Posted in drilling, Gulf of Mexico, Mexico, Offshore Energy - General, Uncategorized, tagged Borr Drilling, Cantium, jack-up rig, Lars Herbst, Odin, Pensacola on June 12, 2026| 1 Comment »
Lars Herbst saw this “beauty” while sitting at a rooftop “establishment” in Pensacola. Reminded him of our temporary Pensacola office and Destin Dome drilling. Lars had visions of returning to work as Pensacola District Manager! 😉
Upon returning to his senses, Lars reports that it’s the Borr jack-up rig Odin purchased from Noble’s fleet. The rig was brought from Mexico to Pensacola for modifications, and will be under contract to Cantium to drill in the GOA, but not the Eastern GOA!
Posted in Alaska, California, energy policy, Georges Bank, Gulf of Mexico, Offshore Energy - General, tagged Atlantic, Ed King, gas lines, Georges Bank drilling, Gulf of America, history, OCS oil and gas program, Pacific, Strategic Petroleum Reserve, withdrawals on June 5, 2026| 2 Comments »
Nothing tilts public opinion more than high gasoline prices, or worse yet shortages! Hence the 1975 legislation establishing the SPR, the massive SPR drawdown in 2022, and this year’s withdrawals.
Looking back to the halcyon days of the US offshore program, it was the gas lines in the 1970s that drove the remarkable and rather unlikely growth in the program during the Carter Administration (1977-1981). A few highlights from those four years:
Perhaps unthinkable today, the Governor of Massachusetts from 1979-1983, Ed King, was a strong supporter of offshore drilling. Absent that support, the exploratory drilling on Georges Bank would probably have never occurred. /s/ Nostalgic Old Man 😉
Posted in Gulf of Mexico, Offshore Energy - General, tagged 2025 production, BOEM, EIA, ONRR, record production on June 1, 2026| Leave a Comment »
BOEM Press Release: “The Bureau of Ocean Energy Management announced today the critical role of offshore leasing, resource assessment and long-term planning in supporting record oil production on the U.S. Outer Continental Shelf, which reached more than 714 million barrels in 2025.”
Was 2025 a record OCS oil production year? No, 2025 came very close, but barring belated revisions, 2019 retains the record.
Did 2025 oil production exceed 714 million barrels? Not even close according to the US Energy Information Administration (EIA), which reported a final OCS production total of 692.6 million barrels for 2025. The Office of Natural Resources Revenue (ONRR), to whom all production data must be reported, has yet to post their final 2025 numbers, but they are normally very close to the EIA totals. Also, ONRR’s fiscal year totals do not suggest calendar year production in excess of 700 million barrels. BOEM’s announced 714 million barrel CY 2025 total is more than 60,000 bopd higher than the actual EIA CY or ONRR FY daily averages, and even exceeds the total posted in BOEM’s data center.
See the 2019 and 2025 oil production totals in the table below. The BOEM 2025 numbers appear to be erroneous.
| Oil Production (includes condensate in all cases) | 2019 | 2025 |
| Gulf of America OCS | ||
| ONRR | 692,681,303 | not yet posted; fiscal year total was 681,760,441 |
| EIA | 692,831,000 | 692,634,000 |
| BOEM | 693,004,577 | 707,847,938 |
| All OCS including Pacific & Alaska | ||
| ONRR | 697,610,350 | not yet posted; fiscal year total was 686,544,402 |
| EIA | 697,217,000 | 697,020,000 |
| BOEM | 697,933,210 | 712,543,491 |
On the plus side, per EIA’s latest update, Jan. 2026 was a record production month for the Gulf. January’s ave. production of 2.060 million bopd surpassed the Aug. 2019 ave. of 2.044 million bopd.
Barring significant tropical storm shut-ins over the next 6 months (hurricane season starts today!), a production record in 2026 seems like a good possibility.
Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Regulation, well control incidents, tagged decommissioning, Dos Cuadras field, Lease OCS-P 0241, Platform A, Santa Barbara blowout, well plugging and abandonment on May 29, 2026| Leave a Comment »
As part of the recent focus on decommissioning and financial assurance requirements, I looked at borehole data for platforms A, B, and C on Lease OCS-P 0241 in the Santa Barbara Channel. Platform “A” is where a well blew out in 1969, permanently scarring the US offshore program. Observations:
Lease documents and regulations at 30 CFR § 250.1710 require that all wells be permanently plugged within one year of lease termination. For leases like 0241 that are still active, 30 CFR § 250.1711 stipulates that BSEE will order a well to be permanently plugged if the well poses a hazard to safety or the environment, or is not useful for lease operations and is not capable of oil, gas, or sulphur production in paying quantities. In the Gulf of America Region, the policy is to require wells that have not been used in the past 5 years to be permanently plugged. Allowing old wells to remain unplugged is neither prudent nor consistent with the regulations.
