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Archive for the ‘Regulation’ Category

damaged Vineyard Wind turbine – Cape Cod Times photo

BOEM’s long list of approved departures from the renewable energy regulations includes the eyebrow-raising approval of Vineyard Wind’s request to shortcut the review of design, fabrication, and installation reports.

Contrary to the regulations, Vineyard Wind was authorized to begin the fabrication of facilities before BOEM “received and offered no objections to the their Facility Design Report (FDR) and Fabrication and Installation Report (FIR).” The approval letter is attached, and excerpts (emphasis added) are pasted below. [Note: The requirement that was then at §585.700(b) is found at §585.632 in the current regulations.]

Vineyard Wind requests a regulatory departure from §585.700(b) requiring that fabrication of approved facilities not begin until BOEM provides notification that it has received and has no objections to the submitted Facility Design Report (FDR) and Fabrication and Installation Report (FIR). Vineyard Wind proposes to fabricate, but not install the following project elements:
1) Monopile foundations;
2) Electrical service platform;
3) Export cable;
4) Inter-array cables; and
5) Wind turbine generator facilities.

….allowing these fabrication activities to take place earlier in time would allow Vineyard Wind to adhere to its construction schedule, maintain its qualification for the Federal Investment Tax Credit, and meet its contractual obligations under the Power Purchase Agreements with Massachusetts distribution companies.

30 cfr 585.103 requires that a departure provide safety and environmental protection equal to or greater than the provision in the regulations that is waived. BOEM’s letter fails to explain how allowing fabrication to begin before fundamental design and fabrication reports are submitted and reviewed meets this test.

It’s noteworthy that GE Vernova has attributed the Vineyard Wind turbine blade failure to a fabrication issue. The FIR is thus particularly pertinent, because it addresses quality assurance measures, significant factors in the Vineyard Wind blade failure.

Perhaps even more troubling is BOEM’s response to subsequent requests by other companies to waive the FDR and FIR requirement (example). In these responses, BOEM asserts that their “current interpretation” is that no departure is needed because “the regulation prohibits only fabrication and installation activities on the Outer Continental Shelf (OCS) itself.” How does that make sense given the important activities, including the fabrication of turbine blades and other turbine components, that take place onshore?

In their letters approving the Vineyard Wind and other departures, BOEM implies that their review of these reports is unnecessary because “the design and fabrication of these components would occur under the supervision of the approved CVA” (Certified Verification Agent). That assertion misconstrues the role of the CVA. These agents, nominated and funded by the operator, provide third party oversight that is complementary to, not a substitute for, BOEM/BSEE project reviews.

According to this memo, DNV was the CVA for Vineyard Wind. Their insights on the turbine blade failure will presumably be included in BSEE’s investigation report.

The Vineyard Wind and other departures reinforce concerns that BOEM’s commitment to promoting offshore wind and accelerating development influenced their regulatory decisions. This concern, along with the division of responsibilities between BOEM and BSEE, should be part of the Vineyard Wind investigation. Hopefully, the investigation panel will be accorded a high degree of independence.

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The Vineyard Wind turbine incident, which littered Nantucket beaches, has also tarnished the US offshore wind program. BSEE has prudently halted Vineyard Wind operations and construction pending an investigation into the blade failure.

Offshore wind development is structure rich, so public confidence in the design of turbines and support platforms is critical. BOEM lists 37 active wind leases on the US OCS. Most of these leases have not yet reached the construction phase. A hold on the approval of any Construction and Operations Plans would seem to be appropriate pending completion of the Vineyard Wind investigations.

Per the leasing schedule below, BOEM intends to hold 4 wind sales during the remainder of 2024, all within a 3 month period. Only 1 sale is scheduled for each of the following 2 years. Deferring the 2024 sales until the investigations are complete would assist potential lessees by ensuring that the issues of concern were fully understood.

Unfortunately, BOEM’s failure to conduct a 2024 oil and gas lease sale has boxed in the wind program. The Inflation Reduction Act prohibits BOEM from issuing wind leases unless an oil and gas sale has been held within the previous year. Lease Sale 261 was held on 12/20/23 meaning that no wind leases may be issued after 12/20/24. BOEM has compressed the wind leasing schedule, presumably to beat the legislative deadline. It would have been better for both the oil and gas and the wind programs if at least one oil and gas sale had been held in 2024 as has been customary since the 1950s.

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….as long as they are aligned with the preordained political decision. 😠

No where has this been more apparent over the years than in Alaska. Most recently, the North Slope Borough filed suit to challenge the Bureau of Land Management (BLM) rule making the National Petroleum Reserve in Alaska (NPR-A) off limits to oil and gas development.

Mayor Josiah Patkotak of the North Slope Borough

“The rule would significantly and irrevocably harm the North Slope’s right to self-determination and ability to provide essential services for residents. This suit is filed alongside the complaints of the Voice of the Arctic Inupiat and the State of Alaska, demonstrating the unity of North Slope communities and Alaskans in opposing the BLM’s unjust and unilateral action to harm the livelihoods of the residents of the North Slope,” the borough explained in a press statement.

