There won’t be a deal without significant energy production provisions and Manchin is on the record regarding the need for action on offshore oil and gas leasing. We’ll see what happens.
Archive for the ‘Offshore Energy – General’ Category
Will the Manchin – Schumer talks lead to a timely resumption of offshore oil and gas leasing?
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged leasing, Manchin, offshore oil and gas, Schumer on May 27, 2022| Leave a Comment »
FOGCO revisited
Posted in energy policy, Guyana, Offshore Energy - General, tagged deepwater production, FOGCO, Guyana, Marcellus, national oil company on May 25, 2022| Leave a Comment »
Guyana’s pending decision regarding the formation of a national oil company brings back memories of unsuccessful attempts to do the same in the US in the 1970s.
The most serious attempt at forming a national oil company in the US was a 1975 Senate bill to establish the Federal Oil and Gas Corporation or FOGCO. (Oddly, the bill’s sponsors weren’t troubled by that acronym.) FOGCO was proposed at a time when natural gas supplies didn’t satisfy demand, and that was the primary impetus behind the legislation. (Supply issues went away when price controls were lifted.)
Concerns about a FOGCO then and now:
- The political pressures under which a national oil company operates are not conducive to sound, expeditious decisionmaking. (Unfortunately, some current industry execs seem overly responsive to pressure from governments and activist organizations, which is not always in the best interest of the company and its shareholders).
- Would limit competition and private investment.
- Would delay or prevent innovation:
- The shale revolution was driven by nimble private companies operating on private land in supportive states. Why is there Marcellus shale development in PA, WV, and OH, and none in NY? (Hint: It’s not the absence of resources.) Why could the US shale experience not be replicated in Europe?
- Innovative deepwater development projects were driven by private companies and the supportive public policies of the 1990s.
- A national oil company could be the first step in the process of nationalizing the petroleum industry.
Guyana is far different from the US and should do what is perceived to be in their best interest. Best wishes to the people of Guyana as they weight their options.
Coming to the Gulf of Mexico to work for BOE (the E&P company, not the blog 😀)
Posted in drilling, Gulf of Mexico, Offshore Energy - General, tagged atlas, Beacon, Blackstone, BOE, titan, transocean on May 23, 2022| Leave a Comment »
The drilling business, particularly the deepwater sector, has never been for the faint of heart, and the past few years have included the added stresses of COVID, negative oil prices, anemic exploration activity, and offshore leasing “pauses.” Transocean nonetheless managed to build two 8th generation drillships, the Deepwater Atlas and Titan, both of which are slated to operate in the Gulf of Mexico.
The Atlas will begin drilling for Beacon Offshore Energy (unrelated to the BOE blog 😀) in the Shenandoah field (almost heaven?😀) later this year. The Titan is expected to begin drilling for Chevron next year. The rigs will be outfitted with 20,000 psi blowout prevention equipment and will be well-equipped for the growing number of high pressure prospects in the Gulf. Here is Transocean’s promotional video for the two rigs.
Both Beacon and Chevron fared well on our Gulf of Mexico scorecard. A bit of information about Beacon (BOE):
- Wholly owned by funds managed by Blackstone Energy Partners.
- CEO Scott Gutterman was previously the CEO of LLOG.
- There are a number of related investment partnerships under the Beacon umbrella and they are often joint lease owners.
- Per BOEM data, BOE has interest in 11 Gulf of Mexico leases.
- The company has an excellent compliance record: 12 facility inspections (presumably all were drilling units) resulted in only 1 INC (violation).
- Per BSEE, Beacon had 22 well starts since 2008. (Mystery: While the Blackstone and Beacon websites indicate that the company was formed in 2016, BSEE’s online borehole file shows 10 well starts prior to that year with the exact same company name. Presumably, the borehole file data are in error because BOEM data do not show any Beacon lease interest prior to 2018.)
- Beacon bid on one tract in Lease Sale 257 (Nov. 2021) and was the sole bidder (sale was voided by DC Federal Court).
- Beacon bid on 3 tracts in Sale 256 (Nov. 2020) and was the high bidder on one.
- Beacon acquired interest in 2 leases in Sale 254 (March 2020), 7 in Sale 252 (March 2019), and 2 in Sale 251 (Aug. 2018)
- In February 2022, Blackstone reportedly advised clients that they would no longer invest in oil and gas projects. Presumably, that doesn’t affect the Beacon operations (or perhaps the folks at Blackstone have come to their senses 😀).
California says YES to offshore drilling…
Posted in California, energy policy, Offshore Energy - General, tagged Andrew Meredith, California, offshore drilling, Rock Zierman, SB953 on May 21, 2022| Leave a Comment »
Not really, but current economic and energy security realities doomed a bill to prohibit drilling and production in State waters. Strong quotes from bill opponents:
“SB 953 was held because it didn’t work — it was going to cost the state billions of dollars for a symbolic victory,” Andrew Meredith, president of the State Building and Construction Trades Council of California, said in a statement. “The California Senate is rightfully more concerned with actually improving the plight of workers and our environment than chasing headlines.”
