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Archive for the ‘Gulf of Mexico’ Category

Official BBG3 stats are attached. Below is a comparison of the three BBG sales.

Link to more stats.

Notes: The Gulf keeps on rollin’ – this was the 137th Gulf lease sale. Congrats to Bryan Domangue on being named Gulf of America Regional Director for the Marine Minerals Administration! The WWII Museum in New Orleans was a nice venue for the sale.

Sale No.BBG1BBG2BBG3
date12/10/20253/11/20268/12/2026
companies
participating
301316
total bids2193869
tracts receiving bids1812559
sum of all bids
$millions
371.969.999.5
sum of high bids
($millions)
279.447.082.7
highest bid
company
block
$18,592,086
Chevron
KC 25
$21,009,990
bp
GC 404
$7,701,011
Murphy
AC 380
most high bids
company
sum ($millions)
50
bp
61.0
6
Anadarko (Oxy)
4.0
9
Chevron/Arena
$15.6 (Chevron)
1.3 (Arena)
sum of high bids ($millions)
company
61.0
bp
22.6
bp
21.5
Murphy
most high bids by independent14-Murphy5-LLOG9-Arena

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Awaiting the official results.

Arena bid on 9 shelf blocks. Chevron, Shell, Anadarko, BP, Murphy, LLOG, and Equinor were active deepwater bidders.

All bids were below $10 million. Murphy had two $7+ million bids.

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Link to the stream.

The pre-sale statistics are attached.

The table below compares the pre-sale stats for BBG3 with those for BBG1 and 2. The number of BBG3 bids, while well below BBG1, which was the first sale in 2 years, bounced nicely from BBG2 levels.

BBG1
12/10/2025
BBG2
3/11/2026
BBG3
8/12/2026
tracts bid on1812559
total bids2193869
shelf bids (<200m)12212
deepwater (>400m)1682347
companies bidding261312

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RWE has agreed to relinquish their Atlantic, Pacific, and Gulf of America wind leases.

“After careful consideration, it was determined there is no path forward to permit these projects in the U.S. for the foreseeable future.”

Comment: The poor prospects for these leases had more to do with bad investment decisions than permitting challenges. The company is fortunate to be able to rollover their lease bonuses into LNG infrastructure and gas turbine purchases.

The relinquished leases:

OCS-A 0539: RWE paid the highest bonus ever, $1.1 billion, for this lease at the irrational exuberance Atlantic wind sale in Feb. 2022. The amount was $305 million higher than the next highest bonus for any offshore lease.

OCS-G 37334: RWE was the only bidder at the 2023 Gulf wind lease sale. A second Gulf wind sale received no bids.

OCS-P 0561: RWE underestimated the technical and economic challenges associated with deepwater floating wind development offshore California and elsewhere. Only one wind lease remains in the Northern California wind lease area. Two of the three wind leases in the Central California area have also been relinquished.

The wind adverse U.S. Administration offered RWE a lifeline that allows them to reinvest in more prospective projects:

  • LNG infrastructure: a financial investment of $900 million to acquire an indirect 16% stake in the Louisiana LNG Project. RWE proceeds will be used to fund the construction of the terminal.
  • Natural gas turbine reservations: To support the expansion of its growing flexible power generation work in the U.S., RWE Americas has signed a $300 million turbine reservation agreement securing future generating capacity to meet growing U.S. electricity demand. The company is developing a pipeline of 15 natural gas peaking projects across target markets in the U.S.

Apparently, the attached letter from 50 U.S. environmental groups asking RWE not to keep their wind leases was not persuasive (and perhaps RWE didn’t appreciate the implied threat of litigation against a deal that was in the company’s best interest).

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Per EIA, Gulf of America oil production declined in May by over 200,000 bopd from April’s record production, which was corrected upward by 2000 bopd. Was the April number anomalous? We’ll need additional monthly data and the audited ONRR numbers to get a better read.

EIA posted corrected April and May totals of 30,000 bopd for the Pacific (California OCS), a 150% increase from February owing to the Sable Santa Ynez Unit restart. Although Pacific OCS production has been in the doldrums for years, the region has an impressive record of 202,000 bopd from Dec 1995.

Meanwhile EIA has still not corrected their 2025 OCS production totals to correspond with the audited ONRR data.

2025 OCS total – ONRR2025 OCS total – EIA2025 Gulf only – ONRR2025 Gulf only – EIA
713,673,419697,020,000708,803,859692,634,000

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Excerpts from BP press release:

Atlantis is located about 150 miles south of New Orleans and has been in production for nearly 20 years. The expansion project adds two new subsea water injection wells to help increase the pressure of targeted reservoirs, unlocking additional barrels and extending the producing life of one of bp’s flagship US offshore assets.

