The Adjusted Delayed Value (ADV), which takes into account the effects of delaying bonuses and future royalty payments, ranged from 1.3 to 9.2 times the high bids.
Perhaps the closest calls were Chevron’s two Walker Ridge bids which had ADV to bid ratios of only 1.3 to 1.4.
The main concern going forward is the absence of a consistent, predictable leasing schedule for the 3.7% of the OCSthat may be considered for leasing. BOEM’s new methodology, which will be applied at the next lease sale (whenever that might be), does not require the bureau to estimate the delay period between the sale being evaluated and the projected next lease sale. Given that the new 5 year plan calls for a maximum of 3 lease sales, the gap between sales has become a much more significant factor just as the new guidance is being implemented.
The new 5 year “leasing plan” is intended to restrain OCS production in deference to “net zero” pathways. This strategy discourages interest from exploration and production companies. US offshore leases, which are by far the world’s smallest, are even less attractive when you don’t know if and when you will be able to acquire the nearby tracts that may be needed for economical deepwater development. This is not the way to obtain fair market value for public resources.
Block
No. of bids
High Bid ($)
MROV($) ADV($)
High Bidder
MROV/bid ADV/bid
MC 711
1
584,700
6,600,000 2,400,000
bp
11.3 4.1
MC 896
1
641,628
6,100,000 1,600,000
Shell
9.5 2.5
GC 182
1
800,085
3,900,000 2,600,000
Anadarko
4.9 3.2
GC 183
1
800,085
9,100,000 6,000,000
Anadarko
11.4 7.5
GC 226
1
800,085
2,100,000 1,600,000
Anadarko
2.6 2.0
GC 227
2
974,628
13,000,000 9,000,000
Shell
13.3 9.2
GC 345
1
1,095,615
13,000,000 5,300,000
Murphy
11.9 4.8
GC 346
1
845,815
5,100,000 2,000,000
Murphy
6.4 2.4
GC 549
1
800,085
15,000,000 6,900,000
Anadarko
18.7 8.6
AT 237
1
909,899
8,300,000 3,000,000
Equinor
9.1 3.3
WR 285
1
859,837
6,200,000 1,200,000
Chevron
7.2 1.4
WR 329
1
595,837
4,400,000 770,000
Chevron
5.7 1.3
MROV=Mean of the Range-of-Value ADV=Adjusted Delayed Value, which takes into account delaying bonuses and royalties
I had the pleasure of working with Jason Mathews when he was a young MMS engineer. He truly cared about our safety mission and has taken that commitment to the next level at BSEE. Jason shared this important, heartfelt message on the anniversary of the Macondo blowout.
One of the greatest gifts I ever received in life is having a little girl and having the opportunity to go home every evening and spending time with her at cheer, softball, doing homework, etc. I have a great deal of 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 US demand. Undoubtedly, they are better / tougher people than me.
Over the last year, my team has seen multiple incidents that had a high potential severity that could have led to a fatal / serious injury or major incident in the GOM. Although we can sit and debate the causal factors for hours, one that jumps to the top of the discussion is the Human Factor – Complacency. Of all the things a leader should fear, complacency heads the list. There is no doubt success breeds complacency, and complacency breeds failure.
To this day, I am still shook by the mindset and complacency of many onboard the Deepwater Horizon prior to the incident. During testimony in the public hearings, John Guide, the BP well team leader for the Horizon, believed that the rig crew had become “too comfortable” because of its good track record for drilling difficult wells. Ross Skidmore, a BP contractor on the rig on April 20, testified that the crew became complacent after completing drilling because “when you get to that point, everybody goes to the mindset that weʹre through, this job is done.” To me, the complacency on the Deepwater Horizon could be attributable to the crew not having access to all of the well data (OptiCem reports – cement job risk) available to BP personnel onshore and the well site leaders on the rig. Our investigation concluded, the overall complacency of the Deepwater Horizon crew was a possible contributing cause of the kick detection failure.
As regulators, we have special roles in the GOM as it relates to safety:
Driving the avoidance of complacency and risk-free mindsets of the offshore employees
Understanding we can’t be selfish – Our success is not our individual personal growth / gains, but it is being unwavering in your promotion of offshore safety to ensure all offshore employees return home to their families safely
Holding each other (internally) and industry (externally) accountable when necessary
In order to achieve greatness offshore, we ,as a regulator, have to believe we can, and never sit still until we achieve it.
Everyone on this email has a very critical function and role. Never underestimate the value of what you do, have the proper mindset, and avoid complacency.
Do whatever it takes to ensure the people offshore are gifted the same gift we receive every day – going home to our families.
All In –
Jason P. Mathews, Petroleum Engineer, Field Operations – OSM
Friday Night LIghts: Coach Mathews and his daughter
Proved reserves should not be a basis for reducing supplemental assurance. The uncertainty associated with reserve estimates and decommissioning costs can easily negate the assumed buffer in BOEM’s 3 to 1 reserves to decommissioning costs ratio. That approach failed completely at the Carpinteria Field in the Santa Barbara Channel (Platforms Hogan and Houchin). See other points on this issue.
Given that the reverse chronological order process for determining predecessor liability was dropped from consideration last April, there is no defined procedure for issuing decommissioning orders to prior owners. The absence of such a procedure increases the likelihood of confusion, inequity, and challenges, particularly when orders are first issued to companies that owned the leases decades ago, in some cases prior to the establishment of transferor liability in the 1997 MMS “bonding rule.”
BOEM’s concern (below) about investment in US offshore exploration and production is interesting given that their 5 year leasing plan strongly implies otherwise.
