When can we expect a statement from Exxon on their intentions for the 94 blocks they acquired? Those 94 blocks (31% of the entire sale) are the elephant in the room, yet we have heard nothing from the company. Given Exxon’s apparent interest in using these leases for CCS purposes, and the tax credits and Federal funding associated with CCS projects (as per the Infrastructure Bill and Inflation Reduction Act), clarification regarding Exxon’s intentions would seem to be appropriate.
Contrary to some post-Macondo commentary, well control has always been the highest priority of the US offshore regulatory program. This was the case regardless of the administration, party in power, responsible bureau, or politics of the day. The first specific well control requirements were in OCS Order No. 2 (Drilling) which dates back to 1958.
Continuous improvement must always be the objective; hence the many revisions to these regulations over the years.
BSEE’s recently proposed Well Control Rule includes updates that should be reviewed by all who are interested in drilling safety and well control regulations. I will be submitting comments to the docket and will post some of those comments on this blog. I hope others take the time to review the relatively brief BSEE proposal and submit comments
Industry comments are typically consolidated which limits the technical discussion and diversity of input. Consensus industry recommendations tend to be less rigorous from a safety perspective than some companies might submit independently. There are also far fewer operating companies than there were in the past. Most of you surely remember Texaco, Gulf, Getty, Amoco, Arco, Mobil, Unocal, and other important offshore operators that have merged into even larger corporations. This further limits the diversity of input.
Of course, the operating company is fully accountable for any safety incident at an OCS facility, including well control disasters like the 1969 Santa Barbara and 2020 Macondo blowouts. This should be ample incentive for comprehensive safety management programs. Unfortunately, risk management, culture, and human/organizational factors are complex, and good intentions don’t always lead to good results.
Although the operating company is legally accountable, the regulator and industry as a whole also bear some responsibility for safety performance. What is the purpose of the regulator if not to prevent safety and environmental incidents? Also, the industry can do better in terms of assessing data, updating standards, and publicly calling out poor performance.
On a more positive note, the offshore industry has collectively had some spectacular well control successes. Perhaps most impressive is this: Prior to 2010, 25,000 wells had been drilled in US Federal waters over the previous 25 years without a single well control fatality, an offshore safety record that was unprecedented in the U.S. and internationally. That number of offshore wells over a 25 year period is by itself a feat that will never again be achieved in any offshore region worldwide. The well control safety record makes that achievement extraordinary.
Per Executive Order 14082, September 12, 2022, yet another White House office and task force has been established to coordinate (direct?) the 26 Federal Departments (plus many bureaus and offices) with energy and climate responsibilities.
Sec. 3. White House Office on Clean Energy Innovation and Implementation. There is hereby established the White House Office on Clean Energy Innovation and Implementation within the Executive Office of the President, which shall coordinate the policymaking process with respect to implementing the energy and infrastructure provisions of the Act and other essential initiatives. The White House Office on Clean Energy Innovation and Implementation shall have a staff headed by the Senior Advisor for Clean Energy Innovation and Implementation; shall have such staff and other assistance as may be necessary to carry out the provisions of this order, subject to the availability of appropriations; and may work with established or ad hoc committees and interagency groups.
Sec. 4. ‘‘There is hereby established a National Climate Task Force (Task Force). The Task Force shall be chaired by the Senior Advisor for Clean Energy Innovation and Implementation. The National Climate Advisor shall serve as Vice Chair.’’
Task Force Membership:
(i) the Secretary of the Treasury; (ii) the Secretary of Defense; (iii) the Attorney General; (iv) the Secretary of the Interior; (v) the Secretary of Agriculture; (vi) the Secretary of Commerce; (vii) the Secretary of Labor; (viii) the Secretary of Health and Human Services; (ix) the Secretary of Housing and Urban Development; (x) the Secretary of Transportation; (xi) the Secretary of Energy; (xii) the Secretary of Education; (xiii) the Secretary of Homeland Security; (xiv) the Administrator of the Environmental Protection Agency; (xv) the Director of the Office of Management and Budget; (xvi) the Director of the Office of Science and Technology Policy; (xvii) the Administrator of the Small Business Administration; (xviii) the Chair of the Council on Environmental Quality; (xix) the Assistant to the President for National Security Affairs; (xx) the Assistant to the President for Domestic Policy; (xxi) the Assistant to the President for Homeland Security and Counterterrorism; (xxii) the Assistant to the President for Economic Policy; (xxiii) the Administrator of the National Aeronautics and Space Administration; (xxiv) the Chief Executive Officer of the Corporation for National and Community Service; (xxv) the Administrator of General Services; (xxvi) the White House Infrastructure Coordinator; and (xxvii) the heads of such other departments, agencies, and offices as the Chair or Vice Chair may from time to time invite to participate.’’
