Exxon CEO Darren Woods’ is concerned that US withdrawal from the Paris climate agreement would threaten carbon capture and sequestration (CCS), the foundation for which is government mandates and generous taxpayer subsidies.
Exxon sought an edge over CCS competitors by improperly acquiring 163 OCS oil and gas leases (map below) for carbon disposal purposes. Conversion of these leases is not authorized, which means they will expire at the end of their primary (5 year) term absent legislative or regulatory action.
The only solid support for CCS is from companies hoping to benefit from subsidies and charges to industries and individual energy consumers. It’s time to end the Federal government’s CCS programs.
199 oil and gas leases were wrongfully acquired at Sales 257, 259, and 261 with the intent of developing these leases for carbon disposal purposes. Repsol was the sole bidder at Sale 261 for 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 (94) and 259 (69).
LM/GE Vernova turbine blade plant. Photo credited by the New Bedford Light to Jean-Philippe Thibault/Journal Gaspésie Nouvelles.
On Oct. 24, Radio Gaspesie reported serious data falsification allegations related to the manufacturing GE Vernova turbine blades at their Gaspé, Quebec facility. GE Vernova’s delay in commenting on those charges is surprising given their economic and legal implications in both Canada and the US.
GE Vernova has informed the New Bedford Light that they have taken corrective actions at their blade facility in Gaspé after an extensive internal review of their blade manufacturing and quality assurance program. However, they have yet to comment on the data falsification allegations.
Actions speak louder than words, and the Light reports that GE Vernova laid off nine managers and suspended 11 unionized floor workers at the Gaspé factory. A representative for the union informed the Light that the production manager has been dismissed and the general manager has resigned.
Neither Vineyard Wind nor BSEE, the Federal safety regulator for the Vineyard Wind project, has commented on the matter. BSEE’s investigation of the blade failure is still pending and has seemingly gotten more complicated as a result of the manufacturing issues.
In addition to legal proceedings in Quebec, GE Vernova and Vineyard Wind are subject to possible civil and criminal penalties in the US. Civil penalties, which are administered by BSEE, seem likely given the extensive pollution from turbine blade fragments.
Criminal penalties, which are possible if the data falsification charges are proven true, are imposed by the Dept. of Justice. The applicable criminal penalties statute is pasted below.
Any person who knowingly and willfully (1) violates any provision of this subchapter, any term of a lease, license, or permit issued pursuant to this subchapter, or any regulation or order issued under the authority of this subchapter designed to protect health, safety, or the environment or conserve natural resources, (2) makes any false statement, representation, or certification in any application, record, report, or other document filed or required to be maintained under this subchapter, (3) falsifies, tampers with, or renders inaccurate any monitoring device or method of record required to be maintained under this subchapter, or (4) reveals any data or information required to be kept confidential by this subchapter shall, upon conviction, be punished by a fine of not more than $100,000, or by imprisonment for not more than ten years, or both. Each day that a violation under clause (1) of this subsection continues, or each day that any monitoring device or data recorder remains inoperative or inaccurate because of any activity described in clause (3) of this subsection, shall constitute a separate violation.
The Santa Barbara County Planning Commission has approved the transfer of the onshore pipeline from Exxon to Sable Offshore. Although the Environmental Defense Center (EDC) is appealing that decision to the Board of Supervisors, the Board’s vote will likely be a 2-2 tie. Supervisor Hartmann’s property is close to the pipeline and she has recused herself from votes on the matter. A 2-2 vote would be a win for Sable, because a tie vote means the planning commission decision stands.
As an investment, Sable is a “pure California permitting play,” which means the risks are high. The company’s chances for success are almost entirely dependent on receiving the necessary approvals from State and local agencies.
Sable’s share price soared to $23.43 on 9/3 after the company reached agreement with Santa Barbara on the installation of required pipeline valves. The price bounced further to $28.30 on 9/19 before falling sharply to $19.43 on 10/9 after being cited for failing to get California Coastal Commission approval to install the required valves. The price rebounded to $24 following the County Planning Commission’s approval of the transfer from Exxon to Sable before settling at $23 on Friday, the date of the EDC appeal.
Expect the financial and psychological roller coaster ride to continue.
See the translated excerpts below from a Radio Gaspesie report. This is a massive scandal if true.
“Yesterday, the vice-president of global operations at GE Vernova reportedly addressed all employees at the Gaspé plant to provide an update on the situation.
The investigation, led by GE Vernova’s lawyers, reportedly revealed that employees were asked by senior company executives to falsify quality control data. Data associated with a well-made blade was then associated with poorly made blades. Our sources indicate that this is a widespread practice in the industry.
The senior management of the Gaspé plant also allegedly implemented a points system that encouraged employees to skip verification steps, thus prioritizing production quantity over quality.
Our sources say the points system allegedly involved tight management oversight that bordered on intimidation of employees.
