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Archive for the ‘Gulf of Mexico’ Category

Lars looks at Gulf of Mexico drilling activity

Posted in drilling, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , on December 20, 2022| Leave a Comment »

Lars Herbst analyzed GoM permitting and drilling activity from 2011 to 2021. His data and observations are summarized below.

  • Shelf (shallow water) exploratory drilling is at historic low levels with only a single exploration well drilled in both 2020 and 2021. That trend appears to have continued into 2022, as only one shelf exploration well (drilled by Contango) has been spudded YTD.
  • 2021 also saw a significant drop in deep water development wells.
  • Over the time period examined, deep water development is led by deepwater exploration. The same cannot be said for the development of shallow water leases where prospects are more mature and data are more available.
  • The only shelf well drilled in 2021 (Walter Oil and Gas) was in relatively deeper water (566 feet). That well was drilled with a deepwater semisubmersible (the Valaris 8503). This is the shallowest water depth for a GoM semisubmersible drilling operation in recent history. The rig had a modified DP/moored configuration with explosive disconnects on the mooring lines so the rig could move off location if needed during an emergency disconnect scenario. That mooring disconnect would also let the rig evade hurricanes without the need for anchor handling vessels. 
  • The 2012 spike in deepwater permit approvals is the result of the Macondo drilling moratorium backlog.
GOM OCS New Drilling Well Permits and Well Spuds 2011-2021
YearNew Shallow Water Drilling Well Permits ApprovedShallow Water Expl.; New Well SpudsShallow Water Dev.; New Well SpudsNew Deep Water Drilling; Well Permits ApprovedDeep Water Exp.;
New Well Spuds		Deep Water Dev.;
New Well Spuds
201171155438326
20126717471125932
2013722834575518
2014651652685220
201512115695714
20161027654814
2017133952449
201818413654124
201925317623823
20201016543617
2021181734295
TOTAL38190261676491182
Note: Only includes new wells not sidetrack or bypass boreholes.

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White Christmas in the Gulf of Mexico? 😀

Posted in climate, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged , , on December 19, 2022| Leave a Comment »

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Waiting for…

Posted in accidents, California, Gulf of Mexico, pipelines, tagged , , , , , , on December 15, 2022| Leave a Comment »

As we approach the end of 2022, I’m still waiting for:

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The Permian continues to thrive. So can the Gulf of Mexico, but will it?

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on December 6, 2022| Leave a Comment »

Like its salty neighbor to the east, the Permian Basin of west Texas and southeastern New Mexico has been proclaimed dead on many occasions. Such proclamations of their demise, however, are mere exaggerations as the Gulf of Mexico and the Permian Basin continue to thrive.

These historic oil and gas production powerhouses have delivered to global markets billions of barrels of oil and trillions of cubic feet of natural gas over the past century. Through the booms and the busts, the resiliency of each was made possible by the combination of ingenuity and perseverance and by advancements in techniques and technologies.

JPT

Thirty years ago the Gulf of Mexico was called “the Dead Sea” because of the decline in drilling and production activity. Deepwater technology reversed that trend and led to record Gulf of Mexico oil production averaging 1.9 million BOPD in 2019.

Similarly, horizontal drilling and hydraulic fracturing technology launched the shale revolution, and Permian oil production has risen impressively to 5.4 million BOPD.

Both the Permian and the GoM have the potential to sustain or increase production. The Permian Basin, much of which is privately owned, is more adaptable to market conditions and less exposed to political risks. The offshore program is dependent on effective long-term planning and supportive lease management policies. Unfortunately, the proposed 5 year leasing plan suggests a commitment to throttling offshore production rather than sustaining it. When will our energy policy pendulum swing back to a more balanced position?

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Uptick in GoM oil production

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , , , , on December 2, 2022| Leave a Comment »

The September total reflects production from recent deepwater startups, including King’s Quay (Murphy) and Spruance (LLOG). Other new deepwater facilities should further boost GoM oil production next year as forecasted by BOEM (table below). Unfortunately, the BOEM forecast considerably overstates 2022 production and appears to be optimistic for the outyears. This is a significant concern given that US offshore leasing policy, as reflected in the 5 Year Plan, is naively focused on throttling long-term production. See the rather startling quote below:

“BOEM’s short-term (20-year) production forecast for existing leases shows steady growth from 2022 through 2024 and declining thereafter (see Section 5.2.1). The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs.“

5 Year Leasing Program, p.3

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Which Sale 257 bid was rejected?

Posted in CCS, Gulf of Mexico, Offshore Energy - General, tagged , , , , on November 21, 2022| Leave a Comment »

On September 14, 2022, BOEM announced that 307 high bids from Lease Sale 257 in the Gulf of Mexico were accepted. BOEM also announced that one high bid was rejected for not providing the public with fair market value. BOEM has not identified the rejected bid.

Per BOEM’s Lease Area Block Online Query file, 306 Sale 257 leases were effective on Oct. 1, 2022. A comparison of these data with the sale results identified 2 Sale 257 leases that have not been awarded:

leaseblockhigh bidder(s)bidcomments
G37261GC 70BHP$3.6 millionlone bid; 7th highest
bid in sale
G37294GC 777BP (75%),
Talos (25%)		$1.8 million2 bids; next highest
$1.185 million

So one of these 2 bids was rejected and the other has lease not yet been awarded for some reason (or perhaps there has been a clerical/IT issue).

