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Archive for the ‘Gulf of Mexico’ Category

Among other provisions, EPA’s proposed rule, issued on 11/2/2021, specifies that associated gas be handled as follows:

Route associated gas to a sales line. If access to a sales line is not available, the gas can be used as an onsite fuel source, used for another useful purpose that a purchased fuel or raw material would serve, or routed to a flare or other control device that achieves at least 95 percent reduction in methane and VOC emissions.

Because the Dept. of the Interior has jurisdiction over air emissions on most of the Gulf of Mexico OCS, I assume this proposed rule does not apply to those facilities. However, the EPA proposal is not entirely clear in that regard. If the EPA proposal does not apply, will BOEM/BSEE be proposing similar restrictions in their regulations?

MMS/DOI considered prohibiting venting, but determined that adding flaring capability was not feasible for many shelf platforms, and for some platforms there would have been a net increase in emissions. That said, venting is not insignificant. A 2017 Argonne study indicated (table 2) that, for shelf platforms from 2011 through 2015, more than 3 times as much gas was vented as was flared. More recent data should be reviewed to get a better sense of the costs, benefits, and safety considerations associated with achieving further reductions in venting.

Current flaring/venting regulations for OCS facilities are here.

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But here’s the thing. Whether you think it was the right thing to do, the reality is that passing legislation that is hostile to the U.S. oil and gas industry makes it even more difficult for domestic production to bounce back. So, instead of asking Russia and OPEC to pump more oil, we could look internally to what we could do in the U.S. to pump more oil. 

Forbes

From a US offshore perspective, there should be serious dialogue about how we can increase exploration and production. The risks associated with over reliance on imports have been repeatedly demonstrated over the past 5 decades. The horizontal drilling/well stimulation revolution has been a blessing, but given the sharp decline rates for fracked wells, we cannot solely rely on onshore production from tight reservoirs.

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Oil prices went negative a year ago: Here's what traders have learned since  - MarketWatch
MarketWatch
Monthly Oil Production
Forbes

U.S. oil production plummeted and is unlikely to recover to pre-pandemic levels. The Gulf of Mexico will not be picking up the slack. GoM production peaked in August 2019 at 2.044 million BOPD. Absent increased exploration, that peak will never be exceeded.

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Data from EIA

1.60 to 1.74 million BOPD were shut-in from 8/28 to 8/31, reducing the average daily production for August to 1.535 million barrels per day, a net reduction of 312,000 BOPD from July. The September production figure will be significantly lower given that more than half of the GoM production was shut-in for 13 days in September and several hundred thousand BOPD were shut-in for the rest of the month. September production will be released at the end of November.

Shell is now anticipating that their GoM production will be fully restored by mid-November.

Hurricane_Ida_landfall.jpg
Hurricane Ida – JPT graphic

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With regard to air emissions, the advantages of deepwater Gulf of Mexico production are rather obvious:

  • High production rates per well
  • Few surface facilities (57 deepwater platforms, 3% of GoM total, produce 90+% of oil)
  • Modern gas turbines for power generation
  • Tightly enforced restrictions on flaring and venting
  • Better control of fugitive emissions
  • Distant from shore (not a factor for GHG effects)

Wood Mackenzie, NOIA, and others contend that restrictions on GoM leasing are contrary to carbon reduction goals.

An important and unintended consequence of enacting more restrictive policies such as a lease ban or increase in royalty rate in the Gulf of Mexico is that it could give rise to carbon leakage to countries that export crude to US.

Wood Mackenzie
Chart: Emissions intensity for US crude importers. US Gulf of Mexico deepwater emissions are less intensive than all but one importer.

In light of the policy implications of GHG emissions, a Carbon Intensity Workshop is highly recommended. The estimates generated by Wood Mackenzie, Rystad, and others need to be explored in depth. Is data quality an issue? How are the data verified? Is there regulator or third party oversight? What are the assumptions behind the estimates? Also, for the purposes of US policy decisions, product transportation emissions should certainly be included. A barrel produced in the Middle East is not the same as a barrel produced in the GoM.

