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Archive for the ‘Offshore Energy – General’ Category

After 3 months of investigation, only a small connector leak has been identified in or near the Main Pass Oil Gathering system. According to the Coast Guard, that leak was not the source of the large November spill (pictured). The absence of findings raises many questions:

  • Is the Main Pass Oil Gathering system still being implicated? Surrounding pipelines?
  • Was a vessel or some other source responsible?
  • Were sheen samples fingerprinted and are those results definitive?
  • Given that the source has not been identified, what was the basis for the large (and rather sensational) spill volume estimate? The sheen was not indicative of a spill of that magnitude.
  • How much production has been shut-in since the slick was first identified? November production data indicate a GoM-wide oil production decline of ~80,000 bopd decline from September.

Given the public claims that were made about the size and potential implications of this spill, the authorities need to be more forthcoming regarding their findings to date.

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In light of the surge in art vandalism, admirers of “Rig at Sunset” have expressed concern about this priceless and symbolic masterpiece.😉

“Rig at Sunset”

Rest assured that “Rig at Sunset” is not being targeted. Climate activists believe the painting is disturbingly visionary and is thus socially important. Even those who are less appreciative of great artwork are reluctant to damage “Rig at Sunset,” fearing that their vandalism might actually improve its quality. So friends of this beloved masterpiece have nothing to fear! 😉

If you are unfamiliar with “Rig at Sunset,” here is a brief summary of the history:

“Rig at Sunset” was painted nearly 50 years ago by a US Geological Survey (USGS) employee who chose to remain anonymous. Initially, the masterpiece was presented to USGS (later MMS) engineers and scientists who had made important contributions to the offshore oil and gas program. Understandably, the intended recipients were so humbled by the magnificence of the painting that they could not accept it. As the painting grew in value and international prominence, framed copies were presented to retirees and the original painting was kept at a secure, undisclosed location.

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The CNLOPB has announced contingent resources of 340 million bbls for the Cambriol discovery which would be co-developed with 2 nearby discoveries as part of Equinor’s Bay du Nord project. Per CNLOPB estimates, this brings the Bay du Nord resource total to 1.132 billion bbls. Equinor has announced that 2 exploratory wells will be spudded this summer. Positive results would further strengthen the case for Bay du Nord development.

contingent resources per CNLOPB (million bbls)
Bay du Nord407
Cappahayden385
Cambriol340
project area total1132
“Contingent Resources” are volumes of hydrocarbons, expressed at 50% probability, assessed to be technically recoverable that have not been delineated and have unknown economic viability.

Meanwhile, Terra Nova production is ramping up after a long hiatus for FPSO refurbishment, remarkable Hibernia has produced more than double the original resource estimate of 520 million bbls and is still producing about 60,000-70,000 bopd, and Hebron is impressively producing about 120,000 bopd on average.

There is indeed reason for optimism about North America’s only Atlantic production in what is arguably the continent’s (world’s?) most challenging operating environment.

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Background:

  • Last summer, Trident Energy exercised multiple options for the use of the Island Innovator semi-submersible (pictured above), extending the duration of the Equatorial Guinea contract to approximately 230 days.
  • The rig arrived in Equatorial Guinea in Nov. 2023.
  • On 7 Feb, a Trident team briefed Equatorial Guinea Minister of Mines and Hydrocarbons Antonio Oburu Ondo about problems with the Innovator’s BOP system. Apparently, Island Drilling, the rig owner, was not present at that meeting.
  • Mr. Ondo subsequently reported that the BOP had serious problems and failed to respond to control system commands.
  • Trident terminated the rig contract on safety grounds.
  • Island has publicly responded that (1) the Trident statements are inaccurate, (2) there have been no critical safety incidents, (3) the BOP has been checked and tested by the OEM representative on the rig and declared safe and ready for operations, and (4) they will challenge the contract termination.

