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John Smith comments on BOEM’s financial assurance proposal

April 14, 2026 by offshoreenergy

John Smith’s decommissioning presentation in Santa Barbara

John Smith‘s excellent comments on the BOE post about the proposed revisions to decommissioning financial assurance regulations warrant a separate post. John’s comments are pasted below.

It’s clear the proposed rules have been designed to reduce financial burdens on OCS oil and gas operators, especially small independents. The proposed rules do this by:

  1. Waiving the requirement of the operator/lessees to obtain supplemental financial assurance to cover decommissioning obligations if jointly and severally liable predecessors are determined to have the financial capability to cover the obligations.
  2. Lowering the credit rating threshold BOEM uses for evaluating the financial health lessees and grantees from BBB- to BB- from S&P Global Ratings (S&P) or Baa3 to Ba3 from Moody’s Investor Service Inc.
  3. Revising the level of BSEE probabilistic estimates of decommissioning cost used for determining the amount of supplemental financial assurance required from P70 to P50.

I don’t see any rationale for lowering the credit rating threshold, which would apply to both current and predecessor lessees.  A BB- and a Ba3 rating is considered “non-investment grade” or “junk,” meaning the company is more vulnerable to adverse economic conditions, such as a downturn in oil and gas prices.  Current market estimates place the 3-year probability of default for a BB- rating at approximately 12.5% to 13%. Lowering the credit rating significantly increases the risks of default by lessees and transfers the risk to the federal government and taxpayers.

Reducing the BSEE probabilistic criteria for determining the amount of supplemental financial insurance required from P70 to P50 means there is a 50% chance BSEE cost estimates for decommissioning are underestimated further increasing risks borne by the federal government and taxpayer.  

BOEM should reverse course and maintain the current credit rating threshold (BBB- and Baa3) and the P70 criteria.

Posted in decommissioning, Offshore Energy - General, Regulation | Tagged , , , , , , , , | Leave a Comment »

If you care about property rights and Santa Barbara County history, this quote may concern you

April 13, 2026 by offshoreenergy

Background: By a 3-2 vote, the Santa Barbara County Planning Commission, acting under the direction of the Board of Supervisors (also by a 3-2 vote), passed ordinances to ban new onshore oil and gas wells and phase out old wells.

The quote:

“We keep discovering new oil and new techniques to recover it,” said Commissioner John Parke. “The only thing to stop the oil industry and the production of oil is legislation.”

Comments:

  • The first sentence is perceptive, acknowledging that resources are not really finite given the ingenuity of engineers and geologists.
  • The second sentence is disturbing. The Commissioner believes he is legally and morally entitled to terminate an industry that has been present in Santa Barbara County for >130 years. He believes the Commission can do so by a slim majority and without compensation to those whose property rights are being abrogated.
  • The 2 Commissioners voting against euthanizing the County’s oil industry represent Districts 4 and 5 (maps below) where most of the wells are located. In essence, South County Santa Barbara is terminating an industry that is important to North County.
  • Pertinent to the County’s action is a suit filed by John and Melinda Morgan, who inherited the mineral rights to two parcels in the Cat Canyon Field (District 4). They argue that a similar provision in CA Senate Bill 1137 amounts to an unconstitutional taking of their property.
District Boundaries
Oil Wells

Posted in California, energy policy, Regulation | Tagged , , , , , , , | 1 Comment »

Vineyard Wind and GE Renewables clash heightens decommissioning financial assurance concerns

April 11, 2026 by offshoreenergy

Three wind turbines, including one with a damaged blade, at the Vineyard Wind offshore site in November 2024. Credit: Eleonora Bianchi / The New Bedford Light.

Yet another chapter in the Vineyard Wind saga:

New Bedford Light: Vineyard Wind on Wednesday sued its turbine supplier, GE Renewables, in civil court in Boston, alleging GE is breaching its contract and planning to abandon the project by April 28 — during the critical final stage of coming fully online.

According to the complaint, GE filed a termination notice with Vineyard Wind in late February for its contracts to supply wind turbines and service and maintain them, citing more than $300 million in claims unpaid by Vineyard Wind.

If GE exits, Vineyard Wind says, the project “will likely fail, leaving the windfarm stranded.”

The New Bedford Light provides more details on the litigation.

Remember, BOEM waived the “pay as you build” decommissioning financial assurance requirement for Vineyard Wind and subsequently relaxed financial assurance requirements for all offshore wind projects.