The project, which was delivered ahead of schedule and under budget, adds approximately 10,000 barrels of oil equivalent per day (boe/d) of gross peak annualized average production, with around 5,000 boe/d net to bp.

Some of you may remember the 2009 False Claims Act allegations by a former BP contractor claiming that BP did not properly maintain the engineer-approved “as built” drawings of systems and structures aboard the Atlantis facility. The contractor alleged that the absence of the documentation created increased safety risks for the facility and to its personnel.

Following the allegations, an industry source closely involved with the project (but not a BP employee) made the following comment to the BOE blog:

Atlantis was by far, in my opinion, the best of the bunch; proceeded as a normal construction project. The PMs were the best I’ve come across.

BOEMRE (the name of the offshore safety regulator at the time) conducted a comprehensive investigation of the matter. Director Michael Bromwich sumarized the findings:

“As the report makes clear, although we found significant problems with the way BP labeled and maintained its engineering drawings and related documents, we found the most serious allegations to be without merit, including the suggestion that a lack of adequate documentation created a serious safety risk on the Atlantic facility. We found no credible evidence to support that claim.”

The BOEMRE press release is attached. Link to the full investigation report.

In August 2014, a Federal court dismissed the False Claims Act lawsuit because the plaintiffs lacked evidence and standing.

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On February 12, 2024, the bankruptcy court approved the sale of certain Cox Operating assets to Natural Resources Worldwide LLC (NRW), a company that had no prior offshore experience. NRW contracted with Array Petroleum to operate 154 Cox legacy platforms (per MMA data). NRW is listed as the operator of just one platform.

The bankruptcy court had previously approved the sale of Cox assets in 6 Gulf of America fields to W&T Offshore.

As noted in previous posts, the Cox legacy of non-compliance has continued under new ownership. In 2026 YTD, Array Petroleum accounted for 52% of Gulf of America Incidents of Non-Compliance (INCs) while operating only 12% of the platforms, and producing only 0.06% of the oil and 0.17% of the gas (2025 production data). Their 2026 YTD INCs/inspection ratio is 7.55 times the Gulf average and 14.6 times the Gulf average if Array inspections are excluded.

The only platform operated directly by NRW was cited for 3 INCs on 2 inspections.

Per MMA data, W&T operates 117 platforms in the Gulf. The number of platforms that were included in the acquisition of the 6 Cox fields is unknown. W&T’s INC/inspection ratio in 2023, the year before the Cox acquisition, was 0.72 (80/111), which was better than their 2026 performance (0.94), but worse than the Gulf-wide 2023 average of 0.57. So W&T’s compliance relative to other Gulf operators was about the same before and after the acquisition.

According to the borehole file, neither Array, NRW, nor W&T conducted any drilling operations in 2026 YTD.

Kudos to the MMA inspectors for their diligence in identifying INCs and issuing citations. The 2026 YTD data table is below.

WCSIFSItotal
INCs
facility
insp
INCs/isp
Array4031154522885.93
NRW120321.50
W&T3846488940.94
GoA total65329656100512800.785
Notes: Numbers are from published BSEE data (7/21/2026 inquiry); INC=incident of non-compliance; W=warning INC; CSI=component shut-in INC; FSI=facility shut-in INC; INCs/insp= INCs issued per facility inspection; each facility-inspection may include multiple types of inspections (e.g. production, pipeline, pollution, Coast Guard, site security, etc)

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The attached letter to the General Accountability Office (GAO) asserts that there were “deeply entrenched ethical issues and conflicts of interest within the former Minerals Management Service (MMS),” and implies that these issues were among the factors contributing to the tragic Macondo well blowout.

I retired from MMS shortly before the Macondo well blew out on April 20, 2020, and testified before the Senate Energy and Natural Resources Committee on May 11, 2010. My comments on MMS employee ethics still stand and are reiterated below:

I also want to express my disappointment in certain media comments directed at my former MMS colleagues. These comments have not only been ill-informed and unsubstantiated, but malicious. Without hesitation, I can tell you that MMS regulatory personnel–inspectors, engineers, scientists, and others–are 100% committed to their safety and pollution prevention mission. MMS inspectors are themselves exposed to risks every day when they fly offshore and inspect facilities. MMS personnel have repeatedly made personal sacrifices to support the regulatory mission. After Ivan, Katrina, Rita, Gustav, and Ike, MMS employees worked to restore oil and gas production essential to our economy, even when their personal lives had been disrupted by the onshore impacts of these hurricanes. These personnel work under strict ethics standards, and despite a few isolated and highly publicized incidents that occurred more than four years ago, conduct themselves with the highest degree of professionalism. While a critical review of the entire offshore regulatory regime is necessary and appropriate, unsubstantiated accusations and personal attacks are not.


