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Archive for the ‘Offshore Energy – General’ Category

GoM oil production virtually unchanged for 5 consecutive months

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , on September 4, 2024| 5 Comments »

EIA has posted the June 2024 US production data. Gulf of Mexico production was remarkably flat from February through June, with a maximum deviation of only 2.0% (FEB vs. APR) and a deviation of only 0.5% from the beginning of this 5 month period to the end. Looking at the historical EIA data, this is about as stable of a 5 month period as I could find. Presumably, production from the new deepwater facilities is offsetting declines elsewhere as anticipated.

Unfortunately, the production growth forecasted by BOEM is not being realized. BOEM’s 2024 production forecast of 2.013 million bopd will likely be more than 200,000 bopd too high. Their forecast of >2 million bopd through 2027 is increasingly doubtful.  These production forecasts contributed to (or were an excuse for) unprecedented leasing policies intended to prevent production from rising too high for too long.

Per ONRR data, the Gulf of Mexico continued to be the top oil producer for Federal lands in 2023. An additional 72.7 million bbls were produced on Native American lands. New Mexico, which has experienced significant Permian basin production growth, ranked second. The Texas Permian was the dominant US oil producer, but that production is almost exclusively on private lands (a big factor in the Permian success story).

Location (Federal lands)2023 production (bbls)
Gulf of Mexico680,548,975
New Mexico409,987,014
Wyoming47,232,043
North Dakota43,225,104
Other33,635,796

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Ruling by a Federal judge in Maryland jeopardizes the Gulf of Mexico oil and gas program. Could there be unintended consequences for the wind program?

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Offshore Wind, Regulation, tagged , , , , , , , , on September 3, 2024| Leave a Comment »

Rice’s whale, Gulf of Mexico

In response to a lawsuit filed by the Sierra Club et al, a Federal judge in Maryland vacated a 2020 biological opinion by the National Marine Fisheries Service (part of NOAA) that addressed risks to endangered species, most notably Rice’s whale, from oil and gas operations in the Gulf of Mexico. The decision by Federal Judge Deborah Boardman, who was appointed to her position in 2021, is attached.

Judge Boardman’s ruling is effective on Dec. 20, 2024. After that date, no new GoM leases may be issued and no new operating plans may be approved pending a new biological opinion. Existing GoM operations could also be affected. In other words, the ruling could have unprecedented effects on the OCS oil and gas program. (If you wonder how a Maryland judge can issue a ruling that could have major consequences for Louisiana and Texas, it is presumably because NOAA’s headquarters office is in Silver Spring, MD.)

The biological opinion process will likely be lengthy given the political considerations in an election year and the prospects for related litigation.

The judge’s ruling could also affect wind leasing in a manner that was perhaps unforeseen. Offshore wind leasing, which the plaintiffs strongly support despite the risks to the critically endangered North Atlantic Right Whale, could be delayed. Per a provision in the “Inflation Reduction Act,” no offshore wind leases may be issued after 12/20/2024, the one year anniversary of the last oil and gas lease sale (no. 261). Ironically, this is the same date as the effective date of the judge’s ruling.

The judge’s decision will likely further delay the next oil and gas lease sale (no. 262) well into 2025 or later, and extend the pause in issuing wind leases that begins on 12/20/2024. Perhaps with that in mind, BOEM has been forging ahead with wind auctions despite the troubling Vineyard Wind blade failure, economic challenges for the wind industry, and growing opposition from coastal residents. An editorial by the publisher of Nantucket Magazine expresses concerns that should not be overlooked in the rush to auction wind leases.

(More on a new biological opinion related to the Right Whale in a future post.)

wsj article

204_memorandum-opinion-8.19.24Download

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Director Kevin Sligh is departing BSEE. He will be replaced by Kati Kovacs.

