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Archive for the ‘Gulf of Mexico’ Category

BBG2 – Big Beautiful Gulf, small lease sale

BOEM has completed their Sale BBG2 bid evaluations, and 2 of the 25 high bids were rejected, further shrinking the sale’s already small footprint. That’s a high rejection rate when compared with Sale BBG1 (3 of 181 bids rejected).

Although BOEM’s decision matrix has not yet been posted, a comparison of the acceptances with the bids submitted tells us that the Keathley Canyon Block 828 ($1,101,202) and Atwater Valley Block 63 ($650,018) bids were rejected.

Both of the rejected bids were submitted by LLOG, partnering with 4 other companies on the Atwater Valley block. LLOG’s high bids on 3 other blocks were accepted, so their rejection rate was 40%. Interestingly, 2 of the 3 BBG1 rejected bids were also submitted by LLOG.

There is no shame in bid rejections, which are part of the legislated leasing process. Why pay more than you have to (or think a block is worth)? A bid rejection may attract future competition, but otherwise the only downside is that you don’t get a lease that you can possibly acquire at another sale if desired (an advantage of regular, predictable lease sales).

BOEM is charged with making fair market value determinations and their process and decisions are publicly available. Of course, opinions differ on the value of an unexplored lease. We will see what the bidding on the BBG1 and BBG2 rejections looks like in future sales.

BOEM did accept the the high bids for the BBG2 “sweet spot” blocks (red in map below; also see the table) in the Green Canyon Area of the Gulf. These 4 blocks accounted for 17 of the sale’s 38 bids (45%) and $32.8 milion of the sale’s $47 million in high bids (70%). BP’s $21 million bid for GC 404 was by far the sale’s highest bid.

red=blocks receiving bids at BBG2; blue=BBG1 and Sale 261 leases; green=active leases issued prior to Sale 261
Green Canyon
Block No.
No. of biddersHigh BidderBid
4045BP$21,009,990
4052BP$885,990
4485Chevron$4,967,067
4925Chevron$5,887,188

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Attached are my comments on BOEM’s proposed revisions to the decommissioning financial assurance regulations. These comments were submitted to Regulations.gov yesterday (3 days early 😀). Bud

Concluding Remarks

  1. MMA’s highest priority must be assuring that facilities are safely decommissioned without public funding. Supplemental financial assurance determinations and lease assignment approvals must be consistent with that priority.  
  2. Predecessor liability is an important financial assurance principle, but legal boundaries and administrative procedures must be clearly established. 
  3. Safety and compliance are inextricably related to financial performance, and must be considered in determining supplemental assurance requirements. 
  4. Using reserve estimates to reduce supplemental assurance exposes taxpayers to geologic and accounting risks. 
  5. Unacceptable public risks have resulted from financial assurance decisions intended to advance offshore wind development.

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The comment period for BOEM’s proposed revisions to decommissioning financial assurance requirements closes on Friday, May 8th.

John Smith’s comments have been officially submitted to Regulations.gov, and are attached for your convenience. Nice work by John.

My comments are being finalized and will be submitted and posted soon.

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Update: Another EIA revision to Gulf of America oil production for Dec. 2025 (1.994 to 1.985 million bopd) means that 2019 retains the production record by the narrowest of margins – 1.898 to 1.897 million bopd. Stay tuned because this may not be the final word 😉.

Per EIA, Feb. 2026 production dipped a bit to 1.931 million bopd (chart below).

Meanwhile, California OCS oil production for FEB continued at about 10,000 bopd. This number may increase a bit for March, and more for April data when the first Sable sales are included. A big increase, by as much as 500%, should be apparent in the June report barring a court ordered shutdown.

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Dirk Kempthorne participating in Lease Sale 206 which garnered a record $3.7 billion in high bids!

I was saddened to learn about the passing of Dirk Kempthorne, Secretary of the Interior from 2006-2009. He was a supporter of responsible offshore oil and gas development, and oversaw six lease sales and the continued growth of the deepwater sector.

One of those lease sales generated a record $3.7 billion in high bids (photo above). Lars Herbst was the Minerals Management Service’s Regional Director at the time.