Posted in decommissioning, energy policy, Offshore Wind, Regulation | Tagged , , , , , | Leave a Comment »

North Sea: Norway explores, UK snores

April 10, 2026 by offshoreenergy

Some of us remember when the UK and Norway were friendly North Sea oil and gas rivals – competing to be tops in production, technology, safety, and even promotion at conferences like OTC. Take a look at the production chart below and note the UK’s production leadership followed by the extraordinary decline.

So what happened? Norway may have better oil and gas resource potential, but that is only part of the story. While Norway was managing their offshore sector to succeed, the UK was seemingly managing theirs to fail.

Norway’s North Sea remains far more active because the government promotes exploration through predictable licensing, cost-recovery incentives, and a focus on adding resources to existing infrastructure.

The UK, by contrast, has shifted toward limited development and decommissioning. In recent years, the UK’s windfall tax on oil and gas profits was raised to 78 percent, and licences for exploratory drilling in new areas were banned.

In 2022, the UK government even changed the name of the Oil and Gas Authority to the more trendy North Sea Transition Authority. (Changing names is one thing; delivering reliable energy at reasonable prices is quite something else.)

The stark policy differences are evident in the exploration drilling numbers – sustained drilling vs. sustained decline (charts below).

Norwegian Continental Shelf Directorate data
UK NSTA data:exploration wells spudded with original wellbore intent classified as “exploration” (offshore UK includes geological sidetracks).

JL Daeschler shared this excellent response by Natalie Coupar (excerpts below) to tired anti-exploration arguments that are popular in the UK and elsewhere:

“Claim: Hundreds of North Sea licences have delivered only “36 days of gas”, proving new drilling does not improve energy security.

“This actually proves the opposite. In a mature basin like the North Sea, you need a constant churn of investment and new licences just to stand still. Without ongoing activity, decline accelerates and import dependence rises faster. That is why countries like Norway continue to license and develop new projects. Their approach allows them to replace what they produce and manage decline more effectively. In industry terms, this is measured through the reserves replacement ratio – how much new resource is added compared with what is produced. Norway consistently produces a higher reserves replacement ratio than the UK. Over the 5 year period 2019-2024, through exploration, Norway replaced on average 46% of the reserves that were produced, the UK however, replaced just 14%.“

“Today, the North Sea still provides over half of the UK’s oil and gas needs. With the right conditions, we can sustain production for longer, reduce exposure to imports, and manage the transition more securely. Without licensing and investment, the UK simply becomes reliant on overseas supplies sooner – regardless of demand falling.“

Claim: 93% of UK North Sea oil and gas has already been extracted, so new drilling makes little difference.

“Official projections show several billion barrels of oil and gas still expected to be produced between now and 2050. Independent analysis commissioned by OEUK shows that, with the right conditions, significantly more could be delivered from known projects and discoveries.“

“And even beyond that, the UK’s own regulator identifies large volumes of oil and gas in:

  • approved projects
  • existing discoveries
  • areas that haven’t yet been developed“

Pressure is mounting on the UK govt to approve the Rosebank and Jackdaw projects and ease exploration restrictions. Will it work?

Posted in energy policy, Norway, Offshore Energy - General, UK | Tagged , , , , , , , , | Leave a Comment »

Congratulations to Frank Musacchia – BSEE Inspector of the Year

April 9, 2026 by offshoreenergy

Frank Musacchia, a member of the New Orleans District Well Operations Unit, has been named BSEE’s Inspector of the Year for 2025.

“Honored to be named Inspector of the Year. I’m sincerely thankful to my supervisor and the management involved for recognizing my commitment to this mission, and I’m proud to work alongside the Well Operations Inspection team, whose support and professionalism elevate all of us. This award reflects our shared dedication to safety and the environment.”

Posted in Gulf of Mexico, Offshore Energy - General, Regulation | Tagged , , , , , | Leave a Comment »

Aquinnah Wampanoag Tribe continues to oppose wind projects that impact their historic and cultural homeland

April 9, 2026 by offshoreenergy

Wamsutta Frank James speaking in Plymouth, at the statue of Massasoit.

My wife has native American (Micmac) heritage. Her family has deep respect for the Wampanoag tribe, in part because of their friendship with Aquinnah Wampanoag elder and activist Frank B. (Wamsutta) James.

Frank rescued my father-in-law after a car crash on Cape Cod and was a close friend for the rest of his life. Frank and my father-in-law, who headed the Art Dept. at Barnstable H.S., had common interests in art and history. Frank was also a talented musician, and was my wife’s music teacher at Eastham Elementary School on the Outer Cape.

