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Archive for the ‘Regulation’ Category

Sable production restart: another step sideways?

Posted in California, Offshore Energy - General, Regulation, tagged , , , , on July 24, 2025| Leave a Comment »

In the Independent, Nick Welsh aptly described the latest court decision in the long and winding road that Sable Offshore hopes will lead to Santa Ynez Unit production:

“When Judge Donna Geck got through ruling on the latest showdown between Sable Offshore Oil and Santa Barbara’s environmental establishment last Friday morning, it wasn’t clear if the no-nonsense judge cut the proverbial baby in half or kicked the can down the proverbial road.” 

Bottom line: The judge will “continue to bar the Fire Marshal from taking any steps to process Sable’s restart application until 10 days after Sable had received all the necessary permits and approvals from the myriad of state, federal, and local agencies that enjoy some degree of regulatory oversight over the proposed project.” Does that mean any agency, even one with a minor or questionable role, can block the project?

As the author notes:

“As of this writing, it’s not entirely clear which of those agencies have yet to issue Sable the permits it needs to start the restart process and when they’re likely to do so, if at all. Even less clear is whether there’s any agreement among the dueling parties as to which agencies have standing to even weigh in.”

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Regulatory reform comments

Posted in energy policy, Offshore Energy - General, Regulation, tagged , , , , , , on July 23, 2025| Leave a Comment »

My comments in response to the Dept. of the Interior’s regulatory reform notice are attached. First and foremost, I believe these recommendations would reduce safety and environmental risks. Second, I am confident that they would also reduce governmental costs and the regulatory burden on industry.

The first attachment discusses regulatory fragmentation and recommends actions to reduce the complexity and redundancy of the offshore regulatory regime. The second attachment proposes a Drilling Safety Leaders Pilot Program as a means of evaluating a more adaptable framework regulatory framework for operators with outstanding performance records.

DOI-2025-0005 Regulatory ReformDownload
Drilling Safety Pilot – WOMP- 7-2025Download

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Regulatory reform is not just about rescinding rules

Posted in energy policy, Offshore Energy - General, Regulation, tagged , , , , on July 18, 2025| Leave a Comment »

IMG0009
Drilling Safety Leaders Pilot Program to be proposed.

 Comments on the Dept. of the Interior’s regulatory reform initiative are due by July 21.

DOI’s “Deregulation Suggestions” form implies that their review may be limited in scope. The form focuses solely on rescinding regulations. True regulatory reform requires a broader assessment of regulatory methods and strategies.

Offshore safety regulations address known or perceived operational risks. Deleting individual provisions without considering the effect on the regulatory objective could introduce new risks without reducing the burden on operators and regulators.

More meaningful regulatory reform, and the associated improvements in operator and regulator efficiency, can be achieved by addressing regulatory fragmentation and providing regulatory incentives for companies with outstanding safety and environmental performance records.

My comments to DOI will address fragmentation and the challenges associated with updating regulations and standards. A Drilling Safety Leaders Pilot Program will be proposed. This pilot program would offer a more flexible regulatory regime for operators with outstanding safety records.

The regulatory system can constrain leading operators and delay innovation. The top performers should be encouraged to stay ahead of the technology and management curves. Most of the requirements that were added after Macondo had been adopted by leading operators well before the blowout.

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Senate version of the Big Beautiful Bill was enacted

Posted in energy policy, Offshore Energy - General, Regulation, tagged , , , on July 7, 2025| Leave a Comment »

See the differences in the OCS oil and gas provisions in the House and Senate versions.

We preferred the House version, but the Senate Parliamentarian killed the provisions that reduced the risk of litigation and processing delays.

Whether justified or not, the royalty rate is now capped at 1/6 and a 10-year deepwater lease term is locked in.

The favorable terms and assurance of regular GOA lease sales put the ball squarely in industry’s court. We are looking for a good showing at Sale 262, including some new bidders and the return of some prominent companies.

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Updated Gulf of America flaring and venting report: good news on oil-well gas venting, otherwise disappointing

Posted in flaring and venting, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , on June 26, 2025| Leave a Comment »

Minimizing flaring and venting is important from both environmental and resource conservation standpoints. Flaring and venting volumes are also good indicators of how well production systems are designed, managed, and maintained.

