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Archive for the ‘Offshore Energy – General’ Category

Waiting for the Judge’s ruling on the Sale 257 suit. Will the Carbon Sequestration bidding complicate his decision? Who pays for offshore CCS?

Posted in CCS, climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on December 7, 2021| Leave a Comment »

What, if anything, will the Judge say about the leases that are intended to be carbon sequestration sites? How can BOEM sell OCS leases for purposes that were neither announced nor environmentally assessed? What do EarthJustice and the other plaintiffs think about the sequestration bids given that the environmental community is split on CCS?

Who is going to pay the enormous cost of sequestration on the Outer Continental Shelf – platforms, wells, pipelines, processing equipment, maintenance, monitoring, decommissioning, and more? The Federal government (i.e. taxpayers) features large in this grand scheme, and will no doubt be assuming most of the economic and performance risks. And all of these costs are for disposal purposes, not for offshore energy production of any kind.

Together with the bipartisan infrastructure bill enacted in November, which included more than $12 billion in funding for carbon capture and carbon removal technologies, the Build Back Better legislation would hand fossil fuel companies nearly every item on their carbon capture wishlist.

Inside Climate News

The reality of offshore CCS is not anywhere near as simple as portrayed in the slick graphic below:

houston ccs hub
ExxonMobil

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Opportunity Lost

Posted in energy policy, gas, natural gas, Offshore Energy - General, tagged , , on December 6, 2021| Leave a Comment »

C:\Users\Owner\Pictures\Hudson Canyon Test.jpg

More than 43 years ago, natural gas was discovered in the Atlantic about 100 miles SE of Atlantic City. The prospect was unitized (Hudson Canyon Unit) and 7 additional wells were drilled over the next 3 years. 725 miles of 3-D seismic data were collected. The geology was complex and more time was needed to evaluate the data. MMS refused to extend the leases without further drilling activity. One unit partner committed to funding a confirmation well if the other companies would relinquish their interest. They would not and the leases expired in 1984. This Hudson Canyon “end game” reflected poorly on the unit partners and the regulator, and the opportunity to produce regionally significant quantities of natural gas was forever lost. Seemed petty then; seems petty now.

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GoM production for September reflects Ida shut-ins

Posted in Gulf of Mexico, hurricanes, Offshore Energy - General, tagged , , , on November 30, 2021| Leave a Comment »

Data from EIA

More than half of GoM oil production was shut-in for 13 days in September and several hundred thousand BOPD were shut-in for the rest of the month. The result was a 42% reduction in production from pre-Ida (July) levels.

All production has now been restored so the December EIA figures should give us a good read on stablized post-Ida production.

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BOEM approves 2nd North Atlantic Wind Project

Posted in Offshore Energy - General, Wind Energy, Offshore Wind, tagged , , , , , on November 29, 2021| Leave a Comment »

  • South Fork Wind: 19 miles southeast of Block Island, Rhode Island
  • 12 or fewer Siemens-Gamesa’s 11-megawatt turbines
  • BOEM approved the larger (62 turbine) Vineyard Wind 1 project on July 15, 2021. Those turbines will be located approximately 15 miles south of Martha’s Vineyard and Nantucket. On Oct. 19, the Responsible Offshore Development Alliance (RODA) filed a 60-day Notice of Intent to Sue the Federal Government over violations of lease management and environmental statutes.
Vineyard Wind

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DOI Report on the Federal Oil and Gas Leasing Program (11/26/2021)

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on November 29, 2021| Leave a Comment »

Observations and comments on the offshore findings and recommendations in the Dept. of the Interior’s report:

  • From an offshore perspective, this report is more moderate than expected. No major complaints.
  • The report was issued the Friday after Thanksgiving. Was there a desire to minimize attention?
  • The report does not include a recommendation on raising royalty rates. DOI will continue to study such actions (prudent decision).
  • BSEE estimates current liability for “orphaned infrastructure” at only $65 million. They must be using a very narrow definition of orphaned infrastructure.
  • “Financial assurance coverage should be strengthened.” (Few would argue with that statement.)
  • “BSEE and BOEM will carefully consider comments on the 2020 proposed financial assurance rule.” (Deja vu? Expect a long, slow process.)
  • BOEM will establish a “fitness to operate standard.” Comments: (1) This is an old concept that has proven to be difficult to execute. Hold companies accountable, make them demonstrate financial assurance, and don’t pander to bad actors (see the case of Hogan and Houchin) (2) Why is BOEM establishing this standard and not BSEE, the safety bureau? (The division of responsibilities between BOEM and BSEE has created serious overlap, inefficiency, and confusion and needs to be addressed.)
  • “BOEM should consider advancing alternatives to the practice of area-wide leasing.” Tract selection makes sense in frontier areas with little operational history. It would have been perfect for the Mid- or South Atlantic or the EGoM, all of which were cynically removed from future leasing consideration by the previous President just before the 2020 election. The Central and Western Gulf of Mexico is too mature for a return to tract selection; employing that approach after 40 years of area-wide leasing is likely to generate less revenue and production.