Questions & comments:

  • Since the rig had just arrived on location, the BOP issues were presumably identified during onboard stump testing. Were corrective measures discussed? Why was contract termination deemed necessary?
  • Island’s statement indicates that the rig was tested with the OEM representative present. Presumably those tests were in accordance with API S53 or the ISO equivalent.
  • Had inspections and maintenance also been conducted in accordance with the standard? Did Trident inspect the rig and review maintenance and testing records before signing the contract?
  • Have other companies had similar issues with the Innovator? None have been identified in my web search.
  • Was a bridging document in place to address differences in Trident/Island management systems? If so, what does that document say about BOP inspection and oversight.
  • Why was the drilling contractor not present at the meeting with the Equatorial Guinea authorities? Was Island advised that the contract was being terminated prior to that meeting? Did the authorities speak with Island to hear their side of the story?
  • Does the contract provide for mandatory arbitration in the event of such disagreements?
  • Could other factors have influenced the cancellation decision? I was involved with an arbitration case involving an operator that used safety issues as the reason for terminating an expensive long-term rig contract. The arbitration panel ruled in favor of the drilling contractor resulting in a very large payment to the rig owner. Ironically, serious safety violations by the operating company (but not the drilling contractor) were identified during the arbitration process.
  • Island Drilling is a Norwegian Company with an experienced management team. The Innovator has conducted operations in the Norwegian and UK offshore sectors. These factors typically imply a strong commitment to safe operations.

Hopefully, we’ll be able to learn more about the specifics of this dispute in the near future.

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Short answer: Yes!

Ocean Ranger sign
recovered Ocean Ranger sign

A good article and video on the topic are linked. During my last visit to St. John’s, the late Charles Smith gave me an excellent tour of the Marine Institute that is featured in the video. The Institute is an outstanding training facility that has reduced operating risks offshore Newfoundland and elsewhere.

Posts about the Ocean Ranger tragedy.

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Exxon’s Santa Ynez Unit facilities are now owned by Sable Offshore, a company headed by offshore production veteran Jim Flores. Apparently Exxon had suffered enough, and Flores accepted the challenge. Sable hopes to restart production in July, but has some big permitting hurdles to clear before that can happen.

Flores and his company are indeed the underdogs in this story. Pending are the pipeline CBAT (coastal best available technology) plan being reviewed by the Office of the State FIre Marshall and approvals by Santa Barbara County. Administrative and legal appeals are a given.

Flores is saying the right things and seems undaunted by the massive challenge. He may just pull this off. We’ll be watching.

Sable Offshore Corp. is going to do it right!

Our proven track record of responsible operations in Santa Barbara County at Point Arguello and Point Pedernales fields over the past couple of decades reflects our commitment to safe, reliable operations at SYU.

Jim Flores to NoosHawk

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Less than a month ago  BSEE issued an alert that addressed chronic and persistent helideck safety issues. This week BSEE again issued an alert (attached) following yet another near-miss. Per BSEE:

After receiving clearance for landing at an offshore helideck, the aircrew noticed upon landing that a section of the helideck’s safety skirting was not properly secured to the support structure and was blowing upward and downward due to the helicopter’s rotor downwash. This created an imminent hazard to safe helicopter operations with potentially catastrophic results.

Of course, we are still waiting for the NTSB report on the tragic helideck incident at the end of 2022 that killed 4 workers.

The latest near-miss is yet another reminder that the muddled regulatory regime for helideck safety needs to be addressed. The most recent Coast Guard – BSEE MOA for fixed platforms only added to helideck regulatory uncertainty by assigning decks and fuel handling to BSEE and railings and perimeter netting to the Coast Guard. What about safety skirting? As is the case with all safety regulations, a holistic, systems based approach to helideck safety oversight is needed.

To their credit, BSEE has been addressing these helideck issues with safety alerts. Since they are bearing the responsibility for these incidents, they should have the unambiguous authority needed to take enforcement actions regardless of which helideck elements are involved.

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Expected appeals by API (first attachment) and Earth Justice et al (second attachment) were filed on 12 Feb, 60 days after Secretary Haaland approved the 5 year plan and thus the first day appeals could be filed pursuant to 43 U.S. Code § 1349.

