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Archive for the ‘energy policy’ Category

Waiting for the Judge’s ruling on the Sale 257 suit. Will the Carbon Sequestration bidding complicate his decision? Who pays for offshore CCS?

Posted in CCS, climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on December 7, 2021| Leave a Comment »

What, if anything, will the Judge say about the leases that are intended to be carbon sequestration sites? How can BOEM sell OCS leases for purposes that were neither announced nor environmentally assessed? What do EarthJustice and the other plaintiffs think about the sequestration bids given that the environmental community is split on CCS?

Who is going to pay the enormous cost of sequestration on the Outer Continental Shelf – platforms, wells, pipelines, processing equipment, maintenance, monitoring, decommissioning, and more? The Federal government (i.e. taxpayers) features large in this grand scheme, and will no doubt be assuming most of the economic and performance risks. And all of these costs are for disposal purposes, not for offshore energy production of any kind.

Together with the bipartisan infrastructure bill enacted in November, which included more than $12 billion in funding for carbon capture and carbon removal technologies, the Build Back Better legislation would hand fossil fuel companies nearly every item on their carbon capture wishlist.

Inside Climate News

The reality of offshore CCS is not anywhere near as simple as portrayed in the slick graphic below:

houston ccs hub
ExxonMobil

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Opportunity Lost

Posted in energy policy, gas, natural gas, Offshore Energy - General, tagged , , on December 6, 2021| Leave a Comment »

C:\Users\Owner\Pictures\Hudson Canyon Test.jpg

More than 43 years ago, natural gas was discovered in the Atlantic about 100 miles SE of Atlantic City. The prospect was unitized (Hudson Canyon Unit) and 7 additional wells were drilled over the next 3 years. 725 miles of 3-D seismic data were collected. The geology was complex and more time was needed to evaluate the data. MMS refused to extend the leases without further drilling activity. One unit partner committed to funding a confirmation well if the other companies would relinquish their interest. They would not and the leases expired in 1984. This Hudson Canyon “end game” reflected poorly on the unit partners and the regulator, and the opportunity to produce regionally significant quantities of natural gas was forever lost. Seemed petty then; seems petty now.

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Excellent Dan Yergin piece in The Atlantic

Posted in energy, energy policy, tagged , , on December 2, 2021| Leave a Comment »

Dan starts by retelling the story about the North Face hypocrisy that earned the company the Colorado Oil and Gas Association’s first ever Customer Appreciation Award for being an extraordinary oil and gas customer. This award rivals the Not My Job Award as a means of recognizing extraordinary individual and organizational chutzpah. North Face refused to sell jackets to an oil industry service company because doing so would be counter to its “goals and commitments surrounding sustainability and environmental protection.” As the Colorado Oil and Gas Assoc. pointed out:

At least 90 percent of the materials in North Face jackets are made from petrochemicals derived from oil and natural gas. Moreover, many of its jackets and the materials that go into them are made in countries such as China, Vietnam, and Bangladesh, and then shipped to the United States in vessels that are powered by oil. To muddy matters further, not long before North Face rejected the request, its corporate owner had built a new hangar at a Denver airport for its corporate jets, all of which run on jet fuel. 

Yergin in The Atlantic

Yergin goes on to point out the extraordinary complexities of energy transitions particularly for developing nations:

Aissatou Sophie Gladima, the energy minister of Senegal, put it more pithily: Restricting lending for oil and gas development, she said, “is like removing the ladder and asking us to jump or fly.”

Yergin in The Atlantic

He talks about other energy transitions:

The 19th century is known as the “century of coal,” but, as the technology scholar Vaclav Smil has noted, not until the beginning of the 20th century did coal actually overtake wood as the world’s No. 1 energy source. Moreover, past energy transitions have also been “energy additions”—one source atop another. Oil, discovered in 1859, did not surpass coal as the world’s primary energy source until the 1960s, yet today the world uses almost three times as much coal as it did in the ’60s.

Yergin in The Atlantic

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California Decommissioning: old disputes prevent common sense solutions

Posted in California, decommissioning, energy policy, rigs-to-reefs, tagged , , on November 30, 2021| Leave a Comment »

Despite scientific support, California’s “rigs to reefs” program has made little progress. Comments in yesterday’s LA Times article help explain why:

Fed by concerns from some environmental advocates and a skepticism about the motives of California’s billion-dollar oil industry, the Rigs to Reefs program that passed in 2010 was so complicated by political compromise that the permitting process became almost unworkable, (State Sen.) Hertzberg said.

Not a single oil company has applied in the history of the program, according to the State Lands Commission, which has jurisdiction over state waters.

LA Times

“Oil companies want a clear path to compliance,” he said. “They’re operating in many cases at a loss, but it’s cheaper to operate at a loss than it is to face millions for decommissioning.”