Looking at the chart above, I have immediate questions about the drilling emissions (blue). What wells are included? What about workovers and other well operations? I’m surprised that the deepwater GoM drilling emissions are so high relative to the other regions. While dynamically positioned MODUs have high fuel consumption rates, deepwater wells are few in number relative to shale drilling. Also, why are Brazil’s drilling emissions, which I assume are primarily associated with deepwater operations, so much lower that those for the GoM.

BOEM/BSEE and/or the Gulf Research Program (NASEM) would seem to be good sponsors for such a workshop.

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Maersk Drilling awarded contract extension to drill world record well in Angola

The Ondjaba-1 well will be drilled at a new world record water depth of 3,628 m. The current world record is 3,400 m, set by Maersk Voyager’s sister drillship Maersk Venturer when it drilled the Raya-1 well for TotalEnergies offshore Uruguay in 2016.

Maersk

The record US water depth well (3051m/10,011′) was drilled in 2003 by Transocean for Chevron in Alaminos Canyon Block 951 the Gulf of Mexico. The deepest well drilled in US GoM in 2021 YTD was for Shell in 9352′ of water in Alalminos Canyon Block 815.

While brief celebrity space flights are major news stories, these economically important and technical challenging accomplishments by the offshore industry receive very little attention even as oil prices pierce the $82/bbl mark.

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Establishing an OSHA rule takes an average of 7 years, and the process has ranged from 15 months to 19 years between 1981 and 2010, the Government Accountability Office (GAO) reported to Congress in 2012

EHS Daily Advisor

OSHA’s long rule promulgation timeframes are actually quite typical for US regulatory agencies. In some cases, employees work on a single rule for most of their careers! On the plus side, the rigorous internal and public review processes help prevent arbitrary and capricious actions by regulators. However, the long promulgation process often results in regulations that are outdated before they are published. As a result, the entire process repeats and you have a regulatory “do loop.”

To avoid the daunting rulemaking process, regulators often resort to issuing notices, letters, or conditions of approval that accomplish some of their objectives. However, these actions are not always consistent with the rule promulgation requirements of the Administrative Procedures Act and other directives, and are less likely to survive legal challenges.

The optimal approach is for the regulator to establish clear objectives for the operating companies and a schedule for achieving those objectives. This approach was demonstrated following the 2005 hurricane season (Katrina and Rita) when numerous mooring system and other stationkeeping issues were identified. In a face-to-face meeting, Department of the Interior Secretary Gale Norton outlined her concerns and informed offshore operators that there would be no drilling from moored MODUs or jackups during hurricane season until the issues identified during Hurricanes Katrina and Rita were addressed.

The collaborative effort that followed was a resounding success. In addition to addressing station keeping concerns, a comprehensive list of hurricane issues was developed. Industry and government then worked together to assess mitigations and develop new standards and procedures. The essential MODU standards were completed before the 2006 hurricane season, and all of the related concerns were effectively addressed prior to the 2009 hurricane season. Had the government elected to promulgate regulations to address all of these issues, much of this work would have never been completed.

 

 

 

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IRVING, Texas – ExxonMobil increased its estimate of the discovered recoverable resource for the Stabroek Block offshore Guyana to approximately 10 billion oil-equivalent barrels. 

ExxonMobil
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Where would you drill?

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EIA just released the July data, and GoM oil production averaged 1.845 million BOPD, which was consistent with expectations. 2021 production through July was relatively stable averaging from 1.762 to 1.845 million BOPD. This will, of course, change dramatically when the August data are released, and even more so for September. Most production was shut-in for Ida beginning on 8/28 and some production has not yet been restored. Per BSEE’s final update (9/23), about 300,000 BOPD remained shut-in.

The EIA data are plotted below:

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