Feeds:
Posts
Comments

Archive for the ‘Regulation’ Category

A US offshore wind lease may NOT be issued after 12/20/2024 unless an oil and gas lease sale is held prior to that date.

Posted in energy policy, Offshore Energy - General, Offshore Wind, Regulation, tagged , , , on March 12, 2024| 2 Comments »

(2) the Secretary may not issue a lease for offshore wind development under section 8(p)(1)(C) of the Outer Continental Shelf Lands Act (43 U.S.C.1337(p)(1)(C)) unless—
(A) an offshore lease sale has been held during the 1-year period ending on the date of the issuance of the lease for offshore wind development; and (B) the sum total of acres offered for lease in offshore lease sales during the 1-year period ending on the date of the issuance of the lease for offshore wind development is not less than 60,000,000 acres.

‘‘Inflation Reduction Act of 2022,” p. 646

Lease Sale 261 was held on 12/20/23. Absent legislative action, no wind leases may be issued after 12/20/24 unless another oil and gas lease sale is held prior to that date. Given that the minimalist 5 year oil and gas leasing plan, which is being challenged, does not propose a sale until 2025, wind lease issuance will likely be suspended at the end of the year. (Note: I wonder if the legislative restriction also applies to lease assignments from existing owners to new owners? Probably not, but that would be very significant given the current state of the offshore wind industry.)

The legislative restriction may be a partial explanation for the apparent rush to issue wind leases. 16 new wind leases were issued in 2022 and 2023, bringing the total number of active leases to 36. The philosophy seems to be this: issue as many leases as you can, as fast as you can, wherever you can (ala James Watt’s failed strategy for the oil and gas program.) Coastal residents are not entirely thrilled.

Perhaps the wind program should be required to develop 5 year leasing plans, as is the case for the oil and gas program. This might facilitate a more holistic approach to wind energy development and ease concerns about cumulative impacts.

Morro Bay protest

Read Full Post »

US offshore carbon disposal: And so it has begun…

Posted in CCS, climate, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , on March 7, 2024| Leave a Comment »

Bayou Bend CCS LLC commenced drilling an offshore (Texas State waters) and an onshore stratigraphic well for carbon sequestration in the first quarter 2024.

Talos

Is offshore carbon disposal ocean dumping? One of the provisions that was slipped into the “2021 Infrastructure Bill” exempted carbon sequestration from the Marine Protection, Research, and Sanctuaries Act of 1972 (Ocean Dumping Act). This exemption revises the OCS Lands Act and thus does not apply to State offshore lands. The Texas offshore wells must therefore be permitted by EPA as “Class VI wells,” as is the case for onshore disposal wells. However, Texas and Louisiana have asked the EPA for “primacy,” which would allow state agencies to approve and oversee these operations.

Meanwhile, the regulations for carbon disposal on the OCS, which the Infrastructure Bill mandated by November 2022, have yet to be published for comment. The latest Federal regulatory agenda indicates a publication date of 12/00/2023 for these regulations. Presumably the staff work has been completed and the rule is stalled in the review process.

Despite the absence of a regulatory framework, BOEM has accepted sequestration bids at the last three oil and gas lease sales. These bids were evaluated as if the leases were being acquired for oil and gas exploration and production, even though the bidders’ intentions were widely known. Why was BOEM a willing participant in this charade, not just at one sale, but at three sales in succession?

Given that the perceived carbon disposal bonanza is dependent on mandates and subsidies, one has to wonder about the massive revenue projections for this industry and raise concerns about the associated public and private financial risks. What is the long term business plan for this industry? Who will be monitoring the offshore wells (in perpetuity)? How will the public be protected from financial assurance and leakage risks? We will see how the myriad of carbon sequestration issues are addressed in the proposed regulations.

Read Full Post »

2022 BSEE incident statistics are finally posted and include a major error

Posted in accidents, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , , on March 5, 2024| Leave a Comment »

As we enter the third month of 2024, BSEE has finally updated the incident tables to include 2022 data.