Gary Brown, Orange County Coastkeeper

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DOI Report on the Federal Oil and Gas Leasing Program (11/26/2021)

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on November 29, 2021| Leave a Comment »

Observations and comments on the offshore findings and recommendations in the Dept. of the Interior’s report:

  • From an offshore perspective, this report is more moderate than expected. No major complaints.
  • The report was issued the Friday after Thanksgiving. Was there a desire to minimize attention?
  • The report does not include a recommendation on raising royalty rates. DOI will continue to study such actions (prudent decision).
  • BSEE estimates current liability for “orphaned infrastructure” at only $65 million. They must be using a very narrow definition of orphaned infrastructure.
  • “Financial assurance coverage should be strengthened.” (Few would argue with that statement.)
  • “BSEE and BOEM will carefully consider comments on the 2020 proposed financial assurance rule.” (Deja vu? Expect a long, slow process.)
  • BOEM will establish a “fitness to operate standard.” Comments: (1) This is an old concept that has proven to be difficult to execute. Hold companies accountable, make them demonstrate financial assurance, and don’t pander to bad actors (see the case of Hogan and Houchin) (2) Why is BOEM establishing this standard and not BSEE, the safety bureau? (The division of responsibilities between BOEM and BSEE has created serious overlap, inefficiency, and confusion and needs to be addressed.)
  • “BOEM should consider advancing alternatives to the practice of area-wide leasing.” Tract selection makes sense in frontier areas with little operational history. It would have been perfect for the Mid- or South Atlantic or the EGoM, all of which were cynically removed from future leasing consideration by the previous President just before the 2020 election. The Central and Western Gulf of Mexico is too mature for a return to tract selection; employing that approach after 40 years of area-wide leasing is likely to generate less revenue and production.

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Sale 257 and Federal funding of carbon sequestration

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on November 24, 2021| Leave a Comment »

The text below, excerpted from the Infrastructure Bill (signed 2 days before Sale 257), requires the Federal government to provide funding for commercial CCS projects. $2.5 billion is appropriated. Given these incentives, how does BOEM possibly issue leases for CCS purposes when there was no public notice (as required by 30 CFR § 556.308) that CCS bids would be accepted at the oil and gas lease sale?

SEC. 40305. 
e) Large-scale Carbon Storage Commercialization Program.--
        ``(1) In general.--The Secretary shall establish a commercialization program under which the Secretary shall provide funding for the development of new or expanded commercial large-scale carbon sequestration projects and associated carbon dioxide transport infrastructure, including funding for the feasibility,site characterization, permitting, and construction stages of project development.
(h) Authorization of Appropriations.--There is authorized to be appropriated to the Secretary to carry out this section $2,500,000,000 for the period of fiscal years 2022 through 2026.

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DOE announces Strategic Petroleum Reserve release

Posted in energy policy, tagged , on November 23, 2021| Leave a Comment »

WASHINGTON, D.C.— At the direction of President Biden, U.S. Secretary of Energy Jennifer M. Granholm authorized that 50 million barrels of crude oil from the U.S. Department of Energy’s (DOE) Strategic Petroleum Reserve (SPR) be made available. 

DOE

Not a fan of this decision. Using the SPR in an attempt to manipulate prices discourages the investment needed to ensure ample secure oil supplies in the future.

Will OPEC respond?

“The battle lines are being drawn,” said John Kilduff, founding partner at Again Capital LLC.  “Certainly, OPEC and the Saudis can win this in that they are holding all the cards. They can keep more oil off the market than a SPR release can put on the market. If you see WTI get under $70, then I would expect a response from OPEC+.”

World Oil

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Almost 15 years ago, the first US offshore CCS Project was proposed for the Atlantic

Posted in CCS, energy policy, Offshore Energy - General, Regulation, tagged , , , on November 22, 2021| Leave a Comment »

The plan was for SCS Energy’s PurGen One plant in Linden, NJ to burn coal to generate electricity and produce fertilizer. SCS proposed to inject 90% of the CO2 into subsurface reservoirs 70 miles offshore. The project faced strong opposition and was ultimately nixed by the State. The plan had been presented to the Federal offshore regulator (MMS), but the company was advised that there was no legal framework for disposing CO2 beneath the OCS.

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Sale 257 was actually two separate sales

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , on November 19, 2021| Leave a Comment »

  • One sale was for oil and gas leases. That sale was carefully planned and publicly announced in accordance with established BOEM regulations and procedures. Proposed and final notices of sale were published for public review. The final notice was published in the Federal Register on 10/4/2021. 32 companies participated in the sale.
  • The second sale was for CCS purposes. That sale was unannounced and had only one participant. That sale was facilitated by a provision in the Infrastructure bill that was signed just 2 days before the lease sale. There was no public notice.

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More questions on the Sale 257 “CCS leases”

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on November 18, 2021| Leave a Comment »

  • Should CCS leases have been offered in a separate sale as is the case for salt, sulfur, and wind operations?
  • Was CCS activity considered in the environmental reviews for this sale?
  • Was CCS mentioned in the Notice of Sale?
  • How will these CCS bids be evaluated?
  • Will the CCS bidding influence the Judge’s decision on the pending Sale 257 litigation?

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