The Construction and Operations Plan (COP) for the SouthCoast Wind project was approved during the last week of the Biden Administration. That approval has been challenged by the Town and County of Nantucket. Ocean Wind, a joint venture of EDP Renewables (Portugal) and ENGIE (France), is the leaseholder.
As is the case for Maryland Wind, a court filing (attached) indicates that DOI is reconsidering the approval of the SouthCoast Wind COP. Construction has not begun on this project.
A further deferral of Federal Defendants’ responsive pleading deadline in this case is needed because Interior intends to reconsider its COP approval and will therefore be moving for a voluntary remand of that agency action by September 18, 2025.
The average oil production rate for the Gulf OCS was 1.915 million bopd in June, the highest rate since Oct. 2023 and thus the highest in the history of the Gulf of America 😉.
Natural gas production, which is now primarily from oil wells (i.e. associated gas) and is thus more closely linked to oil production rates, increased by >10% in June to over 60 bcf. As was the case for oil, gas production was the highest since Oct. 2023.
It is now peak hurricane season, so the eyes of production forecasters are focused on the tropics. Few need to be reminded about what happened 20 years ago when Hurricanes Katrina and Rita roared through the Gulf, preceded by Hurricane Ivan “The Terrible” one year earlier. Those 3 hurricanes triggered major improvements in hurricane preparedness, particularly with regard to stationkeeping capabilities.
The “One Big Beautiful Bill Act of 2025” (OBBB), Public Law 119-21, which was signed into law on July 4, 2025, includes a significant offshore production directive (section 50102) that has received little public attention:
“The Secretary of the Interior shall approve a request of an operator to commingle oil or gas production from multiple reservoirs within a single wellbore completed on the outer Continental Shelf in the Gulf of America Region unless the Secretary of the Interior determines that conclusive evidence establishes that the commingling—(1) could not be conducted by the operator in a safe manner; or (2) would result in an ultimate recovery from the applicable reservoirs to be reduced in comparison to the expected recovery of those reservoirs if they had not been commingled.”
This is, to the best of my knowledge, the first time in the history of the OCS oil and gas program that Congress has directed the safety regulator to approve well completion practices that could increase safety, environmental, and resource conservation risks.
Rather than calling for the operator to demonstrate that a downhole commingling plan is safe and optimizes resource recovery, the plan must be approved unless BSEE proves conclusively that the operation could not be conducted safely or that resource recovery would be reduced. This is the antithesis of the operator responsibility doctrine, a fundamental principle of the OCS regulatory program, and safety management principles that call for the operator to demonstrate that safety, environmental, and resource conservation risks have been effectively addressed.
Only 40 days after the OBBB was signed, BSEE published a direct final rule implementing the downhole commingling directive. This is warp speed for promulgating a Federal regulation! In keeping with the rush to finalize the rule, the preamble asserts that “notice and comment are unnecessary because this rule is noncontroversial; of a minor, technical nature; and is unlikely to receive any significant adverse comments.”
I intend to submit comments prior to the Sept. 12 deadline. These comments will assert that the rule does not qualify for an exemption from the Administrative Procedures Act’s public review and comment requirement. I will also recommend that BSEE consider hosting a public forum during the comment period to present their research on downhole commingling and discuss the risk mitigations.
Below are some of the issues/questions that should be considered during the public comment period:
BSEE’s own fact sheet acknowledges the well-known pressure differential, crossflow, and fluid compatibility risks associated with downhole commingling. The public should have the opportunity to provide input on the extent to which “intelligent completions” and other production technology are effective in mitigating these risks.
The industry-funded Univ. of Texas (UT) study, which led to a relaxation of downhole commingling restrictions, was specific to the “unique Paleogene Gulf of Mexico fields.” Does BSEE have evidence that supports the applicability of the study to other fields?
The authors of the UT study acknowledged that their findings were based on a “simple but reasonable geological base case model.” They also acknowledged the need for “a more comprehensive study using advanced geological models to explore additional geological features.” What are BSEE’s plans for additional research?
Should an independent assessment of Gulf of America downhole commingling safety and resource recovery risks be conducted before finalizing a rule that essentially mandates approval of all applications?
BSEE’s April 2025 policy change raised the allowable pressure differential for commingling production in Paleogene (Wilcox) reservoirs from 200 psi to 1500 psi. Unlike the policy update, the new rule includes no boundaries whatsoever.
What criteria will BSEE use in determining that there is “conclusive evidence” that a commingling request would be unsafe or would reduce ultimate resource recovery? Will BSEE disapprove any requests outside the parameters in the current policy guidance or subsequent updates?
There are many more issues that remain to be discussed, which is why the downhole commingling rule should be published in draft form, with a comment period of at least 90 days.
JL Daeschler shared a London Sunday Times piece about the Piper Alpha fire that killed 167 workers, the worst tragedy in the history of the offshore industry. We were troubled by the headline, because it seems inconceivable that any UK offshore worker could call July 6, 1988, the best day of their life. However, Punchard helped a number of workers escape the fire, so his mixed message is somewhat understandable.
Lord Cullen’s comprehensive inquiry into the Piper Alphatragedy challenged traditional thinking about regulation and how safety objectives could best be achieved, and was perhaps the most important report in the history of offshore oil and gas operations. That report and the US regulatory response to the tragedy are discussed in this post.
