Posted in drilling, energy policy, Gulf of Mexico, Offshore Energy - General, tagged Gulf of Mexico, offshore drilling, rig count on February 21, 2022| Leave a Comment »
The rig count remains low at 12 (see the updated chart below). Per BSEE’s borehole file, only 3 deepwater exploratory wells have been spudded in 2022 YTD (2/21) – one each for Shell, Hess, and Anadarko.
What’s going on? Better opportunities elsewhere? Uncertainty about lease sales? Concerns about legal challenges and the future of the US offshore program?
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged Lease Sale 257, offshore production, oil and gas supply, shale depletion on February 18, 2022| Leave a Comment »
Meanwhile, however, drillers may be running out of sweet spots in the shale basins of the country. In an article citing well data, the Wall Street Journal reported earlier this month that because of the quick depletion rates of shale wells, low-cost resources are giving way to higher-cost deposits. And this is motivating a warier approach to production growth.
Markets Insider
The shale revolution made the US a net oil exporter, but skepticism about shale production forecasts suggests the need for other supply sources. Given the shale uncertainty and the unrealistic expectations regarding the energy transition, greater US dependence on imported oil is on the horizon. This bodes well for OPEC, but not so well for US and international consumers.
BOE post, 1/4/2022
Yet Lease Sale 257 was vacated because BOEM didn’t analyze the GHG reduction that would result from reduced international consumption caused by zero US leasing (and thus higher oil and gas prices). Fortunately US onshore production on private land is not subject to this absurd and economically destructive level of oversight.
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged API, appeal, DOI, Lease Sale 257 on February 11, 2022| Leave a Comment »
“At a time of rising energy costs and heightened geopolitical tensions, the misguided decision to cancel the only lease sale held last year is contributing to significant uncertainty for U.S. natural gas and oil producers and limiting access to the affordable, reliable energy that’s needed here in the U.S. and around the world. We call on the Department of Interior to join us in this effort and appeal the court’s ruling …
API release
When will we hear from the Department of the Interior?
Update: We understand that Louisiana has also appealed the Sale 257 decision.
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged Anchor, Argos, BSEE, deepwater Gulf of Mexico, Houma, King's Quay, Murphy Oil, production semisubmersibles, Shenandoah, Vito, Whale on February 10, 2022| 4 Comments »
Posted in CCS, Gulf of Mexico, Offshore Energy - General, Offshore Wind, Wind Energy, tagged carbon sequestration, CCS, Lease Sale 257, leasing pause, Offshore Wind on February 2, 2022| Leave a Comment »
The judge correctly dismissed the unfounded claim that new oil and gas leasing would preclude wind development in the Gulf. BOE comments:
Will the Administration appeal the court decision to vacate the lease sale or does the decision assist them by reinstating their leasing pause? How will the conflict between the DC court decision and the injunction invalidating the leasing pause (Federal Court for the Western District of Louisiana) be resolved?
What does this mean for the 94 leases that were to have been acquired for carbon sequestration purposes? Will BOEM have a proper CCS sale after conducting an environmental assessment, determining bidding terms and evaluation criteria, and publishing a Notice of Sale? Or will there be a legislative end run that authorizes the issuance of the leases without these steps?
Posted in Gulf of Mexico, Offshore Energy - General, tagged Gulf of Mexico, November 2021, oil production on February 1, 2022| Leave a Comment »
Our last GoM update predicted November oil production of 1.8 million BOPD. The EIA figure released yesterday came in slightly less than that at 1.795 million BOPD.
Will 2022 startups push oil production back up to the 2.044 record achieved in August 2019? Possibly, but the longer term outlook is not compelling given reduced drilling activity and the dearth of recent discoveries. The long leasing pause will further compromise exploration by limiting opportunities to test new geologic interpretations and assess promising prospects.
Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged BOEM, DC Federal Court, energy justice, energy poverty, Lease Sale 257, oil prices on January 31, 2022| Leave a Comment »
The very disappointing 68 page ruling on Lease Sale 257 boils down to the following:
So, if BOEM has to consider the environmental benefits of higher oil and gas prices, shouldn’t they also have to consider the negative economic and environmental effects from the resulting price inflation and energy poverty? Are higher prices, which are most detrimental to the poor and to developing nations, “energy justice?”
If your only objective is the destruction of the US offshore oil and gas program, this was a great decision. For everyone else, this is yet another reason to be concerned about our energy future.
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged DC Federal Court, Lease Sale 257, Louisiana on January 28, 2022| Leave a Comment »
The Court VACATES and REMANDS the Record of Decision for Lease Sale 257 to the Department of the Interior.
Rudolph Contreras, US District Judge
The decision is yet another victory for OPEC+, which is doing quite well of late, and a loss for our economy and energy security.
So here is where we are:
Posted in accidents, Gulf of Mexico, Offshore Energy - General, Regulation, tagged Chevron, Fieldwood Energy, Hogan and Houchin, INCs, safety leadership, safety violations on January 20, 2022| Leave a Comment »
Per BSEE’s Incidents of Non-Compliance (INC) data base, the number of violations surged in 2021, both in terms of the total number of INCs and the INCs/inspection ratio (see chart below). Remarkably, a single company – Fieldwood Energy – was responsible for 845 INCs or 44% of the total number issued. Normalizing for the number of inspections, Fieldwood facilities were cited for 1.46 INCs/inspection versus 0.46 INCs/inspection for all other companies. An unprecedented 61 of Fieldwood’s 2021 INCs called for facility shut-ins, many times more than any other operator. Through the first 17 days of 2022, Fieldwood has already been cited for 21 INCs, 5 of which required facilities to be shut-in.
Fieldwood and its affiliates have experienced multiple bankruptcies and the company has once again been reorganized with the blessing of the courts. Chevron’s comprehensive objection to the reorganization plan asserted that Fieldwood has $9 billion in current and anticipated decommissioning obligations. These enormous decommissioning liabilities and their implications for predecessor lessees (former facility owners) and the Federal government were the main issue in these proceedings, and the bankruptcy plan includes settlements with predecessor companies and the government.
Even more significant than the financial matters and INCs are the following:
While BSEE regulations provide for the removal of operating rights for poor safety performance, companies can reorganize and problem managers can reappear elsewhere. As a result, marginally financed and ineffective operating companies are a major challenge for BSEE as evidenced by the INCs, civil penalties, and investigations. (See the related saga of Platforms Hogan and Houchin in the Pacific Region.)
Poor safety performers drag down the entire industry. The costs of mega-disasters like the Santa Barbara and Macondo blowouts have been widely discussed. However, chronic poor performance and the associated incidents also weaken the industry and damage the integrity of the offshore oil and gas program. These performance issues can’t be left entirely to BSEE and the Coast Guard to resolve. The industry needs to do a better job of self-evaluation, calling out poor performers, and exercising judgement in the assignment of offshore properties.
Bud's Offshore Energy (BOE) 