Posted in energy policy, Offshore Energy - General, Uncategorized, tagged , , , , on August 30, 2024| Leave a Comment »

Kevin Sligh
Kati Kovacs

Excerpts from US Dept. of the Interior Announcement

WASHINGTON — The Department of the Interior today announced that Bureau of Safety and Environmental Enforcement (BSEE) Director Kevin M. Sligh will depart his position effective September 6, after serving in the role for the past two and a half years. Kathryn (Kati) E. Kovacs, who serves as Deputy Assistant Secretary for Land and Minerals Management, will assume leadership of the bureau.

A cornerstone of Director Sligh’s tenure was a focus on the enhancement of BSEE’s emergency response capabilities. This included the first capping stack exercises in a decade, critical high-stakes operations designed to demonstrate the bureau’s readiness to rapidly seal off uncontrolled well blowouts on the Outer Continental Shelf (OCS). In addition, BSEE implemented improvements to its capabilities at its National Oil Spill Response Research and Renewable Energy Test Facility (Ohmsett), where new technologies and training are helping the United States and the international community better plan for and respond to oil spills and advance new renewable energy science and technologies. These efforts were essential in testing and proving BSEE’s ability to manage potential offshore incidents effectively, ensuring that the bureau and industry responders are equipped to act swiftly and efficiently if needed.

In her current role, Kovacs has had oversight over BSEE, focusing on their regulatory agenda. Thanks to both Kovacs’ and Sligh’s leadership during the Biden-Harris administration, the Department made significant progress in expanding its oversight of renewable energy sources, including the enactment of a final rule that transferred safety and environmental compliance responsibilities for offshore renewable energy from the Bureau of Ocean Energy Management (BOEM) to BSEE. The rule recognized that the scopes of the bureaus’ roles and responsibilities had matured since they were created more than a decade ago following the Deepwater Horizon tragedy and supports the Department’s commitment to independent regulatory oversight and enforcement in the renewable energy program.

Prior to joining the Department in April 2022, Kovacs was a professor of law at Rutgers University. Kovacs’ public service career also includes 12 years in the Department of Justice’s Environment and Natural Resources Division, Appellate Section and service as a senior advisor to the director of the Bureau of Land Management in 2016. Kovacs also served in the Baltimore City Law Department as an attorney and clerked for former Chief Judge of the Maryland Court of Appeals Robert C. Murphy. She is a graduate of Yale University and the Georgetown University Law Center.  

Interestingly, on 18 Sept., Ms. Kovacs will be making a presentation at the Case Western Reserve School of Law entitled Regulating Energy and Land Management at the Department of the Interior. There is no charge to register.

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Floating wind turbine to be installed at Total’s Culzean field

Posted in climate, energy policy, Offshore Energy - General, Offshore Wind, UK, tagged , , , , , on August 30, 2024| 2 Comments »

Culzean facilities

Total has announced plans to install a 3 MW floating wind turbine 2 km west of the Culzean platform, 220 km off the coast of Scotland. This turbine, expected to be fully operational by the end of 2025, will supply around 20% of Culzean’s power requirement. This project is interesting from an R&D standpoint, but makes little sense otherwise. Here’s why:

  • Culzean is a gas condensate field that is capable of meeting 5% of the UK’s gas demand. There is thus ample produced gas to reliably and economically power the platform.
  • Gas will be required to meet 80% of the power requirement even after the wind turbine is operating.
  • In light of installation, maintenance, and decommissioning costs for the floating turbine, the cost of the intermittent wind power will no doubt be much higher than the cost of the power generated by platform gas.
  • Some tax benefits may be associated with adding the wind turbine, but this won’t affect the real costs, other than to perhaps make them higher.
  • In addition to affecting profitability, higher operational costs could reduce the ultimate recovery of gas and condensate from the field.
  • Gas not consumed at the offshore facilities will be marketed and consumed onshore, so there is essentially no net reduction in global CO2 emissions.
  • As JL Daeschler reminds me, the floating turbine complicates operations and could create safety issues: obstruction for helicopters and supply boats to avoid, trenching and installing power cable in a spare “J” tube, and feeding power to an electrical distribution system in accordance with standards and platform specifications. As JL notes, “I think we have plenty to do offshore already!”
  • And what if there are mooring failures and the turbine drifts toward the platforms? Turbine blade failures?
  • Bottom line: adding costs and risks for no apparent benefit.

