John notes that Exxon’s March 26 contractual deadline for Sable to have the SYU up and running is fast approaching. What will Exxon do in the likely event that Sable fails to meet that deadline? Does Exxon want to re-enter the SYU legal and regulatory quagmire?
The SYU’s 500+ million barrels of oil, 3 deepwater platforms, and onshore processing facilities are an enormous prize, but is that prize attainable?
Meanwhile, the latest skirmish between Sable and the Office of the State Fire Marshal (OFSM) pertains to metal loss anomalies and inspection tool tolerances. The dispute is summarized in the linked filing.
Sable contends that the Fire Marshal’s letter contradicts guidance from OSFM staff and provides examples. Sable goes a step further at the end of their response by calling for the FIre Marshal to coordinate better with the experts on his staff:
“We respectfully request that, given this background, you coordinate further with the expert team at OSFM and revisit the statements in your October 22nd letter.”
It’s not looking good for a quick resolution of these issues.
Good: OCS oil and gas permitting and inspections appear not to be significantly affected by the govt shutdown to-date. 14 planning documents were approved on Oct. 21, and 37 drilling permits have been approved in Oct. (through 10/21).
Bad: This level of effort is not sustainable given limits on offsetting funds from fees, rentals, etc.
Ugly: The personnel who are performing these duties are not being paid during the shutdown. The longer the shutdown drags on, the greater the hardship on those individuals and their families. Shameful!
Warren Buffett’s proposal would stop deficit spending and address the root cause of shutdowns:
Buffett: “I could end the deficit in five minutes. You just pass a law that says that any time there’s a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for re-election.“
“Only in California! Newsom is blocking oil production off California’s coast from reaching their own refineries, driving gasoline prices even higher for Californians! Now, this oil production will have to be shipped elsewhere, lowering gas prices for other areas— just not for California! This is the opposite of common sense!”
BOE was a fan of Chris Wright long before he became Energy Secretary, and I agree that the resumption of Santa Ynez Unit production is economically desirable for California and the nation. However, his comment implies that OS&T processing and tanker transport is a realistic option, and I do not believe that is the case.
John Smith and I have discussed Sable’s OS&T announcement on a number of occasions, and we don’t see a reasonable path forward for this option. In addition to the significantly higher capital and operational costs and the need to acquire and retrofit a suitable floating production, storage, and offloading vessel (FPSO), the legal and permitting challenges could be even more complex than for the pipeline option (as daunting as that may sound).
The OS&T option would require a revised development and production plan, and the associated environmental review (almost certainly an EIS). An EIS would not favor this option, and the California Coastal Commission would surely rule that the OS&T/tanker alternative was inconsistent with their CZM plan. (Keep in mind that the SYU/OS&T production in the early 1980’s was approved prior to the passage of the Coastal Zone Management Act.) The Secretary of Commerce could overrule the Commission’s consistency determination, but legal objections to the override would likely delay the project for years and have a good chance of success.
Onshore processing and pipeline transportation using existing facilities is clearly the environmentally and economically preferable option. The only reasonable path forward for Sable or Exxon is to continue to pursue the onshore pipeline approvals. Federal attention should focus on jurisdiction over that pipeline, which is inherently an interstate line because it transports OCS production, and State actions that are blocking interstate commerce.
Finally, keep in mind that the SYU would still be producing today were it not for the entirely preventable pipeline rupture and the resulting Refugio oil spill. Plains Pipeline, the party responsible for this ugly incident, is no longer the owner, but that doesn’t comfort coastal residents; nor does it absolve the companies that transported their oil through the line from all responsibility.
The Refugio spill will be discussed further in an upcoming post.
As the above discussion demonstrates, the issue before the Court is not whether the specific work conducted by Sable was or is ultimately necessary or appropriate for pipeline safety. The issue before the Court is whether the Commission abused its discretion in issuing the April 10 Orders under the standards for review by petition for administrative writ of mandate.
