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Archive for the ‘Gulf of Mexico’ Category

Lease Sale 261 observations

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , on December 20, 2023| Leave a Comment »

  • Good prep by the BOEM leasing staff. On time. Quality live stream. Smooth bid reading by Jim Kendall and Bernadette Thomas.
  • Strong sale: $382.2 million in high bids vs. $263.8 for Sale 259. Anything over $300 million would have been considered a good sale.
  • 26 companies participated (updated from pre-sale stats)
  • Strong participation by the GoM stalwarts: Shell, Chevron, Oxy/Anadarko, BP, Woodside (BHP), Equinor, Talos, LLOG, Walter, Kosmos, Beacon
  • Kudos to Arena, Byron, Cantium, Focus for keeping the shelf alive
  • Contrary to the regulations, it looks like we once again have a company seeking to acquire oil and gas leases for carbon disposal purposes. This time it’s Repsol which was the sole bidder for 36 low-value nearshore tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). At least Repsol also bid legitimately on 5 deepwater tracts.
  • Exxon was a complete no show, as was ConocoPhillips.

Complete sale statistics will soon be available at BOEM.gov.

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Carol Hartgen and the 5 Year OCS Leasing Program

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , on December 20, 2023| Leave a Comment »

Foreground (L to R) Lucy Querques Denett, Carolita Kallaur (RIP), Carole Hartgen, Vicki Agnew (RIP); Rear (L ro R) David Sutfin, Willie Taylor; photo credit: Keith Good

As we await Lease Sale 261, Carol Hartgen, my long-time colleague and founder of the 5 year OCS leasing program, voiced astonishment that the new 5 year plan was only for the purpose of scheduling 3 lease sales required by Congress as prerequisites to offshore wind lease auctions.  Carol provides some historical context:

I couldn’t believe the release of the final Five Year Program as just a necessity to hold offshore wind sales.  Back in 1969, Carolita Kallaur, Joan Davenport and I worked on a 5-year schedule based on the supply and demand needs of the nation. That approach, which developed into the elaborate process in the OCS Lands Act and the passage of the National Environmental Policy Act, is a thing of the past. Over.those 50 plus years, politics from both sides of the aisle always drove the changes

Related: How NOT to manage our oil and gas leasing program

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Presale (261) statistics vs. Sale 259

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , on December 19, 2023| Leave a Comment »

261 (presale)259
tracts receiving bids311313
no. of bids352353
companies bidding2032
<400 m water depth52107
>400 m water depth259206

Comments on the preliminary stats:

  • total tracts receiving bids and total no. of bids nearly identical to the previous sale (259 in March 2023)
  • disappointing drop in the no. of companies bidding
  • 83.8% of the Sale 261 tracts receiving bids are in >400m vs. 66.8% for Sale 259 (this may in part explain the drop in participation)

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DOI publishes backhanded 5 year leasing plan

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Offshore Wind, tagged , , on December 18, 2023| Leave a Comment »

The announcement boasts about “the fewest oil and gas lease sales in history” while seemingly apologizing for holding any sales at all.

Consistent with the requirements of the Inflation Reduction Act (IRA) concerning offshore conventional and renewable energy leasing, the Department of the Interior today published the final 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program (Program) with the fewest oil and gas lease sales in history.

These three lease sales are the minimum number that will enable the Interior Department’s offshore wind energy program to continue issuing leases in a way that will ensure continued progress towards the Administration’s goal of 30 gigawatts of offshore wind by 2030.  

DOI

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Offshore cousins are keeping pace

Posted in Gulf of Mexico, Norway, Offshore Energy - General, tagged , , , , , on December 14, 2023| Leave a Comment »

The Gulf of Mexico and Norwegian branches of the offshore family have a long record of technological innovation and production leadership.

As a followup to our last GoM-Norway update, the respective oil production rates are presented below. The Gulf of Mexico now has a small edge as a result of new production from deepwater facilities.

