Green Canyon 79 received a bid of $3.6 million at Sale 257, but no lease was ever issued. No explanation was provided and there were no bids for this block at Sale 259.
There was actually a second bidder, Focus Exploration, for one of the 69 “CCS blocks,” that Exxon seeks to acquire (see below). Exxon’s bid was higher. Does this mean that Focus, a company that is presumably interested in exploring for oil and gas, will lose the block to a company that bid on the block for purposes not authorized in the Notice of Sale?
Exxon doubled down on their strategic CCS bidding; their only bids (69 in total) again appeared to be solely for carbon sequestration purposes. As previously noted, acquiring tracts for CCS purposes is not authorized in an oil and gas sale. Arguably, these bids should be rejected.
The other super-majors, BP, Chevron, and Shell, were active participants as were many independents.
It was good to see BOEM Director Liz Klein announcing bids. This shows respect for the OCS oil and gas program.
15 years ago the Minerals Management Service pushed hard for better offshore medevac capabilities. Harlan King, the father of an offshore worker whose injuries were exacerbated by the delayed medical response, was the main impetus behind this effort. The industry responded favorably and Mr. King, BP, and Petroleum Helicopters Inc received Offshore Leadership Awards in 2009 for their initiatives. This 2009 article describes PHI’s dedicated medevac capabilities at the time.
The number of “non-occupational” fatalities (at least 6) at US OCS facilities in 2021 suggests that medical care and evacuation capabilities are once again a concern. BSEE is therefore applauded for their medical evacuation assessment initiative. Their recent presentation is attached.
BSEE’s presentation describes 6 more “non-operational” fatalities in 2022, and raises concerns about CPR training deficiencies, evacuation challenges posed by stairways, and the absence of medics at some facilities. BSEE’s findings (pages 14-21 of the presentation) are eye-opening and merit the attention of all operators, contractors, and others interested in offshore facility safety.
While historical data on health-related OCS fatalities are not readily available, 12 such fatalities over the past 2 years seems high relative to past experience, particularly given that the total number of hours worked has declined by more than 50% since 2011. As suggested in our 2 February post, further investigation into this disturbing trend is warranted. Given the sensitivity of the topic, it would seem best for the Coast Guard and BSEE, with appropriate medical assistance, to conduct this review.
The bill neither repeals nor amends the massive land withdrawals by Presidents Obama, Trump, and Biden that have fenced the OCS program into portions of the central and western Gulf of Mexico. Worse yet, the bill tacitly endorses those withdrawals by specifically stating that they are not affected in any way (Sec. 20114).
Sec. 20107 mandates that at least 2 lease sales be held annually in the GoM. The certainty would provide some incremental benefit, but is unlikely to stem the decline in GoM reserves. We are becoming increasingly dependent on the 4% of our OCS that may be leased, about 3/4 of which is not prospective or has limited production potential.
Sec. 20601 lowers the revenue to the US Treasury and increases the revenue to Gulf producing states. This would garner further support from those states, but will have little effect on production.
Sec. 20106 requires DOI to publish information and report to Congress on the processing of drilling permits. However, delayed drilling permit approvals do not seem to be a significant issue on the OCS.
The OCS Orders were the foundation for the current operating regulations in the US and many states and other countries. They were logically organized, easily updated, and published for public comment prior to being finalized.
I have an email message indicating that the first OCS Order No. 1 (Identification of Wells, Platforms, and Structures) was signed on 1/31/1957 and the first OCS Order No. 2 (Drilling) dates back to 2/3/1958! (If anyone has access to the actual documents, please let me know.) The orders were developed much further in the 1970s and 1980s.
Contents of the 1/1980 Atlantic Orders:
OCS Order No. 1: Identification of Wells, Platforms, Structures, Mobile Drilling Units, and Subsea Objects
OCS Order No. 2: Drilling Operations
OCS Order No. 3: Plugging and Abandonment of Wells
OCS Order No. 4: Determination of Well Producibility
OCS Order No. 5: Production Safety Systems
OCS Order No. 6: Well Completions and Workover Operations
OCS Order No. 7: Pollution Prevention and Control
OCS Order No. 8: Platforms and Structures
OCS Order No. 9: Oil and Gas Pipelines
OCS Order No. 10 (reserved)
OCS Order No. 11: Oil and Gas Production Rates, Prevention of Waste, and Protection of Correlative Rights
OCS Order No. 12: Public Inspection of Records
OCS Order No. 13: Production Measurement and Commingling
There has been much discussion, particularly since the 1988 Piper Alpha tragedy, regarding the optimal approach to offshore safety regulation be it prescription, goal setting, safety cases, management systems, or some combination, and how to best influence facility, company, and industry safety culture.
