A full day ahead of the deadline! Waiting for an announcement and details.
Archive for the ‘Gulf of Mexico’ Category
BOEM awarded Sale 257 leases today…
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged BOEM, Lease Sale 257 on September 14, 2022| Leave a Comment »
Refreshing wisdom from Sale 257 bidders
Posted in Gulf of Mexico, Offshore Energy - General, tagged Blackcomb Energy, CSL Exploration, DG Exploration, Focus Exploration, Juneau Oil and Gas, Lease Sale 257, Otto Energy, Red Willow on September 14, 2022| Leave a Comment »
Some of the lesser known Sale 257 bidders are intriguing. These companies have a clear and refreshing sense of identity and mission. Observations:
Red Willow Offshore LLC, high bidder on 5 blocks, is a private oil and gas exploration and production company owned by the Southern Ute tribe and headquartered in Ignacio, Colorado. Great mission statement: “Our mission is to create value for the Southern Ute Indian Tribe by exploring for and developing oil and gas resources while prioritizing safety, fiscal responsibility and respect for the environment and Tribal Cultural resources.”
Otto Energy was high bidder on 1 block. If you wonder about the company name, Otto Energy was known as Ottoman Energy until 2006. Otto’s vision is to achieve outstanding business delivery as a partner of choice in the Gulf of Mexico. Their production base includes the South Marsh Island Block 71 field and interest in the Green Canyon 21 Bulleit field.
DG Exploration focuses on new play concepts for the mature continental shelf of the US Gulf of Mexico. They were the high bidder on 14 blocks. According to DG, these blocks control 5 of the best prospects in their portfolio. All the blocks are located in a prolific part of the basin where new high potential exploration has been absent since the early 1990s. By bringing in new technology and ideas, they aim to fundamentally reset the creaming curve for the Louisiana shelf.
Juneau Oil and Gas was high bidder on 4 blocks. Juneau was formed to focus a world class team of professionals on exploring the shallow waters of the Gulf of Mexico. Juneau Oil & Gas has returned to the roots of the founding members’ past success at an opportune and strategic time in the ever-evolving oil and gas industry. Juneau correctly notes that “lease acquisition costs and royalty rates in the shallow water Gulf of Mexico are low relative to other basins, and there has been little competition for these leases after the steep and sustained decline in activity over the past decade.”
Focus Exploration LLC was high bidder on 7 blocks. Like other GoM shelf companies, Focus’ principals created the company with the purpose of identifying and participating in high quality, low to moderate risk oil and gas projects.
CSL Exploration LP was high bidder on 1 block. CSL Capital Management, L.P. is an SEC registered investment firm focused on energy services and equipment businesses. Headquartered in Houston, the CSL team has deep sector expertise in the energy industry and takes a hands-on approach to investments, relying on organic growth and strategic thinking to generate investment success.
Blackcomb Energy LLC was the high bidder on 1 block. Information on this company is limited, but it looks like they have onshore production in Colorado.
Sale 257 bidders waiting for their leases
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged high bidders, Lease Sale 257 on September 13, 2022| Leave a Comment »
Per legislation signed by the President on 8/16/2022, Sale 257 oil and gas leases are to be issued this week. Below is a list of the high bidders. (The carbon sequestration bids are not believed to be valid and are not included in this list.) Note the number of smaller and relatively unknown companies that participated in the sale. These smaller operators and investment companies add significantly to the vitality of the OCS program. BOE will comment on some of these companies in future posts.
