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Archive for the ‘Regulation’ Category

Part VIII, Offshore OIl and Gas Leasing, is a good read for those interested in OCS leasing policy. This cleverly crafted part of the bill specifies leasing schedules, streamlines the leasing process, and minimizes litigation risks. Highlights:

  • Minimum royalty rates return to 12.5% from 16.67% post-IRA. (This is good for small, shelf producers.) The maximum rate remains 18.75%.
  • Requires a Gulf of America lease sale by 8/15/2025, a sale by 3/15 and 8/15 in each of the following 14 years (2026-2039), and a sale by 3/15/2040. 80+ million acres must be offered at each sale unless that amount of acreage is no longer available for leasing.
  • The lease form, lease terms, economic conditions, and stipulations 4 through 10 must be the same as for Lease Sale 254 (3/18/2020). Stipulations 1-3 may be updated.
  • Requires seven 1+ million acre (if available) Cook Inlet lease sales from 2026 – 2032. Beginning in 2035, 90% of the revenues go to the State of Alaska.
  • The required lease sales may be in addition to the lease sales held under the 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program.
  • Adherence with the Biological Opinion shall satisfy the Secretary’s obligations under the Endangered Species Act of 1973 and the Marine Mammal Protection Act of 1972
  • Previous EIS’s for the Gulf of Mexico shall satisfy the Secretary’s NEPA obligation.
  • Consistency determinations prepared by BOEM for Lease Sale 261 for the States of Texas, Louisiana, Mississippi, Alabama, and Florida will satisfy the Secretary’s CZMA obligations.
  • The Secretary may waive any requirement under the Outer Continental Shelf Lands Act that the Secretary determines would delay issuance of a lease.
  • A lease must be issued to the highest responsible qualified bidder not later than 90 days after the sale date.
  • The Secretary shall establish a process through which a Governor may nominate for leasing under a lease sale held under this section an area of the OCS that is adjacent to the waters of the State; and is unleased and available for leasing. If the Governor of a State nominates an area, the Secretary shall include the area in the next scheduled sale. (It appears that this provision applies only to the Gulf of America. Objective?)
  • G&G surveys must be approved within 30 days after a complete application is received.
  • A lease awarded under Lease Sale 259 or Lease Sale 261 shall not be set aside, vacated, enjoined, suspended, or cancelled except in accordance with section 5 the Outer Continental Shelf Lands Act (43 U.S.C. 1334). Also, new terms or conditions may not be added to these leases. (This protects lessees from pending litigation related to these leases).
  • Any action to approve, require modification of, or disapprove any exploration plan, development and production plan, bidding procedure, lease sale, lease issuance, or permit or authorization related to oil and gas exploration, development, or production, or any inaction resulting in the failure to hold a lease sale shall be subject to judicial review only in a United States court of appeals for a circuit in which an affected State is located.

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Their filing is attached. I found the following points to be particularly compelling:

p.3: “Despite no evidence that an Oil and Gas Program vessel has ever struck a Rice’s whale, the 2025 BiOp projects that Oil and Gas Program vessels will lethally strike numerous Rice’s whales over the term of the 2025 BiOp. On that basis alone, the Service found that the Oil and Gas Program will jeopardize the continued existence of the Rice’s whale, and developed a multi-step reasonable and prudent alternative which it asserts will reduce projected vessel strikes to zero.

p. 4: “The Rice’s whale is a rarely found animal that the Service first identified as a new species (separate from the non-endangered Bryde’s whale) in 2021. 86 Fed. Reg. 47,022 (Aug. 23, 2021). There is no evidence that an Oil and Gas Program vessel has ever struck a Rice’s whale (or a Bryde’s whale) despite continued operation in the Gulf over many decades.”

p. 5: “The 2025 BiOp disregards the Bureaus’ logical, fact-based conclusion. Instead, the Service’s 2025 BiOp engages in speculation and guess-work to surmise that Oil and Gas Program vessels could be striking and killing Rice’s whales on a regular basis. The Service ignores the best available data (i.e., showing no recorded observations of an oil and gas vessel striking a Rice’s whale) and instead presumes that forceable and lethal collisions between oil and gas service vessels and 60,000-pound whales are regularly occurring but somehow going unnoticed by the vessels and their crews and that the carcasses silently disappear into the water, never to be seen again.