BSEE’s new downhole commingling rule, which responds to a Congressional mandate, is contrary to Cullen’s Safety Case principles in that it puts the burden of proof on the regulator to conclusively demonstrate that a potentially hazardous operation is unsafe.This is exactly the opposite of the approach recommended by Cullen. It’s also the first time in the history of the OCS program that Congress has dictated approval of complex downhole operations. More on this in a later post.
“Ørsted is evaluating all options to resolve the matter expeditiously. This includes engagement with relevant permitting agencies for any necessary clarification or resolution as well as through potential legal proceedings, with the aim being to proceed with continued project construction towards COD in the second half of 2026.”
I never liked the label “slips, trips, and falls” (STFs) because the words “slips and trips” trivialize the most common cause of serious offshore casualties. Perhaps, the name of this category should be simplified to “falls,” because that is the consequence of concern.
Unfortunately, STFs persist at an unacceptably high rate. In the attached Safety Alert, BSEE informs that between May 2024 and April 2025, 22% of all injuries were attributed to STFs. Many of these injuries were classified as major.
BSEE conducted focused inspections of 19 facilities (17 different operators) to better assess the STF problem. They found common deficiencies in training, hazard identification, and other preventive measures. These deficiencies and the associated safety management recommendations are listed in the Safety Alert.
Kudos to BSEE for their excellent Safety Alert program. Unfortunately, unacceptable delays in updating their incident tables and OCS performance measures data make it difficult to assess industry wide safety performance trends. The most recent data are for 2023, and some of those data raise concerns. For example, the number of fires (152) was the highest in the history of the performance measures data set (dates back to 1996) by some margin. What happened in 2024 and the first half of 2025? These data should be readily available and posted in a timely manner. No offshore facility fire is trivial.
In addition to the Johnson filing, at least 7 other law firms (links below) have announced class action litigation alleging that Sable Offshore made false or misleading statements regarding the restart of Santa Ynez Unit production.
“This is a significant achievement for the Interior Department and aligns with the Administration’s Energy Dominance initiative, as it successfully resumed production in just five months.“
Will the Dept. of Justice intervene on behalf of Sable?
Meanwhile, Sable’s share price rebounded in mid-July and is holding up surprisingly well (see below). Perhaps investors don’t see the class action suits as a significant incremental threat given the risks associated with decisions by 8 California agencies, Santa Barbara County, and various judges, and the persistent challenges by well-organized opponents of offshore production.
BOEM’s streamlining rule codified the deferred financial assurance option. The rule authorizes the transfer of decommissioning risks from developers to taxpayers and consumers by (1) not requiring any additional supplemental financial assurance at the Construction and Operations Plan (COP) approval stage, (2) not requiring supplemental assurance at the installation stage, and (3) providing for incremental supplemental assurance post-installation (e.g. for Vineyard Wind, the full amount is not due until 15 years after installation). See the rule’s previous and current language in the table below (emphasis added).
30 CFR 585.516 – What are the financial assurance requirements for each stage of my commercial lease?
financial assurance required before BOEM will:
language prior to 4/24/2024 “modernization” rule
current language
Approve your COP
A supplemental bond or other financial assurance, in an amount determined by BOEM based on the complexity, number, and location of all facilities involved in your planned activities and commercial operation. The supplemental financial assurance requirement is in addition to your lease-specific bond and, if applicable, the previous supplement associated with SAP approval.
There is no supplemental bond requirement at the COP approval stage.
Allow you to install facilities approved in your COP
A decommissioning bond or other financial assurance, in an amount determined by BOEM based on anticipated decommissioning costs. BOEM will allow you to provide your financial assurance for decommissioning in accordance with the number of facilities installed or being installed. BOEM must approve the schedule for providing the appropriate financial assurance coverage.
A supplemental bond or other authorized financial assurance in an amount determined by BOEM based on anticipated decommissioning costs of the proposed facilities. If you propose to incrementally fund your financial assurance instrument, BOEM must approve the schedule for providing the appropriate financial assurance.
The current financial assurance language is fuzzy enough that BOEM could deny deferred funding requests and require full financial assurance at the time facilities are installed. However, revising the language to clearly require that assurance be fully demonstrated prior to installation would provide clarity and eliminate the deferral option going forward.
The more difficult challenge may be adjusting financial assurance requirements for the projects already under construction. It’s also important to ensure that parent corporations are not shielded from decommissioning and other liability risks.
A new court filing (attached) informs that the Dept. of the Interior is reconsidering the Construction & Operations Plan (COP) approval for US Wind’s Maryland Offshore Wind (“MarWin”) Project (maps above). That approval is the subject of litigation filed by Ocean City MD and others.
The key section of the Federal government’s filing is pasted below.
An extension in this case is necessary as Interior intends to reconsider its COP approval and move in the District of Maryland—the first-filed case—for voluntary remand of that agency action. See, e.g., Util. Solid Waste Activities Grp. v. EPA, 901 F.3d 414, 436 (D.C.Cir. 2018) (recognizing that administrative agencies have the authority to reconsider their decisions). The outcome of Interior’s reconsideration has the potential to affect the Plaintiff’s claims in this case.
Bud's Offshore Energy (BOE) 