Which bid was rejected? I would guess it was the BHP bid even though that bid was the 7th highest bid in the entire sale. The fact that this bid was $2.5 to $3 million higher than the other 7 BHP bids (all of which were accepted) tells us that the company valued this tract highly. Perhaps BOEM, which has all of the geologic data, thought the value was even higher, which is why the bid may have been rejected.

There was another bidder (Chevron) for the BP/Talos tract, so the competition makes it less likely that the bid would have been rejected.

Ironically, the 94 carbon sequestration bids, which made something of a mockery of the lease sale, could not be rejected on fair market grounds. The bids exceeded the minimum required, and the tracts have little or no value from an oil and gas production standpoint. A competitive process would be require to repurpose these leases for carbon sequestration.

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Stemming the decline in deepwater Gulf of Mexico exploration?

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , , , , on November 18, 2022| Leave a Comment »

Was 2021 the low point? Hopefully that is the case, but consistent leasing is essential.

Looks like Woodside is now officially the GoM operator of record (was BHP prior to merger). Kudos to them.

Shell continues to be the GoM bellwether. There is no OCS program without them.

What’s up with BP and Chevron? Big declines from both.

US super-majors Exxon and ConocoPhillips remain out of the picture, both in terms of lease acquisition and exploration. Disappointing.

Tip of the hat to Hess, LLOG, Murphy, and Talos – independents committed to deepwater production.

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RIP Mike Conner, deepwater safety leader

Posted in Gulf of Mexico, Offshore Energy - General, Regulation, Uncategorized, tagged , , , , on November 16, 2022| Leave a Comment »

On Monday, the offshore world lost Mike Conner, an outstanding engineer and a major contributor to the success of the US offshore program.

Mike is the person most responsible for the Deepwater Operations Plan (DWOP), a pioneering safety-case approach to regulating deepwater oil and gas development. The DWOP program was initiated 30 years ago and facilitated deepwater production at a time when there were no deepwater-specific regulations or standards. Innovative tension leg platform, compliant tower, spar, production semisubmersible, and subsea projects would not have been possible without the DWOP program. 93% of Gulf of Mexico oil production and 76% of the gas is now attributable to deepwater production facilities. Thanks in large part to the DWOP program, these facilities have had a nearly flawless safety and environmental record.

While his obituary is no yet available, this link announces Mike’s well-deserved selection for the OTC Heritage Award in 2017, and provides good information on Mike and his career.

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2021 Flaring Intensity – 10 largest flaring nations vs. US Gulf of Mexico

Posted in climate, flaring and venting, Gulf of Mexico, Offshore Energy - General, tagged , , , on November 15, 2022| Leave a Comment »

Using the World Bank’s worldwide flaring data and ONRR flaring and venting data for the GoM, I compared GoM flaring intensity for 2021 with that of the World Bank’s top ten flaring nations. This is just one example of why US offshore production is a preferred and vital component of our energy mix.

Further discussion: Kudos to the World Bank for their use of satellite data to estimate flaring volumes worldwide. Their primary performance indicator is flaring intensity (volume flared per bbl of oil produced). Absent better worldwide reporting regimes, satellite data are essential. However, there are issues with the World Bank’s system that merit further consideration:

  • Satellites miss some flares and vented gas (a more significant GHG concern) is not detected
  • A prior review of Gulf of Mexico data indicated that the World Bank flaring estimates are low.
  • The flaring intensity indicator penalizes higher gas-oil ratio (GOR) wells. Production upsets of the same duration yield higher flaring intensity scores at higher GOR facilities.
  • Associated gas is an environmentally favorable energy source that should not be discouraged. Most Gulf of Mexico gas production is now from oil wells. Efficient collection and utilization is the key.
  • There will always be some production upsets that result in flaring. The objective should be to minimize the % of oil-well and gas-well gas that is flared, irrespective of the amount of oil production. See the recent GoM summary data posted here and here.

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BSEE’s decommissioning notice has been posted

Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , on November 8, 2022| Leave a Comment »

BSEE’s temporary abandonment/decommissioning solicitation has been posted. Some details:

  • 14 wells to be decommissioned
  • 1 well to be checked to confirm temporary abandonment
  • Well depths: 2359′ to 11934′
  • Water depths: 70′ to 477′
  • 11 gas wells, 3 oil wells
  • Well completion dates: 2006-2008
  • Last production: 2010-2013 (Presumably, the short productive life of these wells either contributed to or was because of the lessees’ bankruptcies.)
  • $25,000😀 minimum to $100,000,000 maximum contract guarantee

If I was an offshore contractor, I wouldn’t touch this work without:

  1. Ironclad liability protection after the work is completed and inspected. A contractor should not inherit the perpetual liability that the lessees knowingly and willfully accepted when they purchased the leases and conducted operations; nor is the contractor responsible for the failure of industry and government to establish a financial assurance framework that protects the taxpayer from such liabilities.
  2. Protection against likely cost overruns related to the uncertain downhole condition of the wells.

Previous posts on this matter:

Taxpayer funded decommissioning – troubling precedent for the US offshore program

NOT a shining moment for the offshore industry

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