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National Marine Fisheries Service (NMFS) biological opinion dated 5/20/2025

Background:

  • Section 7(a)(4) of the Endangered Species Act (ESA) requires federal agencies to confer with NMFS on any action that is likely to jeopardize the continued existence of proposed species or result in the destruction or adverse modification of proposed critical habitat.
  • Section 7(b)(3) of the ESA requires that at the conclusion of consultation, NMFS provides an opinion stating whether the Federal agency’s action is likely to jeopardize ESA-listed species or destroy or adversely modify designated critical habitat.
  • Last year, the U.S. District Court for the District of Maryland vacated the NMFS 2020 Biological Opinion for Gulf of Mexico Oil and Gas activities effective May 21, 2025, so failure to complete the opinion by that date would have jeopardized oil and gas operations in the Gulf.

Key points in the biological opinion:

  • p. 598: The proposed action is not likely to jeopardize the continued existence of sperm whale, Northwest Atlantic loggerhead sea turtle, Kemp’s ridley sea turtle, North Atlantic DPS green sea turtle, leatherback sea turtle, hawksbill sea turtle, or Gulf sturgeon.
  • The proposed action is not likely to destroy or adversely modify loggerhead or Gulf sturgeon designated critical habitat, or proposed critical habitat for green sea turtle North Atlantic DPS or Rice’s whale.
  • p. 599: The operation of oil and gas vessels in the Gulf of America, in an area where the endangered Rice’s whale occurs, is likely to jeopardize the continued existence of the whale due to the risk of vessel strike.

According to NMFS, the reasonable and prudent alternative (see below) reduces or avoids the primary threat to Rice’s whales, the risk of injurious and lethal vessel strike interaction. The impacts of other stressors are more limited in space and time, diffuse, or not likely to result in adverse effects to Rice’s whale.

The reasonable and prudent alternative (RPA) requires the following as it relates to vessel activity in the action area. More detail on p. 601:

  1. Immediately begin to use technology to enable Rice’s whale vessel strike avoidance and monitoring of presence of Rice’s whale.
  2. Establish an expert working group to support development and implementation of a Rice’s whale vessel strike avoidance technology plan (RW Tech Plan)
  3. Improve understanding of Rice’s whale vessel strike risk associated with the proposed action
  4. Develop a Rice’s whale vessel strike avoidance technology plan (RW Tech Plan)
  5. Undertake independent peer review
  6. Implement Rice’s whale vessel strike technology plan
  7. Monitor Rice’s whales to ensure no likelihood of jeopardy during RPA implementation

Comment: Because the risk to the Rice’s whale in the central and northwestern GoA is highly speculative (see analysis by Darren Ireland), the RPA is arguably excessive. However, I like the RPA’s technological and management system focus.

Unsurprisingly, Earth Justice et al found the NMFS opinion inadequate and filed a suit (attached) in Maryland calling on the court to vacate the opinion and grant injunctive relief.

How can they sue in a Federal court in Maryland, far away from the Gulf? The venue was ostensibly chosen because NMFS headquarters are located in a Maryland suburb of DC. The Maryland court is also likely to favor the plaintiffs, which may have been a factor in the choice of venue. It’s a great country! 😉

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A good Nick Welsh, Santa Barbara Independent article has been brought to my attention by John Smith. Bonus points for the baseball analogy:

In baseball, ties famously go to the baserunner, but in county government it’s forced a legal fight in the courts.”

The oil company Sable Offshore is insisting that when the County Board of Supervisors voted 2-2 on whether or not to allow another oil company, Exxon, to transfer its permits to Sable, the tie goes to Sable.”

Accordingly, Sable — much in the limelight recently — just filed a lawsuit against the Santa Barbara County Board of Supervisors in federal court to make that point. Joining Sable in this dispute is ExxonMobil, the oil giant that sold Sable its three offshore platforms, its 120-mile pipeline, and its onshore oil storage and processing facilities known as the Santa Ynez Unit two years ago.”

Because the Planning Commission had voted  3-1 to allow the transfer, Sable argues that the 2-2 Supervisors vote upholds the Planning Commission decision.

Never a dull moment in the Santa Ynez Unit restart doneybrook. More on the tie vote here and here.