“When I was sworn in as Mayor of the North Slope Borough, I made a solemn promise to protect and provide essential services for the people of the North Slope Borough. The BLM claims to act on our behalf but what they are truly doing is undermining my ability to fulfill that fiduciary obligation,” said Mayor Josiah Patkotak. “We on the North Slope don’t have the luxury of keeping quiet and waiting for a new industry to swoop in and replace our largest economic driver. We have to speak up for our future as a people.”

Other important points raised in the Must Read Alaska article:

  • NPR-A is entirely within the boundaries of the North Slope Borough (NSB).
  • The NSB represents the ancestral homelands of the Inupiat people.
  • The NSB is the largest employer in the region and provides the majority of essential services depended upon by residents.
  • Taxes on infrastructure account for 95% of the Borough’s revenue.
  • Members of the North Slope Inupiat Tribes, Village Corporations, Regional Corporations, and their elected leaders have been unanimous in their opposition to the rule.
  • The Supreme Court’s decision in Loper, which removed the Chevron Deference, restricts the authority of Federal agencies to take regulatory actions without clear legislative authority.
  • The State of Alaska also filed a lawsuit claiming that the Fed govt had not consulted with affected parties, and that the BLM had exceeded its congressional authorization.

This should be an easy win for Alaska and the NSB.

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BOEM’s land rush approach to offshore wind leasing will add up to 1086 turbine towers and 28 offshore substations (OSSs) in the Atlantic just from active projects with approved Records of Decision (RODs). (See the table below.) Another 17 active Atlantic commercial projects have yet to reach the ROD stage. Those projects should increase the total number of structures to >3000. Five more Atlantic wind lease sales are scheduled.

projectturbine towersoffshore substations
Coastal VA Offshore Wind2023
Revolution Wind1002
Sunrise Wind941
Atlantic Shores South200up to 10
Ocean Wind 198up to 3
Vineyard Wind 11002
Empire Wind 1 & 21472
New England Wind (phases 1&2)1505

Per the Construction and Operations Plan (COP) for Vineyard Wind, the topsides for a conventional electrical service platform (ESP) (also known as an offshore substation or OSS) are 45 x 70 x 38 m, which is larger in surface area than a typical 6-pile oil and gas platform (~30 x 30 m), and is comparable in size to a large jackup drilling rig.

The Atlantic Shores plan calls for 10 small, 5 medium, or 4 large OSSs. (Uncertainty regarding the number and types of structures seems rather common in wind COPs.) The large OSSs have topsides that are 90 m by 50 m and rise to 63 m above MLLW. These are large offshore structures whether for wind or oil and gas.

Vineyard Wind ESP

Despite the looming decommissioning obligations, BOEM’s financial assurance requirements have been relaxed to facilitate wind development.

Per BOEM, the “Rule to Streamline and Modernize Offshore Renewable Energy Development” is intended to “make offshore renewable energy development more efficient, [and] save billions of dollarsUnfortunately, the savings associated with relaxed financial assurance requirements translates to increased risk for power customers and taxpayers.

BOEM signaled their intentions on offshore wind (OSW) decommissioning three years ago when they granted a precedent setting financial assurance waiver to Vineyard Wind. Despite compelling concerns raised by commenters, the “streamlining” regulations codified this decision.

No one knows what the financial future will be for wind projects and the responsible companies. Financial assurance should therefore be established when the structures are installed, not years into the future as allowed by the revised regulations. What leverage will BOEM have then?

Nordsee One substation, Germany. Rystad Energy projects 137 new power substations offshore continental Europe this decade, requiring $20 billion in total investment.

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For decades, Gulf of Mexico operators have reported facility evacuation and production curtailment data to MMS/BSEE as tropical storms or hurricanes approached. Requirements for this reporting are found in the regulations (30 CFR 250.192(a)) supplemented by NTL 20I5-G02.

Operators must submit reports by 11:00 a.m. (CT) daily throughout the period of evacuation and shut-in with the understanding that BSEE will post the compiled data by 1 pm CT. This reporting has been diligently accomplished for decades and MMS/BSEE posted the data each day, including weekends and holidays, without fail. Everyone in industry and government understood the importance of safely evacuating personnel, shutting down production, and ensuring that these hurricane data were made available to the public each day. (All of the daily updates for 2011 onward can be found here.)

On Wednesday, July 3, Shell informed the media that they had begun evacuating non-essential personnel and shutting-in production at certain facilities. Both Shell and Chevron issued general statements on the status of their operations on Thursday, July 4. Both companies no doubt submitted the required reports to BSEE, as did other companies with operations near the projected path of the storm.

BSEE failed to post any evacuation and shut-in data on any date from July 3 through today (July 8).

Beryl missed the heart of the Gulf of Mexico basin, but Shell and other companies with facilities in the more westerly areas evacuated personnel and curtailed production. BSEE’s unprecedented failure to post this information needs to be addressed before more significant storms threaten offshore personnel and production in the Gulf.

Shell evacuated non-essential personnel and shut-in production at Perdido (pictured)

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Followers of the US OCS oil and gas program have observed some impressive chutzpah over the years, but a new law suit challenging the extension of Santa Ynez Unit leases raises the bar.