The statute (language below) requires that leasing program appeals be filed in the DC Court of Appeals. API would have undoubtedly rather filed in Louisiana while Earth Justice is likely content with the DC venue.

43 U.S. Code § 1349 (c)(1) Any action of the Secretary to approve a leasing program pursuant to section 1344 of this title shall be subject to judicial review only in the United States Court of Appeal for the District of Columbia.

The filings don’t include any arguments except for API’s general assertion that “the Record of Decision and Approval is arbitrary, capricious, and not in accordance with law.”

Earth Justice presumably filed for defensive reasons given that the 5 year plan has the fewest lease sales in history and would seem to be favorable to their point of view.

API will likely contend that the plan is not balanced as require by the statue:

43 U.S. Code § 1344 (a)(3)The Secretary shall select the timing and location of leasing, to the maximum extent practicable, so as to obtain a proper balance between the potential for environmental damage, the potential for the discovery of oil and gas, and the potential for adverse impact on the coastal zone.

We’ll see how this plays out.

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In 1980, Don Kash, the great leader who was Chief of the Conservation Div. of USGS (the current equivalent of the Conservation Div. is BSEE plus the resource evaluation functions in BOEM plus some royalty management functions now in ONRR) asked me to move to Cape Cod to head a new office responsible for overseeing exploratory drilling operations on Georges Bank. We established a small office in an old maintenance building at Barnstable Municipal Airport in Hyannis. The space was decidedly unglamorous but functional and ideal for helicopter transit to the offshore rigs.

Karen was a Cape Cod artist and art teacher at Nauset Middle School in Orleans (for baseball lovers, that is where the Orleans Firebirds of the famous Cape Cod League play). Some of her teacher friends were connected to a running club I belonged to, and unknown to me at the time, Karen had designed my beloved Provincetown Dunes Run t-shirt.

We had another connection in that we had bought condominiums built by the same company. Hers was in Orleans and mine was in Hyannis. A couple that owned a condo in each project got to know both of us and thankfully introduced us. A year and many great experiences later we were married at the historic Captain Linnell House in Orleans.

Interestingly, Karen’s mother was an opponent of Georges Bank drilling until she realized that her only daughter would be leaving Cape Cod when the drilling ended. She then changed her position, proving once again that all politics is local 😀

I was very lucky to have spent 4 challenging and exciting years on Cape Cod. The Georges Bank drilling story was uniquely remarkable for me and led to a daughter born at my next duty station (Santa Maria, CA) and 5 grandchildren (good ratio 😀). While I was particularly fortunate, I think the Georges Bank drilling experience was generally positive for all that participated including the State and local officials, Woods Hole scientists, media, industry personnel, commercial fishermen, and even the Greenpeace protesters who were on the scene 155 miles southeast of Nantucket!

Happy Valentine’s Day!

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Energy experts like Dan Yergin have a different, and far more credible view. Yergin explains that energy transitions don’t happen on command, noting that the world uses almost three times as much coal today as in the 1960’s when oil finally surpassed coal as the world’s primary energy source.

Oxy CEO Vicki Hollub’s recent remarks should serve as a reality check for the 5 Year Plan authors and their counterparts elsewhere in western governments. More oil and gas exploration and production are needed, not less. Leading Oxy investor Warren Buffet agrees.

Crude reserves are being found and developed at a much slower pace than they’ve been in the past. Specifically, she said the world has only newly identified less than half the amount of crude it’s consumed over the course of the past 10 years. Given the current trends, this means demand will exceed supply before the end of 2025.

Oxy CEO Vicki Hollub per the Motley Fool

Recent trends in the Gulf of Mexico, where Hollub’s Anadarko unit is one of the more active and successful operators, reflect Hollub’s concern. Note below the sharp decline in discoveries, as determined by BOEM, over the past 20 years. Effective development of older discoveries and improved resource recovery practices are sustaining GoM production, but declines are inevitable without consistent leasing and increased exploration.

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