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BOEM paper on High Voltage Direct Current cooling systems

Protect Our Coast NJ submitted a petition (attached) on May 12, 2025 requesting EPA to withdraw a permit that would allow the Sunrise Wind to use an open loop cooling system. The gist of the filing:

Sunrise Wind has obtained an EPA permit to pull nearly 8 million gallons per day (MGD) of seawater from the Atlantic Ocean and discharge it, after use in cooling and mixture with sodium hypochlorite (chlorine), back into the environment at elevated temperatures. This open-loop system was authorized by EPA Region 1 under NPDES Permit MA0004940. However, approval of this method ignores EPA’s Best Technology Available (BTA) requirement and no rigorous alternatives analysis was conducted to justify this method over a closed-cycle cooling system, despite the known and broad negative environmental impacts that will result, including harms to early life stages of marine species.
The facility lies within a biologically rich and economically vital region of southern New England and the New York Bight. NMFS and BOEM have acknowledged this area as essential fish habitat (EFH) for numerous federally managed species, including Atlantic cod, winter flounder, and longfin squid.

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John Smith reports that Sable has cleared another significant hurdle in its attempt to restart production in the Santa Ynez Unit. The California DEPARTMENT OF PARKS AND RECREATION has determined that no permit is required for the pipeline anomaly digs in Gaviota State Park (see attached).

The reasons for the exemption are that the project consists of repairs to an existing facility with no expansion of use, and the footprint of the pipeline remains the same.

Maybe the SYU restart is not Mission Impossible after all.

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Orsted photo: wind wakes trailing turbines at Vattenfall’s Horns Rev wind farm offshore Denmark

A previous post on wind theft and a recent BBC article point to the rather limited understanding that wind developers and govt land managers have about wind resource management including optimal turbine spacing and protection of correlative rights. Wind is considered a renewable energy resource, but the energy lost through inefficient operating practices is not renewable.

Given that the wake effect can extend for more than 100 km, reduce downwind energy production by >10%, and affect biological productivity, a better understanding of this phenomenon should have preceded the installation of thousands of turbines.

Wind resource management is reminiscent of the early years of oil production when the “law of capture” reigned supreme and wasteful production practices were a self-defense mechanism.

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John Smith shared an outstanding paper (attached) that was presented by co-author Robert Byrd at the SPE Regional Meeting in Garden Grove, CA last week.  

 

John Smith: “My objective in writing the paper is to hopefully spur legislators to recognize the benefits of reefing and the legislative fixes required to facilitate reefing and the removal of aging infrastructure.  The California Department of Fish and Wildlife Habitat Lead was very complimentary of the paper and has distributed it to the Interagency Team which is developing a California Artificial Reefing Plan.”  

John adds: “They are in the process of creating a statewide artificial reef plan and you can sign up for updates and get more information. The California Artificial Reef Program (CARP) Plan won’t discuss the specifics of Rigs-to-Reefs but will be compliant with the National Fisheries Enhancement Act and National Artificial Reef Plan and meet the BSEE requirement of having an adopted state artificial reef plan. The intent is to add an addendum to the plan when resources become available to move Rigs-to-Reefs forward in California. You can check out the latest program update that further discusses the CARP Plan and Rigs-to-Reefs.”

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Coast Guard photo. Thanks to Lars Herbst for bringing this incident to my attention.

In what the Coast Guard is describing as an “uncontrolled discharge” (euphemism for blowout), an 82-year-old oil well has been spewing oil, gas, and water into the coastal marshes of southern Plaquemines Parish, Louisiana, for more than a week.

In hopes of future production, prior and current owners had elected not to permanently plug the well, apparently with the State’s acquiescence.

The well is currently operated by an affiliate of Spectrum Energy. Typical of these situations, the previous owner, Whitney Oil and Gas, was in bankruptcy.

The Coast Guard has taken over the response and has accessed the Oil Spill Liability Trust Fund.

We don’t need relaxed decommissioning and financial assurance requirements. We need a cooperative Federal, State, and industry effort to ensure that wells are plugged in a timely manner and that financial assurance is provided to protect the public interest.

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The U.S. Department of the Interior today (5/2/2025) announced its intent to “update” the Bureau of Ocean Energy Management’s 2024 Risk Management and Financial Assurance for OCS Lease and Grant Obligations Rule. 

Those who are concerned about minimizing the Federal government’s decommissioning risk exposure should closely monitor this process. Some companies and their political allies have sought to minimize the financial risks associated with plugging wells and removing facilities. As a result, it has been necessary to defend BOEM from unwarranted commentary about decommissioning issues and the financial assurance rule. Stay tuned!

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