The oversized 107m blades that were produced in Gaspé for the construction of marine parks are said to be affected. The integrity of the entire production of the longest blades in America is currently being called into question.“
Almost 40 years ago, four large oil and gas platforms were installed in the beautiful offshore area that was part of our Santa Maria District (Pacific Region of the Minerals Management Service). Those platforms are now within the boundaries of the Chumash Heritage National Marine Sanctuary (see map above).
We watched those platforms being installed, inspected the drilling and production operations, and performed a myriad of other duties including the curtailment of offshore operations prior to launches from Vandenberg AFB. Those Vandenberg launches weren’t always perfect as this link clearly demonstrates. Even knowing that, it was still a bit unnerving when missiles were recovered during post-abandonment site clearance trawls.
All four of those Santa Maria District platforms are now on terminated OCS leases. All were installed by companies that are now part of Chevron Corp. (Chevron, Texaco, and Unocal). They are currently maintained by Freeport-McMoRan Oil & Gas, with Chevron retaining financial responsibility for decommissioning.
Platform
Install yr.
installed by
water depth (ft)
Est. removal weight (short tons)
wells drilled
Harvest
1985
Texaco
675
35,150
19
Hermosa
1985
Chevron
603
30,868
13
Hidalgo
1986
Chevron
430
23,384
14
Irene
1985
Unocal
242
8,762
26
BSEE reports that the 46 wells on Harvest, Hermosa, and Hidalgo have been plugged and tested, and that the well conductors have been removed. No information has been posted on the status of the wells at Platform Irene, but presumably they are (or will soon be) plugged in accordance with BSEE regulations.
Will the inclusion of these platforms in the Chumash Marine Sanctuary further complicate the already difficult decommissioning process? Decommissioning specialist John Smith thinks it may:
“In addition to the BOEM and BSEE approval process, Chevron and FMC are going to be dealing with the NOAA permitting regime for Sanctuaries. Those permitting and environmental compliance requirements are extensive. NOAA’s NEPA documentation for West Coast marine sanctuaries will also need to be amended to include the Chumash.”
So the “Mission Impossible” that is California OCS decommissioning now has yet another complex regulatory element.
“Even though most of the SYU facilities are outside the Sanctuary, the proximity of the operations to the Sanctuary is problematic. The Chumash are now going to be a co-manager of the Sanctuary, adding another player in the process. Sable is going to obtain multiple Federal, State and local permits to restart SYU, and law suits are likely at every stage of the process.”
Per a related post, the full SpaceX lawsuit is attached. It’s mostly exhibits, so don’t be intimidated by the length.
This excerpt summarizes the case nicely:
“Rarely has a government agency made so clear that it was exceeding its authorized mandate to punish a company for the political views and statements of its largest shareholder and CEO. Second, the Commission is trying to unlawfully regulate space launch programs—which are critical to national security and other national policy objectives—at Vandenberg Space Force Base (the Base), a federal enclave and the world’s second busiest spaceport.”
Even Gov. Newsome sides with SpaceX saying “I’m with Elon.”
Will this case teach the Commission some humility? Probably not, but we shall see.
199 oil and gas leases were wrongfully acquired at Sales 257, 259, and 261 with the intent of developing these leases for carbon disposal purposes. Repsol was the sole bidder at Sale 261 for 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 (94) and 259 (69).
Despite false starts by Exxon and Repsol (see above summary), no carbon sequestration (disposal) leases may be issued or developed until implementing regulations have been promulgated. In that regard, no news is good news for those who are less than enamored with CO2 disposal in the Gulf of Mexico.
The implementing regulations will be controversial. Most operating companies prioritize GoM production over GoM disposal. Most environmental organizations are strongly opposed to CO2 disposal schemes that sustain fossil fuel production and benefit fossil fuel producers. Taxpayers are leery of subsidizing these projects and absorbing increased costs for energy and consumer goods.
The Administration is, of course, well aware of this opposition and will not be publishing implementing regulations prior to the election. The next Administration, regardless of the election outcome, will no doubt take a hard look at these issues before proposing regulations.
The few oil and gas producers that are rather cynically hoping to cash in on CO2 disposal in the GoM will therefore have to wait, perhaps for a long time.
New Bedford Light: The Rolldock Sun leaves New Bedford on Friday with two blades visible. Credit: Courtesy of West Island Weather
Per the New Bedford Light, the turbine blade delivery vessel Rolldock Sun was seen on Friday carrying at least two blades out of New Bedford. It was not headed for the Vineyard Wind site. According to vessel tracking websites, the Rolldock Sun was en route to the Port of Cherbourg, where GE Vernova has a blade manufacturing facility.
The most likely explanation for returning the blades to Cherbourg is that defects were detected or suspected. The blade that failed, reportedly as a result of a manufacturing issue, is probably not the only one that was defective.
The New Bedford Light asked GE Vernova, Vineyard Wind, and the Federal regulator BSEE why the blades were being transported to Cherbourg. They received the following responses (my comments in parentheses):
GE Vernova: “No comment on this matter.” (This is the worst possible response. In the absence of information, people are left to speculate. If there was no problem with the blades, why wouldn’t GE simply provide an explanation? Their non-response simply reinforces suspicions that the blades were defective. If that is the case, why not take credit for procedures that identified the suspect defects, albeit belatedly?
