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Archive for the ‘Offshore Energy – General’ Category

2025 was not a record year for OCS oil production; however Jan. 2026 set a monthly record

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , , on June 1, 2026| Leave a Comment »

BOEM Press Release: “The Bureau of Ocean Energy Management announced today the critical role of offshore leasing, resource assessment and long-term planning in supporting record oil production on the U.S. Outer Continental Shelf, which reached more than 714 million barrels in 2025.”

Was 2025 a record OCS oil production year? No, 2025 came very close, but barring belated revisions, 2019 retains the record.

Did 2025 oil production exceed 714 million barrels? Not even close according to the US Energy Information Administration (EIA), which reported a final OCS production total of 692.6 million barrels for 2025. The Office of Natural Resources Revenue (ONRR), to whom all production data must be reported, has yet to post their final 2025 numbers, but they are normally very close to the EIA totals. Also, ONRR’s fiscal year totals do not suggest calendar year production in excess of 700 million barrels. BOEM’s announced 714 million barrel CY 2025 total is more than 60,000 bopd higher than the actual EIA CY or ONRR FY daily averages, and even exceeds the total posted in BOEM’s data center.

See the 2019 and 2025 oil production totals in the table below. The BOEM 2025 numbers appear to be erroneous.

Oil Production (includes condensate in all cases)20192025
Gulf of America OCS
ONRR692,681,303not yet posted; fiscal year total was
681,760,441
EIA692,831,000692,634,000
BOEM693,004,577707,847,938
All OCS including Pacific & Alaska
ONRR697,610,350not yet posted; fiscal year total was
686,544,402
EIA697,217,000697,020,000
BOEM697,933,210712,543,491

On the plus side, per EIA’s latest update, Jan. 2026 was a record production month for the Gulf. January’s ave. production of 2.060 million bopd surpassed the Aug. 2019 ave. of 2.044 million bopd.

Barring significant tropical storm shut-ins over the next 6 months (hurricane season starts today!), a production record in 2026 seems like a good possibility.

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57 years after the Santa Barbara blowout, production continues at Platform A

Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Regulation, well control incidents, tagged , , , , , on May 29, 2026| Leave a Comment »

Santa Barbara Channel, Dos Cuadras Field platforms (L to R): Hillhouse, A, B, and C; Antandrus Wiki photo

As part of the recent focus on decommissioning and financial assurance requirements, I looked at borehole data for platforms A, B, and C on Lease OCS-P 0241 in the Santa Barbara Channel. Platform “A” is where a well blew out in 1969, permanently scarring the US offshore program. Observations:

  • There are 140 completed and unplugged wells on the 3 platforms. None of the wells on these platforms have been permanently plugged and only one is temporarily abandoned.
  • The latest available production information (2024 data) indicates ave. daily oil production of 3791 bopd for the lease, including 1901 bopd from Platform A, the highest production for any platform in the region in 2024.
  • 41 of the lease’s completed (unplugged) wells are on Platform A.
    • The number of these wells that are currently producing is not publicly available.
    • 30 of the completed Platform A wells were drilled prior to 1985.
    • The blowout well was the 5th well drilled from platform A. All 4 of the wells drilled prior to the 1/28/1969 blowout are still unplugged:
      • well A-20: spudded on 11/19/1968, reached total depth on 12/2/1968
      • well A-41: spudded on 11/27/1968, TD on 12/19/1968
      • well A-25: spudded on 12/18/1968, TD on 12/28/1969
      • well A-38: spudded on 1/12/1969, TD on 1/24/1969
      • Note how quickly the wells were drilled. The wells were shallow (2299-4051′ true vertical depth), and the operator (Union Oil) saved time by omitting a casing string. (This decision was a root cause of the blowout and thus changed history 😡)

Lease documents and regulations at 30 CFR § 250.1710 require that all wells be permanently plugged within one year of lease termination. For leases like 0241 that are still active, 30 CFR § 250.1711 stipulates that BSEE will order a well to be permanently plugged if the well poses a hazard to safety or the environment, or is not useful for lease operations and is not capable of oil, gas, or sulphur production in paying quantities. In the Gulf of America Region, the policy is to require wells that have not been used in the past 5 years to be permanently plugged. Allowing old wells to remain unplugged is neither prudent nor consistent with the regulations.