Groups that helped block every attempt to resume production in the Santa Ynez Unit are now suing to terminate the leases for non-production. Brilliant!🥇

Without these extensions, each of the leases would have expired and ExxonMobil would have been required to permanently cease its oil and gas operations, plug its wells, and decommission its other infrastructure.” See the full text of the law suit.

More posts on the Santa Ynez Unit saga.

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In a major decision, the Supreme Court overturned the Chevron doctrine, which for four decades led judges to defer to how federal agencies interpreted a law when its language wasn’t clear. In a later post, we will speculate on how this ruling could affect the offshore regulatory program.

About the Chevron doctrine:

One of the most important principles in administrative law, the “Chevron deference” was coined after a landmark case, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984). The Chevron deference is referring to the doctrine of judicial deference given to administrative actions. In Chevron, the Supreme Court set forth a legal test as to when the court should defer to the agency’s answer or interpretation, holding that such judicial deference is appropriate where the agency’s answer was not unreasonable, so long as Congress had not spoken directly to the precise issue at question. 

previous post on the Chevron doctrine

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Carbon sequestration (i.e. subsurface disposal) is a controversial and divisive topic, and important questions regarding the costs and benefits remain. Nonetheless, the Infrastructure Bill of 2021 authorized the disposal of CO2 on the OCS, and stipulated that the Secretary of the Interior promulgate regulations for that purpose. However, that major task cannot be completed without a better understanding of the potential environmental impacts.

BOEM has announced a study (see attached pages from their new Environmental Studies Plan) to consider the potential for CO2 leakage and related environmental concerns. A few excerpts from BOEM’s summary follow:

Problem:  Potential CO2 leakage from carbon sequestration (CS) project activities could occur via a number of pathways. Few studies model and/or measure CO2 leakage, transport, dispersion, attenuation, and environmental impacts in the offshore environment, and those that do exist are preliminary. 

Intervention:   BOEM needs more information about the dynamics, fate, transport, and potential environmental impacts of CO2 leakage under various scenarios, including worst-case, on the OCS to inform the new nationwide CS Program and to protect the environment from CO2 leakage. 

Comparison:   The study will model CO2 leakage under various scenarios, including worst-case scenarios, using the GOM OCS Region as a case-study and can be applied to all OCS regions. Outcome The leakage and worst-case scenario modeling will aid BOEM’s ongoing rulemaking efforts, program development and implementation, and future operational needs including NEPA analyses, lease planning, lease stipulations, consultations, plan and permit approvals, mitigation measures, risk assessment and monitoring requirements, etc. Study results will also provide direction for future studies to include field and/or laboratory analyses.

The performance period for this important study extends through 2027, so it’s hard to envision final CS regulations prior to that date. You can’t issue regulations without first assessing the potential harm that could result from their promulgation (as required by NEPA).

BOEM’s summary mentions “the anticipation of a CS lease sale in the GOM after final regulations are published.” Hopefully, this also means that BOEM will not permit improperly acquired oil and gas leases (Sales 257, 259, and 261) to be converted to CS leases.

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None of the plaintiffs issued a press release or otherwise announced the lawsuit on their websites.

How often do Attorneys General from 3 States sue the Federal government without broadly publicizing their actions? Neither the AG for Louisiana, Texas, nor Mississippi issued a press release to announce their suit to block BOEM’s financial assurance rule.

The limited media coverage of the lawsuit originated from a single Reuters article. Apparently Reuters learned about the suit and reached out to the litigants. Their article quoted Louisiana Attorney General Liz Murrill as follows:

This is a really egregious direct assault on intermediate level producers of oil and gas, and that affects a lot of business in our state,” Murrill told Reuters in an interview.

That quote is all we have from the AGs. Why the absence of announcements:

State of Louisiana et al v. Deb Haaland et al

Plaintiff:State of Louisiana, Louisiana Oil & Gas Association, State of Mississippi, State of Texas, Gulf Energy Alliance, Independent Petroleum Association of America and U S Oil & Gas Association
Defendant:Deb Haaland, U S Dept of Interior, Bureau of Ocean Energy Management, Elizabeth Klein, Steve Feldgus and James Kendall
Case Number:2:2024cv00820
Filed:June 17, 2024
Court:US District Court for the Western District of Louisiana
Presiding Judge:James D Cain
Referring Judge:Thomas P LeBlanc
Nature of Suit:Other Statutes: Administrative Procedures Act/Review or Appeal of Agency Decision
Cause of Action:28 U.S.C. § 2201 Constitutionality of State Statute(s)
Jury Demanded By:None

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What’s their solution?

Since the States don’t seem to think there is much risk, perhaps they would like to guarantee decommissioning expenses. Have they looked into the Cox bankruptcy? How about Platforms Hogan and Houchin and the complex decommissioning challenges in the Pacific. Are they comfortable with taxpayer funding for offshore decommissioning?

BOE recently defended the new BOEM rule. If anything, the rule is too lax in that compliance and safety records are not considered in determining financial assurance requirements and lessees may use reserve estimates to reduce supplemental assurance amounts.

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