Politico
“I think most legislators understand that every barrel of oil we don’t produce here under our strict environmental rules must be imported by foreign tankers floating offshore in our crowded ports from Iraq, Saudi Arabia, or the Ecuadorian rainforest,” California Independent Petroleum Association CEO Rock Zierman said in a text message.
Politico
Leasing program update – about as good as we could hope for at this point
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged 5 year leasing plan, DOI, Gulf of Mexico, US offshore oil and gas leasing on May 19, 2022| 1 Comment »
WASHINGTON — During testimony before the U.S Senate Committee on Energy and Natural Resources today, Secretary of the Interior Deb Haaland confirmed that, despite delays in implementation from the previous Administration, the Interior Department will release the Proposed Program – the next step in the five-year offshore energy planning process – by June 30, 2022, which is the expiration of the current program. A Proposed Program is not a decision to issue specific leases or to authorize any drilling or development.
DOI
Here is the timeline for the 5 Year Leasing Program (light blue).
A sale this year under the new program is thus highly unlikely. The process will no doubt be delayed even further by litigation. As we have said previously, the only hopes for a sale this year are a successful appeal of Judge Contreras’s Sale 257 ruling or successful congressional action (unlikely but possible under the circumstances).
Chevron sanctions Ballymore; BSEE conducts pre-production inspection of Shell’s Vito platform
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged Ballymore, BSEE, Chevron, offshore leasing, Shell, Vito on May 19, 2022| Leave a Comment »
Ballymore will be produced with 3 seafloor wells (6540′ water depth) that are expected to transport 75,000 bopd via a three-mile subsea tieback to Chevron’s Blind Faith floating production unit. Per BOEM, the Ballymore field was discovered in December, 2017. First production is expected to be in 2025.
Shell’s Vito floating production unit was inspected last week by BSEE personnel. Vito is expected to begin production later this year or early next year and produce up to 100,000 bopd. Per BOEM data, the Vito field was discovered in 2010.
As these projects demonstrate, deepwater development takes time and is often dependent on related projects on other leases. This is why future production is dependent on regular, predictable lease sales.
As energy prices soar, remember these 3 things…
Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged 5 year leasing plan, DC Federal Court, India coal, Lease Sale 257, oil prices on May 18, 2022| Leave a Comment »
- Gulf of Mexico Lease Sale 257 was vacated on 1/27/2022 because DC Federal Court Judge Contreras ruled that BOEM failed to consider the “positive” effect that higher prices (the logical result of lower production) would have on reducing foreign consumption and the associated GHG emissions. Think about that in the context of the timing and magnitude of this ruling. Why did the court fail to consider the other logical consequences of tight oil supplies and higher prices – increased coal consumption and energy poverty? To avoid the latter, India, the world’s second largest coal producer and consumer, is boosting coal production to record highs.
- The Administration, which had only proceeded with Sale 257 because a prior court ruling invalidated the President’s leasing pause, chose not to appeal the decision by Judge Contreras. Why appeal a decision that is consistent with your agenda?
- The legislatively mandated 5 year leasing program, without which no Federal offshore leases sales may be conducted, expires at the end of June. This is why last week’s cancellation of the 3 remaining sales in the current 5 year program was rather meaningless. Despite bipartisan congressional support for prompt completion of a new 5 year plan, this does not appear to be a high priority for the Department of the Interior. The only hope for a sale this year might be a successful appeal by Lousisiana and API of Judge Contreras’s Sale 257 ruling.
Rigs-to-Rest-Retirement-RIP-Respect
Posted in drilling, Offshore Energy - General, rigs-to-reefs, Uncategorized, tagged Dalmore, rigs-to-reefs, rigs-to-rest, Scotland, transocean on May 17, 2022| Leave a Comment »
In 2016, this old Transocean semisubmersible was being towed from Norway to Malta prior to being scrapped in Turkey. The rig broke free and grounded at Dalmore, Scotland. This picture, with a Scottish cemetery in the foreground, is a fitting tribute to old rigs, the wells they drilled, the storms they endured, and the people they served.
The picture and title will be added to our world-famous Rigs-to-Reefs+++ page. Many thanks to those who have contributed to this important resource over the years.
Good advice to industry execs from Congressman Donalds
Posted in climate, energy policy, Offshore Energy - General, Uncategorized, tagged bullying, Byron Donalds, Congress, JustSayNo on May 16, 2022| Leave a Comment »
The video below is from 6 months ago but is even more relevant today. Those who produce nothing but insults shouldn’t be dictating corporate strategy.
Amen Byron!
Bud's Offshore Energy (BOE) 