| Company | No. of high bids |
| Hess | 2 |
| Chevron | 34 |
| Shell | 20 |
| Walter | 2 |
| W&T | 2 |
| Houston Energy | 5 |
| LLOG | 6 |
| Anadarko | 30 |
| BHP | 8 |
| Arena | 11 |
| bp | 46 |
| Murphy | 3 |
| Red Willow | 5 |
| Equinor | 1 |
| Focus Exploration | 7 |
| Repsol | 5 |
| Byron | 1 |
| EnVen | 1 |
| CSL Expl | 1 |
| Talos | 10 |
| Kosmos | 1 |
| Beacon | 4 |
| Blackcomb Energy | 1 |
| Cantium | 3 |
| Otto Energy | 1 |
| Foster & Assoc. | 1 |
| Juneau Oil and Gas | 5 |
| DG Exploration | 14 |
| QuarterNorth | 1 |
Good picture, questionable message
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged bp ad, Gulf of Mexico production, Lease Sale 257 on September 9, 2022| Leave a Comment »
Is bp apologizing for the pictured workers and platform? With the demand for oil and gas expected to increase through 2050, and worldwide concerns about energy supply and security, ads like this make neither good business nor good social sense.
Moving away from oil and gas and becoming a “very different” company in the 2030’s won’t make bp the “leading energy company in the world.” On the contrary, a “very different” bp will likely be less influential, less profitable, and more dependent on government mandates and subsidies.
Contrary to the ad (and to the company’s credit), bp seems committed to Gulf of Mexico production well beyond the 2030’s. They are the number 2 oil producer in the Gulf (behind Shell), continue to drill exploration and development wells, and were the most active participant at Lease Sale 257. Bp was the high bidder on 46 tracts, 12 more than no. 2 Chevron. The Department of the Interior has been legislatively directed to award Sale 257 leases by 9/15/2022, but has yet to comment publicly on the matter.
Artemis vs. deepwater oil and gas development
Posted in Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged Artemis, Musk, SLS, space vs. offshore, Space X Raptor on September 6, 2022| Leave a Comment »
Here is a good article, endorsed by Elon Musk among others, about the foreseeable problems NASA is facing with the Space Launch System rockets. SLS rockets use hydrogen which, at super-chilled temperatures and high pressures, easily oozes out of any available opening. Space X Raptor engines are fueled with methane (imagine that) which Musk and his engineers think is the best combination of high efficiency and ease of operation. Methane is also easier to produce on Mars where Musk hopes to develop a self-sustaining city.
In light of their respective frontier exploration accomplishments, space exploration and deepwater production are sometimes compared. In that spirit, NASA’s inspector general estimates the Artemis campaign will cost $93 billion between 2012 and 2025, $4.1 billion for a single launch. Each Artemis launch will thus cost approximately as much as developing and producing a 100 million barrel deepwater oil field in the Gulf of Mexico. And, of course, the Artemis program is fully funded by the government, while deepwater oil and gas development is not only privately funded but is an important source of government revenue.
RIP Gerald Rhodes, Engineer and Regulatory Scholar
Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged decommissioning, financial assurance, Gerald D. Rhodes, MMS, USGS on September 5, 2022| Leave a Comment »
An important figure in the history of the US offshore program passed away last week. Gerry Rhodes was a petroleum engineer with an attorney’s gift for understanding laws and regulations. Among other leadership roles in the offshore regulatory program, Gerry was Chief of the Minerals Management Service’s Branch of Rules, Orders, and Standards in the 1990’s.
Gerry was among the first in the Federal government to fully understand the financial responsibility risks associated with the decommissioning of offshore facilities and the urgent need to update requirements for the plugging of wells and removal of platforms. The enormity of this challenge is described in the 1991 Forbes article pasted below. Despite sharp divisions within the offshore industry and the resulting political pressure, Gerry succeeded in finalizing regulations (including this 1995 rule) that are the basis for the current financial responsibility programs in BOEM and BSEE. Without Gerry’s resolve, subsequent financial assurance challenges and government outlays would have been far greater.
RIP Gerry. You were a true gentleman, a dedicated father and grandfather, and a diligent and highly accomplished colleague.