Platform A during 1969 blowout

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Sable wins again – Gaviota State Park case

Posted in California, Offshore Energy - General, pipelines, Regulation, tagged , , , , on May 28, 2026| Leave a Comment »

Sable Offshore (SOC) surged 12% on Thursday. Here’s why:

Judge Stephen V. Wilson, US District Court for the Central District of California ruled that Sable’s pipeline doesn’t imminently harm Gaviota Park. Judge Wilson said the state “is grasping at straws,” for evidence of real environmental harm, and the federal consent decree governing the terms of the system’s restart is controlled by the California Office of the State Fire Marshall, not the parks department.

The judge didn’t rule on the larger question of whether the Defense Production Act order to restart the Las Flores pipeline system was lawful.

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John Smith’s update on California OCS decommissioning obligations

Posted in California, decommissioning, energy policy, Offshore Energy - General, Regulation, tagged , , , , , , , on May 28, 2026| Leave a Comment »

John Smith’s update on California OCS Decommissioning Obligations is attached. His comments:

Chevron and FMC hold joint and several liability responsibilities for many platforms and all of those operated by DCOR. This reflects Chevron’s long history in developing CA onshore and offshore oil and gas resources. A 2020 report issued by BSEE estimated the nine platforms operated by DCOR had a combined decommissioning cost of $397 million. The actual cost could be 2-3-fold higher based on estimates for decommissioning California state water platforms prepared by experienced decommissioning consultants.

Chevron may be checking out of California by moving its corporate offices to Houston, but as someone once said about decommissioning – referring to the popular Eagles Hotel California song “You can check out but you can never leave.”

Table POCS Platform Lease Ownership and Obligations JBS May 2026.docxDownload

Official decommissioning anthem 😉: Hotel California

Excerpt from the lyrics – Hotel California, Eagles, 1976

Last thing I remember
I was running for the door
I had to find the passage back
To the place I was before
“Relax, ” said the night man
“We are programmed to receive
You can check out any time you like
But you can never leave”

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More onshore vs. offshore: a look at OCS Sale 235

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , on May 27, 2026| Leave a Comment »

Permian drilling rig
West Vela drillship made Walker Ridge discovery for Talos

Per yesterday’s discussion comparing recent onshore and offshore lease sales, the investments are really quite different. When you acquire Permian and Delaware Basin shale tracts you are essentially buying oil in place that should be producible with current technology.

At offshore sales, you are typically acquiring the opportunity to learn more, either through site surveys or drilling. Your lease exploration and development strategy will also be influenced by drilling outcomes for similar targets on other leases. A return on your investment is far from certain.

I looked back at the top ten leases (by high bid) issued at Central Gulf Sale 235. That sale was chosen because it was 11 years ago, giving time to explore and initiate development, and the bidding was strong. The top ten leases received bids ranging from $12.8 million to $52.2 million. See the screenshot below.

Surprisingly, only four of the leases were ever drilled and nine of the ten leases have expired. The only lease remaining is the highest bid block (OCS-G 35724, Walker Ridge Block 107, $52.2 million) now owned by Talos (27% and operator), Red Willow (22.5%), Shell (22.5%), CSL (9%), and two investment partnerships. This lease is being held by operations given that a well was drilled within the past year. However, Talos has announced a discovery, and the well has been temporarily abandoned to preserve future utility:

The discovery well was drilled to a total vertical depth of 33,228 feet utilizing the West Vela deepwater drillship and encountered oil pay in multiple high-quality, sub-salt Miocene sands. A comprehensive wireline program was conducted, acquiring core, fluid, and log data to evaluate the reservoir.

So the bottom line is $308.3 million in bonuses for 10 leases, 9 of which have now expired, and one discovery which could prove to be commercial down the road.

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Another win for Sable?

Posted in California, Offshore Energy - General, tagged , , , , on May 20, 2026| 2 Comments »

A legal challenge to Sable’s ongoing Santa Ynez Unit production has been transferred from the Santa Barbara courtroom of Judge Donna Geck (pictued) to a Federal courtroom in northern California.

Judge Geck had refused to lift her preliminary injunction on SYU operations, and appeared to be set to find Sable in contempt at a hearing that was scheduled for this Friday (5/22).

Attorneys for a coalition of Santa Barbara environmental organizations have filed legal papers demanding that the case be returned to Judge Geck.

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Lease Sale BBG2 now two blocks smaller; “sweet spot” leases awarded

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , on May 20, 2026| Leave a Comment »

BBG2 – Big Beautiful Gulf, small lease sale

BOEM has completed their Sale BBG2 bid evaluations, and 2 of the 25 high bids were rejected, further shrinking the sale’s already small footprint. That’s a high rejection rate when compared with Sale BBG1 (3 of 181 bids rejected).