The comprehensive Chief Counsel’s Report, National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, was the only inquiry to consider whether ethical lapses were a contributing factor to the blowout. In the “Regulatory Observations” chapter, the Chief Counsel addressed ethics concerns directly (p. 261):

“In recent years various bodies have concluded that certain MMS offices and programs have violated ethical rules or guidelines. In the wake of the Deepwater Horizon disaster, some questioned whether ethical lapses played any role in causing the blowout. The Chief Counsel‘s team found no evidence of any such lapses.

This blog closely followed the Macondo blowout. I have read all of the investigation reports and many of the court documents. I also served on the defense team for Bob Kaluza, the BP Well Site Leader who was fully acquitted after being shamefully prosecuted in the wake of the blowout. My thoughts on the Macondo tragedy are summarized in a six part series.

Because of the false ethics narrative and scapegoating of MMS, experts who should have been directing the well control efforts, were pushed to the back of the bus shortly after the blowout began. Had that not been the case, I believe the top kill operation would not have been aborted in late May and the well would have been killed 48 days sooner, reducing the oil spill volume by at least 2.4 million bbls. (See the analysis by Dr. Mayank Tyagi and his colleagues at LSU.) Also, keep in mind that the USCG Incident Commander almost required BP to resume flow from the well after the capping stack successfully shut-in the well on 7/15/2010, and would have likely done so were it not for forceful input from an engineer from the former MMS.

The consolidation of BOEM and BSEE into a single bureau makes sense. As I previously commented:

This is an excellent step that many OCS program veterans have been advocating. In addition to the inefficiencies associated with overlapping and intertwined BOEM and BSEE responsibilities, the associated regulatory fragmentation is a significant safety risk factor.

The primary OCS functions including leasing, resource evaluation, economic analysis, permitting, inspection and enforcement, investigations, environmental assessment, spill response preparedness, promulgation of regulations, technology assessment, research,and decommissioning, are inextricably linked, cannot be effectively segmented, and should not be stovepiped.

Finally, with regard to the reorganization planning questions posed at the end of the attached letter, perhaps GAO should first consider the abrupt, unplanned termination of MMS. At a 2011 Ministerial Forum in Washington, an international offshore safety expert criticized that rash decision noting – “It took 87 days to stop the blowout, but only 30 days to get rid of the regulator.”

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Lease sale Big Beautiful Gulf 3 (BBG3) will be held on 8/12/2026. The Final Notice of Sale is attached.

Given the rather tepid BBG1 and BBG2 results and the high sale frequency, robust bidding is not expected. Nonetheless, the BBG bidding patterns and tract evaluations have been interesting, most notably BOEM’s rejection of LLOG’s bid for Keathley Canyon 828, an expired lease block in the their Buckskin field.

Keathley Canyon 828 is not among the blocks listed for sale at BBG3. Per the Notice of Sale (p. 4), “any lease blocks whose high bids were rejected and not appealed in the immediately preceding Big Beautiful Gulf lease sale, are expected to be included as eligible for lease.” Can we therefore assume that either the KC 828 bid rejection or the prior lease expiration is being appealed?

The legislatively mandated BBG lease terms are attractive – 10 years and 12.5% royalty for deepwater blocks. A more recent legislative directive requires (wrongly in my opinion) the approval of downhole commingling requests. This accelerates the return on investments in deepwater, high pressure reservoirs. Such commingling has presumably contributed to record Gulf oil production in 2025. The longer term concern is the impact on ultimate oil and gas recovery.

Meanwhile, the Gulf rig count and well start numbers continue to disappoint. Baker Hughes (7/2/2026) lists only 4 active rigs in the deepwater Gulf – one each in the Alaminos and Mississippi Canyon areas and two in the Green Canyon Area. BSEE’s borehole file lists only 15 new deepwater exploratory well starts YTD.

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Six months after the year ended, the Office of Natural Resources Revenue (ONRR) has completed their precise, to the barrel, production accounting. BOEM was correct2025 was a record OCS oil production year by a considerable amount. Total OCS production, nearly 714 million bbls, exceeded the 2019 record by 14 million bbls. EIA data still favor 2019 by a slight margin.

The 16+ million barrel difference between the 2025 ONRR and EIA OCS production totals is much larger than any such differential in recent years and warrants an explanation. Below are the 2025 OCS totals (first table) and the 2019 to 2025 Gulf totals (2nd table). As indicated in the second table, all other differentials between ONRR and EIA were <2 million bbls, and only the 2024 differential was >1 million bbls.

2025 OCS total – ONRR2025 OCS total – EIA2025 Gulf only – ONRR2025 Gulf only – EIA
713,673,419697,020,000708,803,859692,634,000
Table 1

Gulf oil production (bbls)ONRREIA
2019692,681,301692,831,000
2020609,704,101610,064,000
2021623,586,734623,167,000
2022632,639,739631,900,000
2023680,868,936680,400,000
2024656,217,605654,223,000
2025708,803,859692,634,000
Table 2

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