I had the pleasure of briefing the Secretary on a couple of occasions and found him to be very personable, attentive, and intelligent. My colleagues were similarly impressed.

The Secretary was also known to ride his motorcycle to the Interior building on occasion. He is pictured on his Harley below, but this photo was taken in Idaho, not Washington. 😀

The organizers of the 2007 IRF Offshore Safety Conference were most pleased when Secretary Kempthorne agreed to participate as a keynote speaker. Our many international guests were impressed by his remarks and his interaction with the conference delegates. His conference bio and those of the other speakers are attached.

RIP Mr. Secretary! You served the country well. Enjoy cruising on that big motorcycle in the sky!

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1947 Oil and Gas is a great name choice given that the first offshore oil well beyond the sight of land was completed in 1947 (see photo). The numeric name choice is reminiscent of historically important team names like the San Francisco 49ers and the Philadelphia 76ers.

The name is especially fitting given that 1947’s first acquisition, Renaissance Offshore, operates entirely on the Gulf shelf (map below). Renaissance is a significant shelf producer ranking 19th among all Gulf operators in both oil (791,572 bbls) and gas (1,335,009 mcf) production in 2025. Renaissance ranked 6th in oil production and 7th in gas production among companies that focus on the shelf.

A challenge for 1947 will be improving Renaissance’s compliance and safety record:

  • In 2025, Renaissance was one of only four companies that operated more than 10 shelf platforms and had INC/facility inspection ratios >1.0.
  • Renaissance has averaged 0.93 violations (INCs) per inspection since 1/1/2020, trailing only Cox legacy Array in INC frequency.
  • In 2019, a worker fell to his death at the Renaissance Eugene Island 331 B platform. BSEE’s investigation found that Renaissance failed to maintain all of its walking and working surfaces in a safe condition, that supervisors failed to promptly correct or prevent employees from accessing the uncorrected and uncontrolled walking and working surface hazard area, and that Renaissance and its contractors failed to follow the agreed upon terms and conditions within their respective Safety and Environmental Management Systems (SEMS) bridging arrangements. (Renaissance incurred a seemingly modest $105,292 civil penalty for this incident. There is no public information on any settlement with the victim’s family.)

Between 2012 and 2014 Renaissance grew substantially with the acquisition of sixteen Gulf of Mexico producing fields, fifteen of which are operated and most are 100% owned.” 1947’s financial strength is unclear. Hopefully, BOEM will verify that satisfactory decommissioning financial assurance arrangements are in place before any lease assignments are approved.

Renaissance operations being acquired by 1947 Oil and Gas

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Jason’s message, pasted in full below, is important for all who are associated with offshore oil and gas operations, in the US and internationally.

Be The Difference

On the Outer Continental Shelf, BSEE (or MMA) annually oversees ~70 million manhours of offshore personnel, production of >650 million barrels oil, and activities on ~1300 platforms and 75-90 rig / rig units. We all have a profound respect for the men and women who work offshore and put their lives on hold for 14-28 days to deliver much needed OCS production to meet the US demand, and that could not be clearer today.

Last month, Lou Holtz, a legendary coach and person passed away, and it reminded me of the rules of life he lived by and often promoted to others – 1) Do the right thing, 2) Do the best you can, and 3) Always show people you care.

Since February, BSEE has lost two great engineers, Tom Meyer and Bobby Nelson, who were both men of conviction. Tom and Bobby made a difference in all of us as they constantly worked with integrity, moral clarity, and high standards, choosing to act based on principles rather than preference or ease. While at BSEE, I have no doubt both of these men acted from internal motivation to adhere to their principles, not based on external applause or convenience. During their careers, both Tom and Bobby personified Lou Holtz’s rules of life.

