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Archive for the ‘Gulf of Mexico’ Category

Saluting the Christmas lease sale (261)

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , , , on December 22, 2023| Leave a Comment »

  • Biggest prize at the holiday party went to Anadarko: Mississippi Canyon 389 – 5 bids, $25.5 million high bid
  • Biggest holiday shopping spree: Shell’s 65 high bids accounted for 24% of the sale’s high bids (excluding CCS bids).
  • Big spender award: Hess – $88.3 million on only 20 high bids. Does Chevron approve? 😀
  • Aussie, Aussie, Aussie, Oi, Oi, Oi: Strong performance by Woodside. 18 high bids, $24.8 million
  • Heia Norge!: Equinor continues to shine in the GoM! 13 high bids, $20.6 million
  • Spirit of America award to Red Willow Offshore which is owned by the Southern Ute tribe. 22 high bids!
  • Deepwater independents for (energy) independence: Beacon, Murphy, LLOG, Kosmos, Talos, Houston Energy, Ridgewood, QuarterNorth, Alta Mar, CSL, CL&F, and Westlawn
  • Smart shelf shoppers: Arena, Byron, Focus, Cantium
  • Even pace wins the race: Another solid lease sale for bp – 24 high bids.
  • So happy together 😀: Chevron and Hess combined for 48 high bids, $114 million
  • Coal in their stockings? Repsol (Sale 261) and Exxon (Sales 257 and 259) made up their own rules for acquiring carbon dumping leases. Perhaps some solid carbon in their Christmas stockings would be appropriate.
  • Christmas in July?: A lease sale in 2024 is needed. Sometime near the 4th of July holiday would be good. It’s up to you Congress!

Holiday greetings to our friends around the world!

Stocking stuffer for that special person! 😉

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Looking at the “top 10” Sale 261 bids

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , , , on December 21, 2023| 1 Comment »

It’s always interesting to compare the high bids with the “runner-up” bids on the same tracts. Usually the gap is large and, as indicated in the table below, that is the case with the Sale 261 “top 10.” This tells us that bidding is independent, that tract evaluation is far from an exact science, that information and expert opinions differ, and that companies have different business and bidding strategies.

Particularly interesting in this sale were the tracts that both Hess and Chevron, its future parent, sought to acquire. Chevron and Hess bid against each other on two of the “top 10” tracts, and Hess outbid Chevron by wide margins. Will this affect post-merger relationships? 😉

In a future post, we’ll look at the 14 rejected Sale 259 high bids and the bidding on these tracts in Sale 261.

blockhigh bid
(million $)		company2nd highest bid
(million $)		company
MC 38925.5Anadarko1.9LLOG
GC 18821.0Hess4.8Chevron
GC 15118.0Hess3.0Anadarko
GC 72317.2Anadarko (55%)
Chevron (45%)		2.0Equinor
GC 11614.0Hess7.5Anadarko
GC 72212.0Equinor1.4Chevron (55%)
Anadarko (45%)
GC 727.5Hesssingle bidder
GC 2327.0Hess1.1Chevron
GB 7016.7Shellsingle bidder
KC 2105.3Shellsingle bidder

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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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