BOEM’s goal for its financial assurance program continues to be the protection of the American taxpayers from exposure to financial loss associated with OCS development, while ensuring that the financial assurance program does not detrimentally affect offshore investment or position American offshore exploration and production at a competitive disadvantage
I’m just guessing here, but my sense is that BOEM was pressured to finalize this rule in a timely manner (<10 months is timely for such a complex rule) and was thus reluctant to make any significant changes to the proposal published last summer. A public workshop during the comment period would have been a good idea to facilitate informed discussion on the important issues addressed in this rule. Such workshops were once commonplace for major rules.
JL Daeschler is a pioneering subsea engineer and artist extraordinaire who is a native of France (Brittany) and lives in Scotland. He has shared 2 more of his exceptional drawings. (Click on the images to enlarge.)
This is a drawing of the Ocean Viking (Odeco) in the Norwegian North Sea in 1968. The rig was built in Oslo as a sister ship to the Ocean Traveler, which was already working at the same location. The Ekofisk field was discovered later in 1969. The mast-type derrick could be lowered for long ocean tow or bridge clearance. It would have been difficult to evacuate a 100 + personnel to the standby vessel, a decommissioned trawler. Things have changed so much in 56 years!Inclined jack up legs with rack and pinion drive ( Marathon Le Tourneau), Gulf of Mexico
The table in the Sale 259 bid rejections post has been corrected below. That table incorrectly reported that subsequent bids for Keathley Canyon Blocks 745 and 789 were rejected at Sale 261. Those bids were in fact accepted. Houston Energy was identified as the submitter rather than Beacon Offshore Energy, the company that, per the bidding data, had the largest ownership share. (See the bidding partnership pasted below.)
The acceptance of those 2 bids significantly increases the net gain to the government as a result of the Sale 259 bid rejections. See the corrections in red to the table:
The active rig count in the GoM in 2001 was 148 (AL-4, LA-119, TX-25), which is >8 times the current Baker Hughes rig count of 18. The 2001 rig count was not a one year blip; the number of rigs active in the GoM exceeded 100 for the ten year period from 1994-2003.
While the current rig count is anemic by comparison, the capabilities of the fleet are anything but. Below is a list derived from drilling contractor status reports of deepwater rigs now operating in the Gulf.
All of these rigs are dynamically positioned and are capable of drilling in 12,000′ of water. They have dual derricks and 15,000 psi rated BOP rams (one has a 20,000 psi stack, and another can be upgraded to 20,000 psi). The annular preventers are rated at 10,000 psi. All have impressive storage and hook load capacities, the latest tubular handling equipment, advanced control systems, and efficient power generation.
Note that most of the rigs fly the flag of the Marshall Islands. This “flag of convenience” registration is preferred for reasons related to taxation and operational freedom. For the record, the fact that the Deepwater Horizon was registered in the Marshall Islands had little to do with the Macondo blowout. The DWH was subject to all Coast Guard and MMS regulations under the OCS Lands Act.
The main cause of the Macondo blowout was the poorly planned and executed well suspension operation. Certain equipment capability, maintenance, and employee training issues were contributing factors. However, with that said, the Marshall Islands report on the blowout candidly acknowledges that “the complexity of and interdependence between the drilling and marine systems and personnel suggests a need for increased communication and coordination between the flag State and coastal State drilling regulators.” Hopefully, that coordination is being achieved and the risks associated with the fragmented regulationof mobile drilling units are being effectively managed.
Contractor
Rig
Operator
Est. end date
Flag
Transocean
Deepwater Titan
Chevron
3/2028
Marshall Islands
Transocean
Deepwater Atlas
Beacon
4/2025
Marshall Islands
Transocean
Deepwater Poseidon
Shell
4/2028
Marshall Islands
Transocean
Deepwater Pontus
Shell
10/2027
Marshall Islands
Transocean
Deepwater Conqueror
Chevron
3/2025
Marshall Islands
Transocean
Deepwater Proteus
Shell
5/2026
Marshall Islands
Transocean
Deepwater Thalassa
Shell
2/2026
Marshall Islands
Transocean
Deepwater Asgard
Hess
4/2024
Marshall Islands
Stena
Evolution
Shell
4/2029
Marshall Islands
Noble
Stanley Lafosse
???
11/2024
Liberia
Noble
Valiant
LLOG
2/2025
Marshall Islands
Noble
Globetrotter I
Shell
5/2024
Liberia
Noble
Globetrotter II
Shell
5/2024
Liberia
Valaris
DS-18
Chevron
8/2025
Marshall Islands
Valaris
DS-16
Oxy
6/2026
Marshall Islands
Diamond Offshore
BlackHawk
Oxy
10/2024
Marshall Islands
Diamond Offshore
BlackHornet
bp
3/2027
Marshall Islands
Diamond Offshore
BlackLion
bp
9/2026
Marshall Islands
Short video about the Stena Evolution, the newest entry to the Gulf of Mexico fleet:
After 5 months of investigation, the Main Pass Oil Gathering (MPOG) system has finally been cleared for production. (The Coast Guard update only says that the pipeline passed the integrity test, but I assume the operators may resume production though the MPOG system.)
So what was the source of the November sheen and what was the basis for the 1.1 million gallon spill volume estimate? The sheen was not indicative of a spill of that magnitude. Did the Coast Guard et al assume a worst case loss from the MPOG system, even though no leak had been identified?
Is this the most oversight ever for a pipeline integrity test?
The removal and replacement of the spool piece and the subsequent integrity test of the MPOG line were conducted under the close supervision of the Unified Command and Pipeline and Hazardous Materials Safety Administration. During both operations, spill response vessels were on site, along with divers, remotely operated vehicles, helicopters equipped with trained oil observers and multi-spectral imaging cameras, and other containment and recovery equipment. No material discharge of oil was observed during these operations.
Bud's Offshore Energy (BOE) 