BSEE data for the past 3 days are tabulated below. Data are as of 12:30 p.m. ET on the specified date. Barring offshore or downstream infrastructure damage, production should begin to resume over the next few days.
Prior to the shale boom, when our national production was lower and the OCS accounted for a larger share, these numbers would have had a more significant effect on oil and gas prices. That is not the case today with only a 2.4% rise in WTI prices.
For decades, Gulf of Mexico operators have reported facility evacuation and production curtailment data to MMS/BSEE as tropical storms or hurricanes approached. Requirements for this reporting are found in the regulations (30 CFR 250.192(a)) supplemented by NTL 20I5-G02.
Operators must submit reports by 11:00 a.m. (CT) daily throughout the period of evacuation and shut-in with the understanding that BSEE will post the compiled data by 1 pm CT. This reporting has been diligently accomplished for decades and MMS/BSEE posted the data each day, including weekends and holidays, without fail. Everyone in industry and government understood the importance of safely evacuating personnel, shutting down production, and ensuring that these hurricane data were made available to the public each day. (All of the daily updates for 2011 onward can be found here.)
On Wednesday, July 3, Shell informed the media that they had begun evacuating non-essential personnel and shutting-in production at certain facilities. Both Shell and Chevron issued general statements on the status of their operations on Thursday, July 4. Both companies no doubt submitted the required reports to BSEE, as did other companies with operations near the projected path of the storm.
BSEE failed to post any evacuation and shut-in data on any date from July 3 through today (July 8).
Beryl missed the heart of the Gulf of Mexico basin, but Shell and other companies with facilities in the more westerly areas evacuated personnel and curtailed production. BSEE’s unprecedented failure to post this information needs to be addressed before more significant storms threaten offshore personnel and production in the Gulf.
Shell evacuated non-essential personnel and shut-in production at Perdido (pictured)
BOEM’s “Rule to Streamline and Modernize Offshore Renewable Energy Development” is intended to “make offshore renewable energy development more efficient, [and] save billions of dollars. Unfortunately, the savings associated with relaxed decommissioning financial assurance requirements translates to increased risk for customers and taxpayers.
BOEM signaled their intentions on offshore wind (OSW) decommissioning three years ago when they granted a precedent setting financial assurance waiver to Vineyard Wind. Despite compelling concerns raised by commenters, the “streamlining” regulations have codified this decision.
Cape May County, New Jersey, was among the commenters objecting to BOEM’s departure from the prudent “pay as you build” financial assurance requirement. The County commented as follows (full comment letter attached):
“[e]nergy-utility projects are in essence traditional public-private partnerships where technical and financial risks are transferred to the private sector in exchange for the opportunity to generate revenues and profit. Under the proposed rule, the Federal government is instead transferring risks associated with decommissioning to the consumer rather than to the private sector.”
Cape May added:
“[w]hile BOEM believes that if a developer becomes insolvent during commercial activity that a solvent entity would assume or purchase control, the County believes this is a risky assumption as the most likely reason for default is that a constructed wind farm developer is unable to meet its contractual obligations set forth under a Power Purchase Agreement (PPA) because its energy production revenues are not in excess of its operating costs. A change of hands would not remove these circumstances or make the project profitable.”
Cape May and others also commented on the threat of premature decommissioning as a result of storm damage. In response, BOEM asserts that these risks have been addressed in the latest standard for North American offshore wind turbines (Offshore Compliance Recommended Practices: 2022 Edition (OCRP-1-2022)). However, design standards, particularly those for offshore facilities, are not static. The recommended practice for OSW is likely to change multiple times in the coming years as storm, operating, and turbine performance data are updated and analyzed. The design standard for Gulf of Mexico platforms has been repeatedly refined and improved and is now in its 22nd edition.
In their response to public comments on the decommissioning risks, BOEM repeatedly asserts that they can adjust the amount and timing of required financial assurance as they monitor a lessee’s financial health. Unfortunately, a company’s finances can change quickly and BOEM’s options will be limited when it does. Increasing the financial burden on a struggling company that is providing power to a regional power grid will not be a simple proposition.
Bud's Offshore Energy (BOE) 