Based on the foregoing analysis and a review of all of the arguments of the parties and the AR, the Court finds the Commission’s factual findings are supported by substantial evidence and that Sable has not met its burden to show an abuse of discretion by the Commission in issuing the April 10 Orders.
Accordingly, the petition for administrative mandate as set forth in the first cause of action of Sable’s FAP will be denied.
The road ahead for Sable continues to get rockier, and their share price took a major hit today.
The Snorre field is in 300-380m of water in the North Sea ~200 km west of Floro.
According to Reuters and others, Equinor will no longer pursue electrification of Snorre A and B, Heidrun, Aasgard B, and Kristin platforms, but still plans to proceed with projects at Grane and Balder fields.
A number of BOE posts since Jan. 2022 have questioned Norway’s electrification strategy for offshore platforms. Our reasons:
Most offshore platforms produce sufficient gas to support their power demands
Assuming gas that is not used to power a platform is marketed and consumed elsewhere, the net (global) reduction in CO2 emissions from electrifying offshore platforms is negligible. (Perhaps there is actually a small increase in net emissions given the power required to transport the gas to markets and the emissions associated with onshore power generation).
Offshore power demands are highly variable, especially when drilling operations are being conducted.
Gas turbines are reliable, and capable of responding to variable power demand. Excess generation capacity is typically provided.
Power from shore increases the cost of platform operations and could decrease ultimate recovery of oil and gas resources.
Per NPD, electrification of the shelf will increase electricity prices for onshore consumers and increase the need for onshore facility investment.
Gas turbines or diesel generators are still necessary to satisfy emergency power needs at the platforms.
Long power cables are vulnerable to damage (accidental or intentional), as are onshore power stations.
The reliability, cost, and cable vulnerability concerns have clearly been validated. The reality is that powering distant platforms from shore increases operating costs, safety risks, and onshore electricity prices with no net environmental benefit.
It also seems rather hypocritical for a major natural gas exporter to prevent offshore operators from powering their platforms with gas produced at their platforms.
In light of the fantastic Middle East news, planning for the redevelopment of Gaza is underway. The Gaza Marine Gas Field should be a high priority given the power generation and revenue potential.
The field, which was discovered in 1999 by British Gas (now part of Shell), is located approximately 30-36 km off the coast of Gaza in the eastern Mediterranean and has estimated natural gas reserves of ~ 1 Tcf.
Who should be licensed to develop the field? In June 2023, there was a proposed agreement between the Palestinian Authority and an Egyptian consortium led by state-owned Egyptian Natural Gas Holding Company (EGAS). A resurrection of this arrangement may align with Palestinian interests. EGAS has experience in Mediterranean gas projects including the giant Zohr field (see map below).
Other candidates for developing the Gaza Marine field (pure speculation):
Chevron would be a logical choice given their extensive eastern Mediterranean experience as a result of their acquisition of Noble Energy. However, there might be concerns about undue US and Israeli control of this important resource.
Regional giants like Saudi Aramco, Qatar Energy, and Abu Dhabi National Oil Company (ADNOC) would be good candidates.
Another interesting possibility might be Equinor, which is 2/3 owned by the Norwegian govt. Equinor seems to sometimes make socially desirable investments that are less profitable.
Some combination of the above companies might also be a possibility. In any event, it’s critical to manage this resource in a manner that best benefits the recovery effort.
As a result, on Sept. 29 Sable Offshore filed a declaratory judgement action against the State of California in Kern County. Sable is asking the court to confirm that the objectionable permitting provisions of SB 237 do not apply to their Las Flores Pipeline System.
Also, on Oct. 6 Sable filed a motion increasing the monetary damages in its ongoing case against the California Coastal Commission to $347 million. Sable asserts that their pipeline repair program was authorized by existing permits issued by the County of Santa Barbara under its Local Coastal Program and delegated Coastal Act authority.
These seem like good tactical moves on the part of Sable.
Although President Trump rescinded Biden’s action via executive order on January 21, 2025, the court proceeded with the case, acknowledging the high likelihood of similar actions in the future.