See a related post on platform electrification in Norway.

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Santa Ynez Unit: 500+ million barrels, 3 major platforms, and zero production since 2015. Is production restart a “pipe dream?”

Posted in California, Offshore Energy - General, pipelines, tagged , , , , , on August 26, 2024| 2 Comments »

Earlier this year John Smith correctly commented that a Santa Ynez Unit (SYU) production restart in 2024 was not possible. Last month, BOE reported on the regulatory “catch 22” facing Sable Offshore, the current operator under an agreement with Exxon.

An assessment prepared for Hunterbrook Capital draws the same conclusions regarding the prospects for production, calling the restart “a pipe dream” (presumably the pun was intended given the pipeline permitting quagmire). Hunterbrook’s chart (pasted below) illustrates the regulatory labyrinth facing Sable.

Hunterbrook has also flagged Sable’s ability to continue as a “going concern.” That may be a valid concern, but Sable’s success is very much in Exxon’s best interest. Exxon must have evaluated Sable and been comfortable with their management. Otherwise, they wouldn’t have made the deal.

Does Exxon want the massive SYU headache to revert back to their portfolio, as provided for in their agreement with Sable, if production doesn’t restart by January 1, 2026? Unless Exxon thinks they have a better option than Sable, they will presumably be flexible about the deadline.

Meanwhile, a judge denied the temporary restraining order requested by Sable to prohibit release of redacted portions of their oil spill contingency plan. Sable had argued that revealing “trade secrets” and specific locations and vulnerabilities of the pipelines could pose a “threat to national security.”

The Santa Barbara Independent also alludes to “pending litigation with Santa Barbara County over automatic shut-off valve permits.” Although litigation would seem likely if the County continues to deny permits for valves required by the Fire Marshall, BOE was unable to confirm any such litigation plans.

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Another GE Vernova turbine blade failure at Dogger Bank

Posted in accidents, Offshore Energy - General, Offshore Wind, tagged , , , on August 23, 2024| Leave a Comment »

The operator of the wind farm released this short statement yesterday (8/22/2024):

We are aware of a blade failure which occurred this morning on an installed turbine at Dogger Bank A offshore wind farm, which is currently under construction. In line with safety procedures, the surrounding marine area has been restricted and relevant authorities notified. No one was injured or in the vicinity at the time the damage was sustained.

We are working closely with the turbine manufacturer, GE Vernova, which has initiated an investigation into the cause of the incident.

Further updates will be issued in due course as more information becomes available.

There have thus been at least 3 GE Vernova Haliade-X turbine failures at new offshore wind farms in 2024 – two at Dogger Bank and one at Vineyard Wind.

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Update on the high potential Orphan Basin well

Posted in Canada, drilling, Offshore Energy - General, tagged , , , , , on August 23, 2024| Leave a Comment »

To find the sole exploratory well being drilled in the vast North American Atlantic, you have to exit “wind-only” US waters, head NE to St. John’s, NL (advancing your watch by 1.5 hours 😉), and transit another 317 miles NE to the Stena DrillMAX working for Exxon in the Orphan Basin.

The latest (8/20/2024) CNLOPB report (below) is that operations are ongoing. The well was spudded 3 months ago. That is about all they can disclose without compromising confidentiality. Even seemingly innocuous information like the current and projected well depth provides the opportunity to speculate about geologic conditions and current well activities.

We can assume that there have been no safety or environmental incidents to date, because the CNLOPB does a good job of posting such information in a timely manner.

Previous posts on this well

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Cool story!

Posted in Guyana, Offshore Energy - General, Uncategorized, tagged , , , on August 22, 2024| Leave a Comment »

From Oil Now Guyana:

“In the evolving landscape of Guyana’s oil and gas industry, few have managed to carve out a niche quite like Koaito Grant. A name synonymous with corporate photography, Grant’s journey from discovering his passion for capturing moments to becoming a sought-after photographer within the oil and gas sector is as inspiring as it is instructive.“

So true: “It’s the best feeling when a client reaches out and says you were very highly recommended by this or that person.” His professionalism and work ethic have been key differentiators. “I have a client that always asked if I was Guyanese because I’m always early for all projects and activities.”👍 💯

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Guyana Stabroek dispute: Exxon claims the Chevron-Hess deal is “an asset acquisition disguised as a merger.”