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Interesting exploration opportunity offshore Jamaica

Posted in drilling, Offshore Energy - General, tagged , , , on November 26, 2021| Leave a Comment »

United Oil & Gas is looking for partners to drill the promising Colibri prospect offshore Jamaica. United’s exploration license has been extended after the completion of Jamaica’s first 3-D seismic survey. The results were encouraging as indicated in the video below. High risk, high reward opportunity!

Walton Morant - UOG
United Oil and Gas Video

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Sale 257 and Federal funding of carbon sequestration

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on November 24, 2021| Leave a Comment »

The text below, excerpted from the Infrastructure Bill (signed 2 days before Sale 257), requires the Federal government to provide funding for commercial CCS projects. $2.5 billion is appropriated. Given these incentives, how does BOEM possibly issue leases for CCS purposes when there was no public notice (as required by 30 CFR § 556.308) that CCS bids would be accepted at the oil and gas lease sale?

SEC. 40305. 
e) Large-scale Carbon Storage Commercialization Program.--
        ``(1) In general.--The Secretary shall establish a commercialization program under which the Secretary shall provide funding for the development of new or expanded commercial large-scale carbon sequestration projects and associated carbon dioxide transport infrastructure, including funding for the feasibility,site characterization, permitting, and construction stages of project development.
(h) Authorization of Appropriations.--There is authorized to be appropriated to the Secretary to carry out this section $2,500,000,000 for the period of fiscal years 2022 through 2026.

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A truly remarkable lease sale: OCS Sale 53, Pacific Region, May 28, 1981

Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on November 23, 2021| Leave a Comment »

Were it not for the surprising CCS bidding, which was accomplished without public notice, last week’s Gulf of Mexico sale would have been pretty ordinary – $177 million on 214 tracts.

A 1981 lease sale offshore California was quite another matter. That sale (no. 53) set records that will never be surpassed. A single lease (OCS-P 0450) encompassing a little more than 5000 acres was sold to Chevron and Phillips for an astounding $333 million. This equates to $1.013 billion in 2021 dollars. That single bid (in 1981 dollars) exceeds the total high bids for any Gulf of Mexico sale since 2015.

High bids for Sale 53 totaled $2.3 billion ($7.0 billion in 2021 dollars!) for only 81 tracts. A GoM sale in 2008 received $3.7 billion in high bids, but that was for 603 tracts.

Unfortunately, production from lease 0450 never met expectations. Platform Hidalgo (0450) and the other two Pt. Arguello field platforms (Harvest and Hermosa) are no longer producing and are in the process of being decommissioned. An interesting criminal case involving Platform Harvest, then operated by Texaco, will be discussed at a later date.

Pt. Arguello Field

OCS Sale data

Pacific only data

John Smith’s Pacific decommissioning update

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Almost 15 years ago, the first US offshore CCS Project was proposed for the Atlantic

Posted in CCS, energy policy, Offshore Energy - General, Regulation, tagged , , , on November 22, 2021| Leave a Comment »

The plan was for SCS Energy’s PurGen One plant in Linden, NJ to burn coal to generate electricity and produce fertilizer. SCS proposed to inject 90% of the CO2 into subsurface reservoirs 70 miles offshore. The project faced strong opposition and was ultimately nixed by the State. The plan had been presented to the Federal offshore regulator (MMS), but the company was advised that there was no legal framework for disposing CO2 beneath the OCS.

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Sale 257 was actually two separate sales

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , on November 19, 2021| Leave a Comment »

  • One sale was for oil and gas leases. That sale was carefully planned and publicly announced in accordance with established BOEM regulations and procedures. Proposed and final notices of sale were published for public review. The final notice was published in the Federal Register on 10/4/2021. 32 companies participated in the sale.
  • The second sale was for CCS purposes. That sale was unannounced and had only one participant. That sale was facilitated by a provision in the Infrastructure bill that was signed just 2 days before the lease sale. There was no public notice.

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