The OCS program managers I was privileged to work for would never have accepted such delays in posting fundamental safety data. Carolita Kallaur (RIP) wouldn’t tolerate a delay of 14 days in publishing quarterly incident statistics, let alone a delay of 14 months for annual data with no quarterly updates. Transparency and timeliness in informing the public about offshore safety performance was her highest priority. Cynthia Quarterman, Tom Readinger, and other OCS program leaders were similarly insistent on timeliness and transparency in the reporting of incident data.

The belated 2022 BSEE tables also include a glaring error. The most important figure, the number of fatalities, is incorrect. Five workers died from US OCS incidents in 2022, not one. The fatal helicopter crash at the West Delta 106 A helideck on 12/29/2022 that killed four workers (photos below) is inexplicably not included. 

Is the failure to include this fatal incident a regulatory fragmentation issue? OCS safety data should be reported holistically and should not be parsed based on perceived regulatory jurisdiction? In any event, the tragic accident at the West Delta 106 A platform occurred at the helideck, which per the MOA with the Coast Guard is under BSEE jurisdiction.

It’s unfortunate that 2023 data are not available, even in summary form. At a minimum, BSEE should be proudly reporting that 2023 was the first zero fatality year on the US OCS since at least 1963! While acknowledging that this outstanding achievement will be difficult to repeat, it most certainly deserves public attention.

Lastly, what about incident data for the offshore wind program? When will these data be posted?

Read Full Post »

GAO: “Interior Needs to Improve Decommissioning Enforcement and Mitigate Related Risks”

Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Offshore Wind, Regulation, tagged , , , , , , , , , , on February 27, 2024| Leave a Comment »

Offshore facility decommissioning is a frequent target of Federal auditors given the complex financial and regulatory challenges. Unfortunately, the reviews have done little to better protect the public interest. As have previous inquiries, the new GAO report (attached for your convenience) calls for improved regulations and enforcement practices. That, of course, has been the objective for decades, but the problems have only worsened.

While the GAO recommendations are unsurprising, the body of the report is informative. Most notably, GAO (p. 29) raises a significant inconsistency on a key provision in the proposed decommissioning financial assurance regulations published last year:

One of the five criteria BOEM would no longer use under the proposed rule is demonstrated reliability, as shown by record of compliance with laws, regulations, and lease terms, among other factors. BOEM’s June 2023 regulatory analysis concluded this criterion is not a good predictive indicator of default on decommissioning obligations. However, BOEM and BSEE officials we spoke with told us that poor compliance records—such as safety and maintenance issues or delayed decommissioning obligations—can be an indicator of potential decommissioning noncompliance or financial stress.

Why was there such a disconnect between the opinions of BOEM and BSEE officials (who are directly involved with decommissioning) and BOEM’s decision not to include a company’s compliance record among the factors to be considered in determining the need for supplemental financial assurance? As pointed out here and here, safety performance is arguably the most important predictor of financial failure and decommissioning noncompliance.

The GAO report correctly acknowledges the difficulties in disqualifying operating companies. However, the regulations at 30 CFR § 250.135 specifically provide for disqualification for poor performance. While the regulations could be tighter, enforcing disqualifications regulations is dependent on persistence and strong support from management and DOI attorneys. Given the political risks associated with disqualifying operators, that support is often lacking.

Disqualification difficulties make it imperative that BOEM carefully consider past performance before approving lease assignments or determining financial assurance amounts. Provisions in 30 CFR §585.408 and §585.107 could have been used to disapprove assignments to Signal Hill, Fieldwood, Cox, and other problem operators. The failure to do so has significantly delayed decommissioning and increased public exposure to financial risks.

In some cases, lease assignments to unqualified companies have not only been approved but they have been facilitated by BOEM/MMS. The case of Platforms Hogan and Houchin, in the Santa Barbara Channel, is a particularly good example. (Did GAO inquire about the Inspector General report on this matter or ask why that report has still not been released?)

Most operating companies are responsible about planning for and fulfilling their decommissioning obligations. The problem is the exceptions, and they are not difficult to identify if you look at compliance data and obtain input from BSEE inspection personnel.