Posted in Guyana, Offshore Energy - General, tagged , , , , , , , , on August 22, 2024| Leave a Comment »

Reuters has published an interesting article on the Exxon/CNOOC vs. Chevron/Hess dispute scheduled for arbitration next year in Paris. According to Reuters (emphasis added):

“Getting the panel to consider the appraised value is central to Exxon’s claim that the deal is an asset acquisition disguised as a merger. Exxon believes the Guyana asset is so valuable that the merger would trigger a change of control and give Exxon and CNOOC a right of first refusal to the asset sale, the people said.“

The Exxon argument implies that Hess’s only major asset is its share of Stabroek, which is hardly the case. Hess’s 30% Stabroek share is without question an important asset with great long-term potential, but Hess is also a major player elsewhere, most notably in the Bakken formation in North Dakota and the Gulf of Mexico. Implying that Hess was a single asset acquisition is thus misleading:

  • In Q4 of 2023, Hess produced 194,000 boepd in the Bakken formation vs. a Stabroek share of 128,000 bopd.
  • In 2023, Hess produced 20 million barrels of oil in the GoM and 40 bcf of gas making them the 8th highest oil producer and 7th highest gas producer.
  • Hess acquired 20 GoM leases in Sale 261, ranking first in total high bids ($88 million) among all participants.
  • Chevron and Hess GoM assets have significant potential for synergy. The combined company would be the 3rd largest GoM oil producer (behind Shell and bp) and the second largest gas producer (behind only Shell).

Exxon’s ally in this dispute is state owned China National Offshore Oil Corporation. CNOOC acquired their 25% Stabroek share when they purchased Nexen, a Canadian company (sound familiar?). Both the Canadian and US governments had reservations about this acquisition and nearly nixed the deal.

This dispute will continue to smolder given the delay in the arbitration hearings until May 2025. As previously mentioned, I believe the Government of Guyana should have intervened. I’m all for companies settling their disputes privately, but this dispute is over Guyanese resources, and the protracted delay could have implications for Guyana.

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The 5 new deepwater GoM platforms are now (or will soon be) producing. What’s next?

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , , , , , , , , , on August 21, 2024| Leave a Comment »

Shell Vito
Chevron Anchor
bp Argos
Murphy King’s Quay
Shell Whale

Four of the five simpler, safer, greener deepwater platforms featured on this blog are now producing. The 5th platform (Whale) is on location and scheduled to begin production later this year.

platformoperatorfirst production
King’s QuayMurphyApril 2022
VitoShellFeb 2023
ArgosbpApril 2023
AnchorChevronAug 2024
WhaleShelllate 2024

These platforms are in 4000 to 8600′ of water, are expected to reach peak production rates of 100-150,000 boe/day, and have favorable emissions characteristics on a per barrel basis.

This is all good, but what is next? Will technological advances once again sustain GoM production? The short answer appears to be yes!

The efficiencies achieved with the simpler platform designs combined with the high pressure (>15,000 psi) technology developed over the past 2 decades will facilitate 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 below.)

Chevron’s Anchor is the first deepwater, high-pressure development. Three similar deepwater hub platforms (table below) will begin production over the next 5 years. These host platforms will also facilitate additional production from nearby fields. Each will have production capacities of approximately 100,000 boe/day. Note the long lead times in achieving first production given the technological issues that had to be evaluated and addressed.

platformoperatordiscovery datefirst production
Kaskidabp20062029
SpartaShell20122028
ShenandoahBeacon20092025

Wood Mackenzie sees these high pressure projects as the key to sustaining GoM production rates. Their projections for 2024 and 2025 seem optimistic based on 2024 YTD data, which adds to the importance of the projected new production.

Related: Movin’ on up to 20,000 psi BOP equipment

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