Natural gas is a different story, and Norway’s offshore gas production is much higher. US gas production (second chart below) has been dominated by the onshore sector since advances in horizontal drilling and well stimulation procedures triggered the shale gas revolution twenty years ago.

If you get a chance to visit Stavanger, the Norwegian Oil Museum is highly recommended. See the short video below.

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Gulf of Mexico lease sale 261 is just one week from today!

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on December 13, 2023| Leave a Comment »

This should be an interesting sale. Below are some of the questions that may be answered:

  • Will the Rice’s whale issues affect bidding for deepwater leases? The 5th Circuit’s ruling removes the Rice’s whale lease stipulation. However, BOEM’s Notice to Lessees and Operators (NTL) includes the same provisions and still stands pending further consultations with NOAA. Although the NTL is a “guidance document” (wink-wink), there are ways of making it stick through the plan approval process. Even without binding requirements, companies might choose to fully comply with the NTL to minimize legal risks.
  • Will the uncertainty about future sales spur or constrain bidding? Absent legislative action, no sale will be held in 2025.
  • Will the 14 blocks with rejected high bids at Sale 259 receive bids at Sale 261? If so, will the bids be higher or lower? Is it prudent to reject high bids without knowing when the next sale might be held?
  • Will bp, Chevron, Shell, Equinor, Oxy, and Woodside continue to be bullish on the GoM?
  • Will Red Willow Offshore, owned by the Southern Ute tribe, again be an active bidder?
  • Will Exxon again seek to acquire carbon sequestration leases at an oil and gas lease sale? After a long absence, it would be good to see the US super-major acquire leases for oil and gas purposes. Ditto for ConocoPhillips.
  • How many companies will participate in the sale? 30-35 would be a nice outcome.
  • What will be the sum of the high bids? >$300 million would be a solid result.

BOEM will live stream the opening of bids at 9 am CDT on Dec. 20, 2023

BOEM

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What’s next for OCS flaring and venting?

Posted in climate, flaring and venting, Gulf of Mexico, Offshore Energy - General, tagged , , , , on December 12, 2023| Leave a Comment »

Regardless of one’s opinion about the causes of climate change, minimizing methane emissions makes good safety, conservation, and environmental sense. The emerging international consensus on methane emission reductions thus merits broad industry and governmental support.

Because of the resource conservation mandate in the OCS Lands Act, minimizing the waste of natural gas has been a point of emphasis in the US offshore program for 50+ years. If you couldn’t utilize or market the natural gas, your project wouldn’t be approved. This requirement delayed the entry of some floating production systems into the Gulf of Mexico, but the pipeline network ultimately expanded to support deepwater development with floating units. Those associated with the offshore program are rightfully proud of their success in prohibiting the waste of gas and minimizing flaring and venting.

Despite the historical commitment to restricting flaring and venting, the data suggest that further improvement may be needed. The concerns listed below are based on the compilation and review of flaring and venting data that operators are required to report to ONRR.

  • The % of US OCS gas produced that is flared or vented is trending upward (first chart below).
  • Both the gas flaring and venting volumes were higher in 2022 (vs. 2021) despite lower gas production.
  • 2022 oil well gas (OWG) flaring volume increased by 18% vs. 2022 despite nearly identical total oil production
  • More regulator/industry transparency on flaring episodes is needed, particularly in light of the PNAS paper and the June 2022 Inspector General Report.
  • In particular, there should be a process for explaining large spikes in monthly flaring and venting volumes. Were these spikes associated with production startups, major compressor issues, administrative corrections, or other factors?
  • Venting, which is a more significant environmental concern than flaring, increased by 407 million cu ft (21%) in 2023 vs. 2022. Although the overall venting trend is still favorable (second chart), the 2022 jump should be explained.
  • The previously noted inconsistencies in flaring data sets remain a concern.
  • The fact that more gas-well gas (GWG) is being vented then flared implies that most such venting is on older shelf platforms (where there are more gas wells).
  • As summarized in the third chart below, deepwater facility methane emissions are consistent with the reported inventories, but shelf emissions in State and Federal waters differ significantly.
  • Regulating venting from older shelf platforms is difficult. About 15 years ago, the Federal government (MMS) considered requiring that older production platforms be retrofitted with flare booms, but safety, space limitations, and cost considerations precluded such a regulation. Instead, additional flaring/venting limits, and measurement and reporting requirements were imposed. What is next for these facilities?
  • Compiling and posting flaring and venting data should be a priority for BOEM/BSEE.
vented oil-well gas (VOWG) and vented gas-well gas (VGWG) vs. time
Total CH4 emissions for the GOM from inventories and observations for federal waters (Left) and state waters (Right). Observationally informed emissions are shown for the resampling of absolute flux rates (resampling approach A), with a mean and 95% confidence interval. The inventory estimates represent values adjusted for the year 2021. PNAS, 2023