Posted in Offshore Energy - General, Gulf of Mexico, energy policy, tagged Delaware Basin, high bids, OCS Sale 235, onshore vs. offshore, Permian Basin, Talos, Top Ten, West Vela on May 27, 2026| Leave a Comment »
Per yesterday’s discussion comparing recent onshore and offshore lease sales, the investments are really quite different. When you acquire Permian and Delaware Basin shale tracts you are essentially buying oil in place that should be producible with current technology.
At offshore sales, you are typically acquiring the opportunity to learn more, either through site surveys or drilling. Your lease exploration and development strategy will also be influenced by drilling outcomes for similar targets on other leases. A return on your investment is far from certain.
I looked back at the top ten leases (by high bid) issued at Central Gulf Sale 235. That sale was chosen because it was 11 years ago, giving time to explore and initiate development, and the bidding was strong. The top ten leases received bids ranging from $12.8 million to $52.2 million. See the screenshot below.
Surprisingly, only four of the leases were ever drilled and nine of the ten leases have expired. The only lease remaining is the highest bid block (OCS-G 35724, Walker Ridge Block 107, $52.2 million) now owned by Talos (27% and operator), Red Willow (22.5%), Shell (22.5%), CSL (9%), and two investment partnerships. This lease is being held by operations given that a well was drilled within the past year. However, Talos has announced a discovery, and the well has been temporarily abandoned to preserve future utility:
The discovery well was drilled to a total vertical depth of 33,228 feet utilizing the West Vela deepwater drillship and encountered oil pay in multiple high-quality, sub-salt Miocene sands. A comprehensive wireline program was conducted, acquiring core, fluid, and log data to evaluate the reservoir.
So the bottom line is $308.3 million in bonuses for 10 leases, 9 of which have now expired, and one discovery which could prove to be commercial down the road.
Posted in energy policy, Gulf of Mexico, tagged Delaware Basin, Devon, Gulf of America, New Mexico, onshore leasing, record lease sale, sale 206 on May 26, 2026| Leave a Comment »
The Federal onshore oil and gas program was always secondary to the offshore program, at least in the opinion of those of us who worked in the offshore program 😉. That was before the shale era revolutionized US energy production.
The onshore program is now free to flex 💪 following recent sale results, most notably last week’s impressive BLM New Mexico sale that featured the Delaware Basin. See the attachment for details.
The table below compares the last two Big Beautiful Gulf sales and the record 2008 Gulf of Mexico sale with the BLM NM sale. Most astonishing is the record $357,129 per acre bid for a single NM tract. Devon Energy, which exited the Gulf in 2010, was the mega-bidder acquiring 24 tracts for $2.6 billion! (Devon is still bogged down in the Hogan/Houchin decommissioning dispute in the Pacific, a case which should temper enthusiasm for relaxed lease assignment and financial assurance policies.)
The attractiveness of the Permian, Delaware, and similar onshore basins has been greatly enhanced by vastly improved drilling and well completion technology. The short lead times to first production are a big advantage relative to offshore development.
The total high bids for Gulf Sale 206, which dwarfed the BBG1 and 2 sales, are still a Federal oil and gas leasing record when converted to 2026 dollars, but the sale area was much larger than for the NM sale.
| Sale | date | tracts bid on | acres bid on | total high bids | highest bid/acre |
| BLM NM | 5/20/2026 | 74 | 33,529 | $4,007,609,288 | $357,129 |
| BBG2 | 3/11/2026 | 25 | 140,753 | $46,976,423 | $3,647.57 |
| BBG1 | 12/10/2025 | 181 | 1,023,526 | $300,425,222 | $3,227.79 |
| 206 | 7/21/2008 | 615 | 3,323,047 | $3,677,688,245 ($5.7 million in 2026 dollars) | $18,333.47 ($28,300 in 2026 dollars) |
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged bid rejections, BOEM, bp, Chevron, Green Canyon, Gulf of America, Lease Sale BBG2, LLOG, sweet spot on May 20, 2026| Leave a Comment »
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.
| Green Canyon Block No. | No. of bidders | High Bidder | Bid |
| 404 | 5 | BP | $21,009,990 |
| 405 | 2 | BP | $885,990 |
| 448 | 5 | Chevron | $4,967,067 |
| 492 | 5 | Chevron | $5,887,188 |
Posted in California, Gulf of Mexico, Offshore Energy - General, tagged 2025 vs. 2019, California oil production, Gulf of America, record oil production, Sable Offshore on May 4, 2026| Leave a Comment »
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.
Bud's Offshore Energy (BOE) 
My comments on BOEM’s proposed revisions to decommissioning financial assurance requirements
Posted in California, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged BOEM, comments, decommissioning, financial assurance, predecessor liability, proposed regulation, reserve estimates, safety and compliance on May 6, 2026| 1 Comment »
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
Read Full Post »