The best performance indicators are the percentages of produced gas that are flared and vented both for oil-well gas (OWG, also known as associated or casinghead gas) and gas-well gas (GWG or non-associated gas).

Updated flaring and venting volumes for the Gulf of America have been compiled using monthly data submitted to the Office of Natural Resources Revenue (ONRR). This is the best data source because reporting is mandatory and strictly enforced, and flaring and venting are accounted for separately.

In assessing performance trends, it’s important to segment venting and flaring volumes for both OWG and GWG production. Venting produced gas (mostly methane) is a more significant environmental concern from both air quality and greenhouse gas (GHG) perspectives.

Flaring and venting data for 2019-2024 are summarized in the table below. All volumes are in millions of cubic feet (MMCF).

Notes and comments:

  • The more disappointing 2024 numbers are entered in red. The blue numbers, all related to OWG venting, are encouraging.
  • The % of all produced gas that was flared or vented in 2024 (1.3%) was the highest in the past 10 years (see the chart below the table). Until 2018, annual flaring/venting rates of <1% of production were commonly achieved. This should be the target going forward.
  • OWG flared increased significantly from 2023 levels, both in terms of the volume (7.26 billion cu ft) and the % of OWG produced (1.22%).
  • Production curtailments and restarts related to Tropical Storms Francine and Helene may have contributed significantly to the 2024 flaring increase. ONRR’s monthly reports show a near doubling of the average monthly flaring volume in Sept., when Francine and Helene shut-in 42% and 29% of oil production respectively. However, even if the Sept. flaring surge is normalized to the monthly average for the other 11 months, the total 2024 flaring still exceeds the 2023 volume by 361 MMCF.
  • The % of GWG vented in 2024 was the highest in the 6 year period and double the 2019, 2020, 2021 rates. Inefficiencies associated with the dramatic decline in GWG production, down 41.5% from 2023, may be a contributing factor.
  • The continued decline in OWG venting to only 0.16% in 2024 is encouraging. The decline should be sustainable given that most OWG is now produced at modern deepwater platforms equipped with efficient flare stacks.
  • Given the significance of these data, from safety, conservation, and environmental perspectives, a more comprehensive analysis by the offshore industry and regulators should be a priority.
  • Related posts
201920202021202220232024
OWG flared772773855919698763427260
OWG vented25781984140516381230965
OWG produced670,699582,254582,824581,235598,005595,600
% OWG flared1.151.271.021.201.061.22
% OWG vented0.380.340.240.280.210.16
GWG flared405432311213212232
GWG vented958578548722468465
GWG produced364,082224,808209,558203,342152,40089,167
%GWG flared0.110.190.150.100.140.26
%GWG vented0.260.260.260.360.310.52
total flared and vented11668102338183955982528922
total gas production1,034,782807,062792,382784,577750,405684,758
% flared or vented1.131.271.031.221.101.30
total vented353624161953236016981430
% vented0.340.300.250.300.220.21
total flared813278176230720065547492
% flared0.790.970.790.920.871.09
OWG=oil well gas; GWG=gas well gas; all volumes are in MMCFG

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Unfavorable trend for Gulf of America flaring

Posted in flaring and venting, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , on June 24, 2025| Leave a Comment »

As the chart indicates, the % of flared or vented Gulf of America gas production increased over the past 10 years. This trend is presumably due, at least in part, to the sharp increase in the % of gas production from oil wells (associated gas), which have a higher flaring rate. In 2024, 87% of Gulf gas production was from oil wells.

Flaring/venting summary tables and comments, updated through 2024, will be posted later in the week.

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BSEE Safety Alert: fires while attempting to start pipeline pumps at Gulf of America platforms

Posted in accidents, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , , on June 23, 2025| Leave a Comment »

The Safety Alert is attached. Per BSEE, the fires resulted from an accumulation of gas caused by improperly installed or disconnected exhaust vent piping on gas starters.

Incident 1: Two workers sustained burns to the hands, arms, and face. BSEE investigators discovered that the engine’s air intake hose was disconnected, which may have allowed gas-enriched air to be drawn into the carburetor causing the backfire.

Incident 2: While attempting to start the gas engine of a pipeline pump, the lead mechanic sprayed ether into the engine’s carburetor. The exhaust vent piping for the starter had not been installed. The combination of the gas-rich atmosphere and ether caused the engine to backfire and ignited the
accumulated gas. The lead mechanic, sustained burns to his face, arms, and hands.