Vineyard Wind:“The weekend has gotten in the way of the information flow,” and they would share information should they hear anything. Another request for information was not answered as of noon Monday. (Not exactly confidence inspiring from the company whose blade failure littered beaches and the offshore environment. They are deservedly being watched, and need to be more transparent and responsive.)
BSEE:A BSEE spokesperson did not answer questions and said by email that the agency has no new information. (Disappointing, but not surprising.)
Rendering of Ocean City MD morning view per US Wind project plansubmitted to BOEMOcean City NJ offshore wind protest
To those of us from Philly, Ocean City is in New Jersey. To those living in the DMV, Ocean City is in Maryland. These popular beach resorts have distinct personalities, but both are heavily dependent on tourism. They are also aligned against offshore wind development.
On Aug. 5, Ocean City MD Mayor Rick Meehan said the town has hired a law firm, and will join several local co-plaintiffs in suing BOEM if it issues a federal permit to US Wind to construct the US Wind project offshore Maryland. Exactly one month later (9/5/2024), BOEM approved the project. (The 2 US Wind leases have been consolidated, and the project is now known as the Maryland Offshore Wind project).
Halting Atlantic wind projects has been a difficult proposition for local governments, tribes, and grass roots environmental groups given that the wind industry, State and Federal govt, and the large environmental NGOs have been firmly aligned against them. Indeed, the Federal govt considers wind developers to be their partners.
Disputes between State and local governments regarding offshore wind policy are becoming increasingly strident. Such disconnects are not common for offshore oil and gas given that State and local govts are typically aligned either for or against.
The growing level of discord is neither in the best interest of wind developers nor their opponents. Unfortunately, election year politics probably stand in the way of a pause in wind leasing that would facilitate open and unpressured collaboration with coastal residents, power customers, tribes, and fishing organizations on the best path forward.
Sable’s stock price soared after the company reached an agreement with Santa Barbara County that will allow them to comply with the California Fire Marshall’s requirement to install shutdown valves on the onshore pipeline that failed in 2015. That pipeline is necessary to transport production from the Santa Ynez Unit, which is currently operated by Sable.
The significance of a resumption of SYU production is illustrated in the chart below. The 3 SYU platforms accounted for more than 2/3 of Pacific OCS production before the Refugio pipeline spill in June 2015.
This agreement with the County is a major step forward, but there are still regulatory and legal hurdles to clear before production resumes.
In the SEC filing that announces the agreement with Santa Barbara County, Sable affirms their 2024 restart expectations. However, a resumption of production in 2024 is highly unlikely given the administrative challenges that remain. A restart in 2025 would be a major accomplishment and a very good outcome for Sable.
Pasted below is the full text of the SEC filing (emphasis added):
Santa Barbara County (the “County”), on August 30, 2024, acknowledged that the County does not have jurisdiction over Pacific Pipeline Company’s (“PPC”) installation of 16 new safety valves in the County along PPC’s Las Flores Pipeline System (the “Pipeline”) in accordance with Assembly Bill 864. The County’s acknowledgement was delivered in the form of a conditional settlement agreement dated August 30, 2024 (the “Safety Valve Settlement Agreement”) among the County, PPC and PPC’s parent company Sable Offshore Corp. (“Sable”), and a subsequent acknowledgement by the County’s planning and development staff.
The Safety Valve Settlement Agreement is predicated upon a prior settlement agreement between PPC’s predecessor in interest, Celeron Pipeline Company, and the County in a federal case styled Celeron Pipeline Company of California v. County of Santa Barbara (Case No. CV 87-02188), which was executed in 1988.
Pursuant to the Safety Valve Settlement Agreement, PPC agreed to the following additional surveillance and response enhancements in the County:
i. PPC will create a Santa Barbara County-based Surveillance and Response Team, trained in PPC’s Tactical Response Plan, which will be responsible for timely initial incident response and equipped with key resources to deploy in early containment, particularly for those regions of the Pipeline between Gaviota and Las Flores Canyon;
ii. PC will provide Santa Barbara first responders with additional training and equipment to assist in PPC’s incident response efforts; and
iii. PPC will undertake the following Pipeline system enhancements: (1) install and operate and maintain primary and secondary Operations Control Centers in Santa Barbara County, and (2) refurbish the Gaviota pump in its existing station.
PPC, Sable and the County have further agreed, in the Safety Valve Settlement Agreement, to file a stipulation to dismiss the pending lawsuit, Pacific Pipeline Company and Sable Offshore Corp. v. Santa Barbara County Planning Commission and Board of Supervisors (Case No. 2:23-cv-09218-DMG-MRW) within 15 days of final installation of all 16 underground safety valves in the County.
Sable affirms that initial restart of production from Sable’s Santa Ynez Unit is expected in fourth quarter 2024.
Bud's Offshore Energy (BOE) 