Although BOEM’s decision matrix has not yet been posted, a comparison of the acceptances with the bids submitted tells us that the Keathley Canyon Block 828 ($1,101,202) and Atwater Valley Block 63 ($650,018) bids were rejected.

Both of the rejected bids were submitted by LLOG, partnering with 4 other companies on the Atwater Valley block. LLOG’s high bids on 3 other blocks were accepted, so their rejection rate was 40%. Interestingly, 2 of the 3 BBG1 rejected bids were also submitted by LLOG.

There is no shame in bid rejections, which are part of the legislated leasing process. Why pay more than you have to (or think a block is worth)? A bid rejection may attract future competition, but otherwise the only downside is that you don’t get a lease that you can possibly acquire at another sale if desired (an advantage of regular, predictable lease sales).

BOEM is charged with making fair market value determinations and their process and decisions are publicly available. Of course, opinions differ on the value of an unexplored lease. We will see what the bidding on the BBG1 and BBG2 rejections looks like in future sales.

BOEM did accept the the high bids for the BBG2 “sweet spot” blocks (red in map below; also see the table) in the Green Canyon Area of the Gulf. These 4 blocks accounted for 17 of the sale’s 38 bids (45%) and $32.8 milion of the sale’s $47 million in high bids (70%). BP’s $21 million bid for GC 404 was by far the sale’s highest bid.

red=blocks receiving bids at BBG2; blue=BBG1 and Sale 261 leases; green=active leases issued prior to Sale 261
Green Canyon
Block No.		No. of biddersHigh BidderBid
4045BP$21,009,990
4052BP$885,990
4485Chevron$4,967,067
4925Chevron$5,887,188

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Small win for Interior and Sable Offshore

Posted in California, Offshore Energy - General, Regulation, tagged , , , , , , , , on May 19, 2026| Leave a Comment »

On 5/14/2026, the U.S. District Court for the Central District of California dismissed the complaint filed by the Center for Biological Diversity (CBD) against the Dept. of the Interior. This was one of the less prominent cases challenging Sable Offshore’s oil and gas operations in the Santa Ynez Unit. 

The CBD had challenged an April 2025 BOEM decision concluding that Sable was not required to revise its development and production plan for the SYU. They sought a court order requiring a revised plan. This suit seemed to be a stretch, so its dismissal is not a surprise.

Per the Dept. of Justice, the court dismissed the lawsuit because the plaintiffs’ asserted procedural injury had no basis in the statute, was not traceable to any action by BOEM, and could not be redressed by an order of the court. (Other than that, it was just fine. 😉)

Among other problems the court identified with the plaintiffs’ case, they invoked a provision of the statute that governs “approval of a development and production plan,” not revision of an already-existing plan. It will be interesting to see the full decision so that we can better understand the context for that statement. Distinguishing revised plans in that manner could have significant policy implications.

For a full update on Sable litigation, see the section of their Quarterly Report beginning on p. 12.

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Platforms Hogan and Houchin – the saga continues

Posted in California, decommissioning, Offshore Energy - General, Regulation, tagged , , , , , , , , , , on May 15, 2026| Leave a Comment »

Platform Houchin, Lease OCS-P 0166, Santa Barbara Channel

In light of the decommissioning fire at Platform Habitat, I checked on the status of well plugging operations at Platforms Hogan and Houchin.

BSEE (2020) estimates the cost of decommissioning these facilities to be $85 million (too low), and there is no collateral or third party guarantee.

The responsibility for decommissioning these platforms has yet to be settled. ConocoPhillips, Oxy, and Devon have appealed decommissioning orders from BSEE. The Interior Board of Land Appeals (IBLA) has yet to rule on those appeals. The appellants are funding some plugging operations and facility upgrades pending the IBLA decision.

Per BSEE’s borehole file, this is the current status of the Hogan and Houchin wells:

  • 33 completed and not yet plugged; these wells were drilled between 1968 and 2010
  • 43 temporarily abandoned (TA) wells plugged in accordance with 30 CFR § 250.1721
  • 10 wells have been updated to TA status in the past 6 months (latest 3/22/2026), so some progress is being made
  • 0 permanently abandoned wells (30 CFR § 250.1715)

Therefore, by my count, 33 wells have yet to be TA’d, and all 76 wells remain to be PA’d. Note that the lease was relinquished nearly 6 years ago (10/14/2020).

If you are interested in the Hogan/Houchin mess or decommissioning liability in general, I highly recommend that you look at Devon’s informative and rather compelling appeal to IBLA. Similar appeals were submitted by Oxy and ConocoPhillips.