Leasing policy and BOEM’s unrealistic Gulf of Mexico production forecast
Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged 5 year leasing plan, BOEM forecast, EIA, Gulf of Mexico production on September 1, 2022| Leave a Comment »
GoM oil production for June increased (see chart below) with King’s Quay and Spruance contributing to the uptick. Other anticipated 2022 startups are not yet producing.
The EIA production forecast for 2022 is proving to be pretty accurate. Kudos to them. However, BOEM’s 2022 forecast of 1.9 million bopd is not achievable and concerns about the intermediate and longer term persist. Unfortunately, BOEM’s highly optimistic forecast for 2022 and beyond, along with unrealistic expectations regarding the energy transition, have significant policy implications. This stunning quote from the 5 year leasing plan explains why so few lease sales were proposed:
“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
Action by DOI on Lease Sale 257 required in 15 days
Posted in CCS, climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged CCS, fair market value, Inflation Reduction Act, Lease Sale 257 on August 31, 2022| Leave a Comment »
Per legislation signed by the President on Aug. 16, 2022:
(b) LEASE SALE 257 REINSTATEMENT.—
(1) ACCEPTANCE OF BIDS.—Not later 30 days after the date of enactment of this Act, the Secretary shall, without modification or delay—
(A) accept the highest valid bid for each tract or bidding unit of Lease Sale 257 for which a valid bid was received on November 17, 2021; and
(B) provide the appropriate lease form to the winning bidder to execute and return.
The Department of the Interior has been silent on their implementation of this provision. We are particularly interested in:
30 years ago today Hurricane Andrew struck the heart of the Gulf of Mexico oil patch
Posted in Gulf of Mexico, hurricanes, Offshore Energy - General, tagged Gulf of Mexico, Hurricane Andrew, safety valves on August 25, 2022| Leave a Comment »
After devastating South Florida during August 25, 1992, Hurricane Andrew struck Gulf of Mexico facilities the following day. Sustained winds were 140 mph with gusts to 160 mph, and significant wave heights were 35-40 feet. About 700 platforms were exposed to hurricane force winds. 241 platforms and 83 pipeline segments incurred substantial damage.
All workers had been evacuated from the offshore facilities without incident. Surface and subsurface safety systems performed as intended, and there were no uncontrolled flows from production wells. According to respondents to a JP Kenny survey for MMS, 2698 valves were closed during the storm as follows:
| valve type | activated | failed |
| subsurface safety valves | 716 | 0 |
| master surface safety valves | 729 | 5 |
| wing surface safety valves | 460 | 0 |
| pipeline shutdown valve | 415 | 0 |
| pipeline check valve | 378 | 0 |
The five MSSV failures were at facilities directly in the path of the eye in an area where the storm damage was most severe.
The valve performance reporting was associated with a research project and was thus voluntary. It’s therefore important to give credit to the companies that participated (a number of which no longer exist): Amoco, Aquila Energy, BP, Chevron, Four Star O&G, Gulfstream, Houston Expl., Kerr-McGee, Mobil, Pennzoil, Samedan, Shell, Sonat, Stone, Tennessee Gas PL, Texaco, and Unocal.
Also, in reviewing the survey responses it’s clear that there was some confusion about what to report. Most facilities were completely shut-in well ahead of the storm’s arrival and the survey requests information on valves that were shut-in (presumably automatically) during the hurricane. Reporting was therefore inconsistent, and the total number of shut-in valves was under-reported.
Was Warren Buffet influenced by the BOE compliance honor roll? 😉
Posted in Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged Anadarko, offshore compliance, Oxy, Warren Buffet on August 24, 2022| Leave a Comment »
It was revealed on Friday that Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) has received Federal Energy Regulatory Commission approval to acquire up to 50% of Occidental Petroleum’s (NYSE: OXY) common stock.
StreetInsider.com
Oxy (Andarko) fared very well in BOE’s mid-year review and apparently the “Oracle of Omaha” noticed. 😉
Bud's Offshore Energy (BOE) 