“The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs.“ (Interpretation: offshore oil and gas production must be throttled down to correspond with the climate office’s energy fantasies.)
The Safety Award for Excellence (SAFE) program was initiated in 1983 by Lowell Hammons, a senior executive in the Minerals Management Service, the OCS safety regulator at the time. The objective was “to promote interest in and recognition of operational safety and environmental protection on the OCS.” In that regard, the program was highly effective.
Companies could not self-nominate or be nominated by other companies. District winners were selected by MMS district personnel based on compliance and incident data, and inspector evaluations. The national SAFE winner was selected using data and input from all districts. Companies rightfully took great pride in the recognition, and the SAFE program helped drive the development of safety management systems and safety culture initiatives.
Attached is a list of the award winners for 1983 and 1984. Also note the recognition for the Salenergy jackup crew members who rescued injured and endangered personnel from a distressed vessel. Such heroism was not uncommon.
Pursuant to section 50264(b) of the Inflation Reduction Act of 2022 (Pub. L. No. 117-169), Congress has directed BOEM to award leases to the highest valid bidders in Lease Sale 257, which was held on November 17, 2021. Consistent with this direction, BOEM has accepted 307 of the highest valid bids, totaling $189,888,271.
A total of 33 companies participated in the lease sale, generating $191,688,984 in high bids for 308 tracts covering 1.7 million acres in federal waters in the Gulf of Mexico. One bid was rejected for not providing the public with fair market value.
We need exploration and new discoveries to maintain the production of oil and gas over time, which is important both for Norway and Europe. The applications in TFO 2022 show very good interest among the companies active on the Norwegian continental shelf in looking for new petroleum resources. This is very gratifying, says Oil and Energy Minister Terje Aasland (Ap)
Some of the lesser known Sale 257 bidders are intriguing. These companies have a clear and refreshing sense of identity and mission. Observations:
Red Willow Offshore LLC, high bidder on 5 blocks, is a private oil and gas exploration and production company owned by the Southern Ute tribe and headquartered in Ignacio, Colorado. Great mission statement: “Our mission is to create value for the Southern Ute Indian Tribe by exploring for and developing oil and gas resources while prioritizing safety, fiscal responsibility and respect for the environment and Tribal Cultural resources.”
Otto Energy was high bidder on 1 block. If you wonder about the company name, Otto Energy was known as Ottoman Energy until 2006. Otto’s vision is to achieve outstanding business delivery as a partner of choice in the Gulf of Mexico. Their production base includes the South Marsh Island Block 71 field and interest in the Green Canyon 21 Bulleit field.
DG Exploration focuses on new play concepts for the mature continental shelf of the US Gulf of Mexico. They were the high bidder on 14 blocks. According to DG, these blocks control 5 of the best prospects in their portfolio. All the blocks are located in a prolific part of the basin where new high potential exploration has been absent since the early 1990s. By bringing in new technology and ideas, they aim to fundamentally reset the creaming curve for the Louisiana shelf.
Juneau Oil and Gas was high bidder on 4 blocks. Juneau was formed to focus a world class team of professionals on exploring the shallow waters of the Gulf of Mexico. Juneau Oil & Gas has returned to the roots of the founding members’ past success at an opportune and strategic time in the ever-evolving oil and gas industry. Juneau correctly notes that “lease acquisition costs and royalty rates in the shallow water Gulf of Mexico are low relative to other basins, and there has been little competition for these leases after the steep and sustained decline in activity over the past decade.”
Focus Exploration LLC was high bidder on 7 blocks. Like other GoM shelf companies, Focus’ principals created the company with the purpose of identifying and participating in high quality, low to moderate risk oil and gas projects.
CSL Exploration LP was high bidder on 1 block. CSL Capital Management, L.P. is an SEC registered investment firm focused on energy services and equipment businesses. Headquartered in Houston, the CSL team has deep sector expertise in the energy industry and takes a hands-on approach to investments, relying on organic growth and strategic thinking to generate investment success.
Blackcomb Energy LLC was the high bidder on 1 block. Information on this company is limited, but it looks like they have onshore production in Colorado.
From 1997 to 2007, Aera operated the Beta Unit offshore Huntington Beach. Since selling those facilities, all Aera operations have been conducted onshore, primarily in Kern County, a historically important California oil production area. Aera will continue to operate these onshore properties for IKAV, which looks like an interesting company.
Bud's Offshore Energy (BOE) 