Other important decommissioning questions that need to be considered:

Additional comments on the GAO report from decommissioning specialist John Smith will be posted tomorrow.

gaodecomDownload

Read Full Post »

Island Drilling – Trident BOP safety dispute raises many questions

Posted in drilling, Norway, Offshore Energy - General, Regulation, UK, tagged , , , , , , on February 20, 2024| Leave a Comment »

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.

Read Full Post »

BSEE issues second helideck Safety Alert in 30 days as problems persist

Posted in accidents, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on February 16, 2024| Leave a Comment »

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.

bsee-safety-alert-481-hazardous-helideck-conditions-results-in-near-miss-incidentDownload

Read Full Post »

Still waiting ….

Posted in accidents, California, CCS, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, oil spill response, pipelines, Regulation, tagged , , , , , , , , , , , on February 12, 2024| Leave a Comment »

Still waiting for:

Read Full Post »

US OCS compliance data for 2022 and 2023

Posted in Alaska, California, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , on February 5, 2024| Leave a Comment »

The 2023 Safety Honor Roll list will be posted tomorrow.

As background information, below is a summary of compliance data for 2022 and 2023.

The performance of Fieldwood and Cox skewed the 2022 and 2023 data. In 2022, Fieldwood was issued 448 INCs, 26% of the Gulf of Mexico total. In 2023, Cox was by far the leading violator with 718 INCs, 39% of the GoM total (780/43% when Cox affiliates are included). These data point to the importance of considering safety and compliance in approving lease assignments and making supplemental bonding determinations.

20222023
facility inspections33093100
inspection types1085610341
W INCs8091050
CSI INCs530600
FSI INCs376180
total INCs17151830
INCs/facility inspection0.520.59
INCs/inspection type0.160.18
Pacific facility inspections280300
Pacific inspection types802744
Pacific W INCs2211
Pacific CSI INCs1314
Pacific FSI10
Pacific total INCs3625
Pacific INCs/facility inspection0.130.08
Pacific INCS/inspection type0.040.03
Alaska facility inspections85
Alaska inspection types3722
Alaska W INCs01
Alaska CSI INCs01
Alaska FSI INCs00
Alaska INCs total02
Alaska INCs/facility inspection00.4
Alaska INCS/inspection type00.09
INC=incident of noncompliance, W=warning, CSI=component shut-in, FSI=facility shut-in.
No Alaska facilities are located on the Federal OCS. One Alaska facility, Hilcorp’s Northstar island, has wells that are completed on the OCS; hence the limited BSEE inspections.

Read Full Post »

2023 Safety Honor Roll will be posted next week

Posted in Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , on February 2, 2024| Leave a Comment »

Criteria for achieving honor roll status:

  • Must average <0.3 incidents of noncompliance (INCs) per facility-inspection.
  • Must average <0.1 INCs per inspection-type. (Note that each facility-inspection may include multiple types of inspections (e.g. production, pipeline, pollution, Coast Guard, site security, etc). On average, each facility-inspection included 3.3 types of inspections in 2023. Here is a list of the types of inspections that may be performed.
  • Must operate at least 3 production platforms and have drilled at least one well (i.e. you need operational activity to demonstrate compliance and safety achievement).
  • May not have a disqualifying event (e.g. fatal or life-threatening incident, significant fire, major oil spill). Due to the extreme lag in updates to BSEE’s incident tables, district investigations and media reports are used to make this determination.

Read Full Post »

All 36 of Repsol’s carbon disposal bids at Oil and Gas Lease Sale 261 were accepted by BOEM!

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on January 31, 2024| Leave a Comment »

At Oil and Gas Lease Sale 261, Repsol was the sole bidder 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 and 259. All 36 of the Repsol bids have now been accepted.

As previously posted here and here, carbon disposal bidding at the last 3 oil and gas lease sales has made a mockery of the leasing process and the regulations that guide it.

Hopefully, the carbon sequestration regulations that are under development will preclude conversion of leases acquired at Sales 257, 259, and 261. At a minimum, these regulations should require a competitive process for converting any oil and gas leases.

Read Full Post »

« Newer Posts - Older Posts »