Sixteen years ago, to this day, a phone call took place from the Deepwater Horizon to BP’s onshore office. The phone call discussed the anomalies encountered in the negative pressure test, and it was between the Well Site Leader and the lead drilling engineer. BP drilling engineer, Mark Hafle, allowed the temporary abandonment operations on the Deepwater Horizon to proceed even though he told Donald Vidrine, the Deepwater Horizon well site leader, that “you can’t have pressure on the drill pipe and zero pressure on the kill line in a [negative] test that is properly lined up.” Furthermore, Hafle did nothing to investigate or resolve the pressure differential issue even though he remained in BP’s office until 10:00 p.m. the evening of April 20 and had access to real‐time well data (which he logged out of at 5:27:35 p.m.). Hafle’s failure to investigate or resolve the negative test anomalies noted by Vidrine was a possible contributing cause of the kick detection failure that resulted in the Macondo blowout and 11 fatalities (Jason Anderson, Aaron Burkeen, Donald Clark, Stephen Curtis, Gordon Jones, Wyatt Kemp, Karl Kleppinger, Jr., Blair Manuel, Dewey Revette, Shane Roshto, Adam Weise).

Every day your actions, no matter how small, have a profound impact on others at the platform, in the company, and in industry. If you know something is not right, something is not possible, or even if you have doubt, consider being the difference.

For the remainder of the year, I challenge all of us, as regulators, to urge individuals on our teams to use their personal strengths to influence change rather than waiting for others to take initiative – including yourself. Also, promote the idea that one does not have to follow the crowd and can take a unique, personal stance to improve the offshore workplace. Be the difference just like Tom and Bobby.

Be The Difference and do whatever it takes to ensure the people offshore return from work the same way they arrived.

Respectfully, 

Jason P. Mathews

Petroleum Engineer

Field Operations – OSM

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I am again sharing this touching tribute to the 11 men who lost their lives on the Deepwater Horizon on April 20, 2010. The video is introduced by country singer Trace Atkins, a former Gulf of Mexico rig worker. The video and Trace’s song serve as a memorial to the 11 Deepwater Horizon workers and others who have died exploring for and producing oil and gas around the world. Please take a moment to watch.

Macondo revisited series:

Reiterating this proposal: Make April 20th International Offshore Safety Day to honor those who have been killed or injured, to recognize the many workers who provide energy for our economies and way of life, and to encourage safety leadership by all offshore operators, contractors, and service companies.

Deepwater Horizon Memorial, New Orleans

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Honored to be named Inspector of the Year. I’m sincerely thankful to my supervisor and the management involved for recognizing my commitment to this mission, and I’m proud to work alongside the Well Operations Inspection team, whose support and professionalism elevate all of us. This award reflects our shared dedication to safety and the environment.”

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If Beacon and HEQ are willing sellers of their majority share in the impressive Shenandoah field, as appears to be the case (per Reuters), the big dogs are interested in buying. And why wouldn’t they be? Production began last July and the targeted rate of 100,000 bopd has already been achieved from just four phase-one wells.

Reuters reports that Total, Shell, BP, Repsol, and Chevron are interested in Beacon and HEQ’s 51% stake. More about Shenandoah:

  • located in Walker Ridge blocks 51, 52, and 53
  • ~150 miles off the coast of Louisiana
  • floating production unit (FPU) in 5800′ of water in WR block 52
  • true vertical reservoir depths ~30,000′
  • high pressure ~20,000 psi
  • Paleogene, Inboard Wilcox trend
  • FPU can host production from nearby subsea systems
  • capacity is being expanded to 140,000 bopd
  • estimated 600 million BOE recoverable including nearby tiebacks
  • other owner: Navitas Petroleum (49% share)

Investment companies like Beacon (owned by Blackstone) are positive, and increasingly necessary, contributors to the offshore program. These companies bring capital and new exploration strategies that increase development and production. They must, of course, be committed to safety excellence, which seems to be the case for Beacon.

It’s noteworthy that Anadarko and Conoco Phillips, Shenandoah’s major original partners holding 33% and 30% interest respectively, withdrew from the project in 2018 citing unsatisfactory appraisal results and weak commodity prices. Evaluation mistakes like this are common, which is why broad and diverse industry participation is needed. With mergers reducing the number of US majors (remember Amoco, Arco, Sun, Texaco, Getty, Mobil, Phillips, Marathon, Unocal, Superior, Hess, etc.), investment companies play an increasingly important role in OCS development.

Shenandoah, WR 51, 52, 53 (center blocks); green=active leases prior to Sale 261; blue=leased issued after Sale 261

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