Lease history (excerpted from the Devon appeal):

  • Lease OCS-P 0166 was issued effective January 1, 1967.
  • Phillips Petroleum Company (“Phillips”) (predecessor to ConocoPhillips), Cities Service Oil Company (predecessor to Oxy), and Continental Oil Company (predecessor to ConocoPhillips) were the initial lessees
  • Phillips was designated operator on January 25, 1967
  • February 28, 1983: Petro-Lewis Funds, Inc., obtained the 37.5% interest of the Continental Oil Company (which in 1979 had changed its name to Conoco Inc., now Conoco Phillips Company (“ConocoPhilips”)).
  • November 1983: Cities Service Oil Company assigned its 37.5% interest to Cities Service Oil and Gas Corporation (now OXY U.S.A. Inc).
  • July 2, 1987: the Minerals Management Service (“MMS”) approved two more assignments of the Lease. One, from PetroLewis Funds, Inc. to American Royalty Producing Company (“American Royalty”), was approved retroactively to December 31, 1984. The other, from American Royalty to Santa Fe Energy Company(“Santa Fe”), was approved retroactively to April 30, 1987.
  • April 1, 1988: Santa Fe transferred a 3.75% interest to Maersk Energy Incorporated, reducing Santa Fe’s share to 33.75%.

1991 Assignment to Signal Hill: MMS approved assignment of the lease to Signal Hill effective February 5, 1991. The assignment was approved without any provision under which the assignors agreed to be liable for decommissioning operations on the lease. MMS’s approval actually had the opposite effect, leaving such obligations to the assignee. The assignment was approved despite concerns within the MMS about the financial strength of Signal Hill and the technical competence of Pacific Operators Offshore Inc (POOI), the affiliate that would operate the facilities.

Comments:

  • The assignment to Signal Hill should have never been approved. The outcome was predictable.
  • The Devon, Oxy, and ConocoPhillips appeals are very strong and would seem to have a good chance of success. Perhaps that is why the IBLA decision is taking so long (nearly 5 years to date).
  • Given the uncertainty regarding this appeal, the absence of transparency about other potential decommissioning liabilities, and the uncertainties regarding the administration of predecessor liability, this is not the time to be relaxing financial assurance requirements and further exposing taxpayers to decommissioning risks.

This is the final day to comment on BOEM’s proposal:

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Platform Habitat ceased production more than a decade ago! Is the damaged structure fit for the resumption of decommissioning?

Posted in accidents, California, natural gas, Offshore Energy - General, Regulation, well control incidents, tagged , , , , , , , , on May 13, 2026| 1 Comment »

The Platform Habitat fire was extinguished at 11:40 a.m. on 5/11/2026 after burning for 5 hours.

All 26 workers were safely evacuated from DCOR’s Platform Habitat. The big question now is the fitness of the structure for continuing well plugging/abandonment and platform decommissioning.

As indicated in the attached letter, BSEE had informed DCOR that their Pitas Point Unit leases (where Platform Habitat is located) expired on 3/15/2016 owing to the cessation of well operations 6 months prior. Following the Interior Board of Land Appeals (IBLA) May 7, 2021 affirmation of BSEE’s directive, DCOR was notified that they must permanently plug all wells within one year of the lease termination (i.e. one year after the 2021 IBLA decision). I’ll include the informative IBLA decision in a future post.

Although details have not been shared, it appears that well plugging operations were still ongoing on 5/11/2026 when the fire occurred. According to BSEE’s borehole file, most of the Habitat wells have been temporarily abandoned, but few have been permanently abandoned, and several are still completed (i.e. neither temporarily nor permanently abandoned).

The risks and costs associated with delaying well plugging and abandonment have once again been demonstrated at Habitat. Fortunately, there were no casualties or pollution.

With regard to overall safety compliance, DCOR is the violations leader in the Pacific Region. In 2025 and 2026 (YTD) they were cited for 70 violations, 66 of which required component or facility shut-ins. The age of the 9 DCOR platforms (installed by others between 1968 and 1984) has likely contributed to the compliance challenges.

BSEE spreadsheets for 2020-2024 show 6 incidents at Platform Habitat. BSEE’s incident summaries are pasted in the second attachment.

Neither DCOR nor BSEE has issued a statement on the Habitat fire.

This serious incident further demonstrates the concerns expressed by John Smith and me about the relaxed decommissioning financial assurance regulations proposed by BOEM.

DCOR-Platform-Habitat-Decommissioning-ApplicationsDownload
Untitled documentDownload

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