Judge Cain concluded that Biden departed from historical executive practice and exceeded statutory limits under OCSLA Section 12(a), which allows the president to “withdraw from disposition any of the unleased lands of the outer Continental Shelf,” but does not explicitly authorize permanent or irrevocable bans.
The judge emphasized that prior withdrawals were typically temporary or modifiable, and attempts to make them permanent encroached on congressional powers.
The ruling reinforces that OCSLA withdrawals must be revocable by future presidents, limiting executive power to bind successors on public lands disposition. The ruling should prevent future reliance on leasing bans.
Judge Cain’s decision is important because leasing bans should be carefully considered and should not be executed casually at the end of a term for purely political purposes.
Every deepwater platform installed since Feb. 2018, when Chevron installed its Big Foot tension leg platform (TLP), has been a Floating Production Unit (aka FPU or production semisubmersible). During that period, no new SPARs, FPSOs, or TLPs were installed.
The list (below) of these simpler, safer, greener FPUs has grown by two with the initiation of production at Shenandoah and Salamanca. Note the water depth range from 3725 to 8600 ft.
platform
operator
water depth (ft)
first production
Appomattox
Shell
7400
May 2019
King’s Quay
Murphy
3725
April 2022
Vito
Shell
4050
Feb 2023
Argos
bp
4440
April 2023
Anchor
Chevron
4600
Aug 2024
Whale
Shell
8600
Jan 2025
Shenandoah
Beacon
5840
July 2025
Salamanca
LLOG
6405
Sept 2025
The efficiencies achieved with the simpler platform designs combined with the high pressure (>15,000 psi) technology developed over the past 2 decades is facilitatihg production from the highly prospective Paleogene (Wilcox) deepwater fans. (For those interested in learning more about the geology, see the excellent presentation by Dr. Mike Sweet, Univ. of Texas, that is embedded in this post.)
All of the operators note the cost-saving similarities in their FPU designs. For example, Vito and Whale are very much the same despite the 4550′ difference in water depth.
Phil also believes SYU production would reduce natural seepage: “UCSB and State Lands Commission studies (Quigley, Luyendyk, Hornafius, Peltonen, and others) have shown that when oil production is active, reservoir pressure is reduced and natural seepage declines by up to 50%. That means: •Cleaner beaches (less tar and oil) •Cleaner ocean surface (fewer sheens) •Healthier marine life with reduced chronic stress“
Note that those studies are specific to Platform Holly and the Coal Oil Point area. To the best of my knowledge, no studies have associated SYU production with a reduction in natural seepage.
While Platform Holly may be a negative spillage facility (i.e. Holly’s seep reduction may significantly exceed the platform’s production spillage), this type of seepage reduction has not been demonstrated at other platforms. Decisions on offshore exploration and development should be driven by the economic, energy security, and environmental benefits. To the extent that production reduces natural seepage, all the better. However, seepage reduction is not a primary reason for producing offshore oil and gas.
Option 1 (use of existing onshore infrastructure) is preferable from cost, air emissions, spill risk, State and local revenue, and regional energy supply standpoints. This is the only option that makes sense despite the enormous permitting challenges.
Option 2 (floating processing facility and tankers) would literally be an “in your face” act of defiance given the coastal visibility of the offshore facilities. Supporters of this option should be aware that there was no Coastal Zone Management Act when Exxon produced from Platform Hondo (the only SYU platform at the time) to the Offshore Storage and Treatment (OS&T) vessel in the 1980s. An EIS would not favor this option, and the California Coastal Commission would surely rule that this option was inconsistent with their CZM plan. The Secretary of Commerce could overrule the Commission’s decision, but legal objections to the override would seem to have a good chance of success.
The only reasonable path forward is to do the right thing and continue to pursue the State pipeline/onshore approvals. Although these approvals are substantively warranted, more litigation is probably inevitable. It will be far better to defend a good project (option 1) than a contrived workaround (option 2).
Bud's Offshore Energy (BOE) 