The Alert includes important recommendations for proper venting, mechanical integrity awareness training, maintenance, and the use of gas detectors and a temporary fire watch during engine startup.

BSEE Safety Alert 503 – Personnel Burned by Fire due to Improper Venting of Gas Starters on EnginesDownload

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Total couldn’t bid jointly with Chevron for leases they now own jointly. Time to ditch the joint bidding restrictions!

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , on June 20, 2025| Leave a Comment »

This week Total announced the acquisition of a 25% working interest in 40 Chevron leases in the Gulf of America. Total already owned interest in Chevron’s producing Ballymore (40%), Anchor (37.14%), Jack (25%), and Tahiti (17%) fields. Ironically, Federal regulations prohibited Total from jointly bidding with Chevron for any of those leases at the time of the sales. How does that make sense?

Restrictions limiting joint bidding by major oil companies date back to the Energy Policy and Conservation Act of 1975. Although these restrictions were intended to increase competition and revenues, OCS program economists have asserted, and studies have shown, that the ban results in fewer bids per tract and lower bonuses to the government.

Total did not submit a single bid in any of the past 4 Gulf of America lease sales. Perhaps they prefer to acquire interest in blocks previously leased to companies like Chevron. That is a reasonable acquisition strategy. However, farm-in acquisitions yield no bonus dollars to the Federal government. Wouldn’t it have been in the government’s best interest if some of those acquisition dollars were spent at lease sales where the bonus bids go to the US Treasury? It’s long past time to remove the joint bidding restrictions!

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BSEE inspections identify safety device bypass management issues

Posted in accidents, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , on June 12, 2025| 2 Comments »

As explained in the attached Safety Alert, BSEE’s risk-based inspection program has identified deficiencies in safety device bypass practices including:

  • inadequate documentation
  • inoperative data history software
  • bypassing more devices than is necessary
  • bypassing devices for longer than necessary
  • missing audit documentation
  • mistakenly bypassing the entire safety system during production

The regulations restricting the bypassing of safety devices are core elements of OCS regulatory and operator management programs. Because they are critical to process safety, these requirements are widely supported and strictly enforced.

BSEE Safety Alert 501-BSEE Identifies Bypassed Safety Device DeficienciesDownload

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Comments on the operator responsibility and unlimited liability provisions of Guyana’s Oil Spill Bill

Posted in Guyana, oil spill response, Regulation, well control incidents, tagged , , , , , , on June 6, 2025| Leave a Comment »

Guyana’s Oil Spill Bill (attached) has much in common with the Oil Pollution Act of 1990 that we implemented for US offshore faciities and the International Convention on Oil Pollution Preparedness, Response and Co-operation that I attended in 1990. A couple of issues warrant highlighting:

Operator/licensee responsibility:The definitions correctly establish the operator or license holder as the responsible party. This means that in the event of a well blowout while drilling from a mobile drilling unit, the licensee/operator would be the responsible party. This aligns with the “operator responsibility” mantra that is fundamental to the US offshore program. Drilling and other contractors are managed by the operator and are the operator’s responsibility.

Unlimited liability: The liability section (Part VI) establishes an unlimited liability standard for the responsible party. As previously discussed in more detail, this is a daunting, open-ended obligation that would trouble permittees in any industry. The unlimited liability provision could preclude responsible independent operators, including Guyanese companies, from seeking licenses.

The unlimited liability standard (par. 17) is qualified with a provision (pasted below) that also favors major international companies.

The unlimited liability provision therefore does not seem to apply to parent companies idemnifying a project. This was a point of contention during the parliamentary debate. The Kaieteur News delves into the issue and is not entirely convinced by the Government’s defense. Their article closes as follows:

It is important to note that stakeholders have argued that since ExxonMobil Guyana Limited (the responsible party) does not have adequate assets, the burden of oil spill-related costs could be left on Guyana, especially in the absence of unlimited coverage from the parent company. These and other “flaws” have prompted Guyanese to urge President Irfaan Ali not to assent to the Bill, passed in the National Assembly on May 16, 2025. Be that as it may, the Ministry maintained that the “robust statutory framework now established protects Guyana and its people.”

Oil-Spill-Bill-2025Download

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