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Will the Main Pass Oil Gathering (MPOG) system be vindicated?

Posted in accidents, Gulf of Mexico, pipelines, tagged , , , , on December 7, 2023| Leave a Comment »

MPOG System in red

On Nov. 17, the Coast Guard reported a “crude oil release” in the Gulf of Mexico near the Main Pass Oil Gathering (MPOG) company’s pipeline system southeast of New Orleans. After 3 weeks of investigation, no pipeline leak has been identified.

The cause and source of the incident remain under investigation. The entire length of the main pipeline has been assessed to date, along with 22.16 miles of surrounding pipelines with no damage or indications of a leak identified. Remotely operated vehicles (ROVs) and divers continue to reassess the main pipeline and surrounding pipelines as a sustained effort to locate the source of the suspected release.

US Coast Guard

So what was the source of the spill? Another pipeline? Vessel?

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DOI Inspector General report cites safety test violations and falsified records

Posted in Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , on December 5, 2023| Leave a Comment »

Below is a report summary that was referenced in the Office of the Inspector General, Dept. of the Interior, Semiannual Report to Congress (9/30/2023). The summary does not identify the company that committed the violations.

Failing to identify the responsible company is not in the best interest of the OCS program or the many operators and contractors that are committed to safe operations and compliance with the regulations.

The subject violations were on the Federal OCS and were serious enough to be investigated by the IG. The public has a right to see the full report. (See also the discussion about the failure to release the IG report on the misuse of the decommissioning account for Platforms Hogan and Houchin.)

Presumably, BSEE has issued civil penalties, so we may be able to piece this case together when those penalties have finally been paid.

Summary: Offshore Servicing Company Failed to Conduct Mandated Safety Tests and Submitted False Information to BSEE
Report Date: August 29, 2023 Report Number: 20-0425

The OIG investigated allegations that an offshore oil and gas servicing company bypassed safety valves and falsified mandated safety tests associated with an oil and gas production platform located in the Gulf of Mexico. The safety tests are required by Federal regulations enforced by the Bureau of Safety and Environmental Enforcement (BSEE) to ensure that equipment aboard the platform functions properly and prevents the discharge of hydrocarbons into Federal waters.

We found that the servicing company did not perform the mandated safety tests but submitted documentation to BSEE that falsely represented that the safety tests had been conducted. We also determined that multiple safety valves aboard the offshore platform were bypassed and remained in that condition for at least 59 days but potentially as long as 223 days. We presented our findings to the U.S. Department of Justice, which declined prosecution.

This is a summary of an investigative report we issued to the Director of BSEE for action as deemed appropriate.

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GoM production: 2 million barrels per day in Sept!

Posted in energy policy, Gulf of Mexico, hurricanes, Offshore Energy - General, tagged , , , , , on November 30, 2023| Leave a Comment »

Per EIA, September Gulf of Mexico production averaged 2 million bopd on the button! New production from Vito and Argos were no doubt contributors, as production reached the 2 million bopd mark for only the third month in the history of the OCS program. The other 2 months were in 2019.

Imagine what US offshore production might be if the OCS oil and gas program was actually managed to succeed!

Also, as the official hurricane season comes to a close today, we are fortunate in that there have been no production shut-ins from tropical storms in 2023.

Vito

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