My personal view is that the quality and type of regulations are not nearly as important as the people implementing them. My take:
Good regulators are more important than good regulations and are the key to a successful regulatory program.
Regulatorsmust understand and be committed to their organization’s mission and the strategy for achieving that mission.
While they should have a good understanding of the activities that they regulate, their focus is on challenging operators, not directing them.
Regulators should audit operator activities and carefully review incident and performance data. They should identify problems and concerns, but should not direct solutions.
Safety leaders should be applauded and poor performers should be penalized.
The quality of regulators is more important than the quantity.
Internal and external communication and collaboration are critical to their success.
Management should ensure that regulators are able to focus on their mission and that organizational distractions are minimized.
Rental terms for leases in <200 meters of water are higher and more punitive (for delayed development) than for previous sales and for deepwater leases.
Minimum bid requirements are unchanged from sales 256 and 257, and are higher for deepwater leases ($25/acre for <400m and $100/acre for >400m).
Bottom line: While the terms for deepwater leases are unchanged from Sales 256 and 257, that is far from the case for shelf leases where royalty rates were increased by 50% and rentals were increased by 43% for all lease years.
Of the 1.7 billion acres of Federal land on the US Outer Continental Shelf, only about 73 million acres in the Gulf of Mexico and 1 million acres in the Cook Inlet may be offered for oil and gas leasing. Official or de facto exclusions prohibit leasing in the entire US Atlantic, the entire US Pacific, all Alaska areas except the Cook Inlet, and most of the Eastern Gulf of Mexico. No other coastal nation has restricted access to oil and gas resources to this extent.
The number of active leases, currently 2153, has been at a historically low level for the past 2 years. Only 0.7% of our OCS is leased and thus open to exploration. 26% (552) of these leases are already producing, leaving a historically low number of nonproducing leases.
Oil is where you find it, not where you wish it was or want it to be. Denying access to all but a small portion of the OCS limits exploration strategies and prevents publicly owned resources from supporting our economy in the manner intended by the OCS Lands Act.
Per yesterday’s post, below are US OCS fatality data from a 2014 presentation. Ten year intervals were selected for 1975-2004. The longer 1953-1974 era was selected so the activity indicators (well starts and production) would be comparable with the next 3 intervals. The last interval (2005-2013) was limited because the presentation was prepared in 2014.
Fire/explosion fatalities exceeded fall/struck fatalities only in the first interval (1953-1974). As one would expect, the fire/explosion deaths were associated with a limited number of better known incidents (e.g. Main Pass 41, Bay Marchand, Macondo). While the overall trend is favorable, fall/struck incidents and helicopter fatalities at offshore platforms have proven to be more chronic.
I hope to update these data in the not too distant future.
The most common causes of offshore fatalities and serious injuries, falls and being struck by equipment, receive little media attention because there is no blowout, oil spill, or fire. However, these are often the most difficult types of incidents to understand and prevent. Human and organizational factors predominate, and prevention is dependent on a strong culture that emphasizes worker engagement, awareness, teamwork and mutual support, effective training and employee development, risk assessment at the job, facility, company, and industry levels, stop-work authority, innovation, and continuous improvement.
While unlatching the lower Marine Riser Package from the Blowout Preventor in preparation for ship relocation, a crewmember was lifted into the air after being struck by a hydraulic torque wrench (HTW), hitting a riser clamp approximately six feet above the elevated work deck before falling to the rig floor. The crew member was given first aid and transported to the drillship’s hospital, where he was later pronounced deceased.
In an upcoming post, BOE will provide historical fatality data by cause and operations category.
The offshore oil and gas (O&G) sector is set for the highest growth in a decade in the next two years, with $214 billion of new project investments lined up. Rystad Energy research shows that annual greenfield capital expenditure (capex) broke the $100 billion threshold in 2022 and will break it again in 2023 – the first breach for two straight years since 2012 and 2013.
Offshore activity is expected to account for 68% of all sanctioned conventional hydrocarbons in 2023 and 2024, up from 40% between 2015-2018.
Bud's Offshore Energy (BOE) 