Frank fought for the rights of Native Americans long before it was fashionable. In 1970, the speech be wrote to commemorate the 350th anniversary of the arrival of the Mayflower was never delivered, because it was deemed to be inflammatory. In his draft remarks, Frank succinctly summarized the tribe’s recent history:

“Although time has drained our culture, and our language is almost extinct, we the Wampanoags still walk the lands of Massachusetts…. Our spirit refuses to die.”

This spirit is evident in their opposition to wind projects that impact their historic and cultural homeland.

If Frank was alive today, he would no doubt be tirelessly supporting the preservation efforts of the Aquinnah Wampanoag Tribe. Most recently, the tribe joined the Narragansett Tribe, Green Oceans, commercial fishermen, and others in a suit challenging federal approvals for the Sunrise Wind project. Green Ocean’s press release is attached.

GO+PressRelease-Sunrise-LawsuitDownload

Posted in energy policy, Offshore Wind, Regulation | Tagged , , , , , | 1 Comment »

Comments from the California AG and Sable Offshore on the special permit application to PHMSA

April 8, 2026 by offshoreenergy

I’m attaching the complete comment letters from Sable Offshore and their main antagonist, California Attorney General Bonta, in response to PHMSA’s public notice and request for comments on Sable’s special permit application.

Summary of the California AG’s assertions:

“First, PHMSA is without authority to grant such a special permit because Lines CA-324/325 are intrastate pipelines and California regulators have sole regulatory oversight over any attempt to restart these Lines and issue state waivers. Second, California has vested interests in ensuring Lines CA-324/325 operate safely and PHMSA’s proposed special permit would dilute the higher state safety standards that were imposed on Sable and therefore it is inconsistent with pipeline safety. 49 C.F.R. § 190.341(d). Third, given the fact Line CA-324 already failed and caused a catastrophic oil spill in 2015 in Santa Barbara County, even if PHMSA had authority to issue a special permit (which it does not), a more robust environmental analysis needs to be performed. Fourth, PHMSA unlawfully invokes the Endangered Species Acts’s emergency consultation procedures and has given no indication that it will consult with the National Marine Fisheries Service, in violation of the Act. Finally, Secretary Wright’s March 13, 2026, order (“DPA
Order”) does not change anything about the propriety of the Application, because the DPA Order itself is unlawful.”

Summary of Sable’s position (screenshot):

You can sample the other public comments, some of which are quite good, by visiting the Regulations.gov docket.

PHMSA-2026-0464-0067_attachment_1Download
California Comment LetterDownload

Posted in California, energy policy, Offshore Energy - General, pipelines, Regulation | Tagged , , , , , , , | 2 Comments »

Deepwater development takes time, unless you buy a project that is already producing 😉

April 7, 2026 by offshoreenergy

Shenandoah FPU

If Beacon and HEQ are willing sellers of their majority share in the impressive Shenandoah field, as appears to be the case (per Reuters), the big dogs are interested in buying. And why wouldn’t they be? Production began last July and the targeted rate of 100,000 bopd has already been achieved from just four phase-one wells.

Reuters reports that Total, Shell, BP, Repsol, and Chevron are interested in Beacon and HEQ’s 51% stake. More about Shenandoah:

  • located in Walker Ridge blocks 51, 52, and 53
  • ~150 miles off the coast of Louisiana
  • floating production unit (FPU) in 5800′ of water in WR block 52
  • true vertical reservoir depths ~30,000′
  • high pressure ~20,000 psi
  • Paleogene, Inboard Wilcox trend
  • FPU can host production from nearby subsea systems
  • capacity is being expanded to 140,000 bopd
  • estimated 600 million BOE recoverable including nearby tiebacks
  • other owner: Navitas Petroleum (49% share)

Investment companies like Beacon (owned by Blackstone) are positive, and increasingly necessary, contributors to the offshore program. These companies bring capital and new exploration strategies that increase development and production. They must, of course, be committed to safety excellence, which seems to be the case for Beacon.

It’s noteworthy that Anadarko and Conoco Phillips, Shenandoah’s major original partners holding 33% and 30% interest respectively, withdrew from the project in 2018 citing unsatisfactory appraisal results and weak commodity prices. Evaluation mistakes like this are common, which is why broad and diverse industry participation is needed. With mergers reducing the number of US majors (remember Amoco, Arco, Sun, Texaco, Getty, Mobil, Phillips, Marathon, Unocal, Superior, Hess, etc.), investment companies play an increasingly important role in OCS development.

Shenandoah, WR 51, 52, 53 (center blocks); green=active leases prior to Sale 261; blue=leased issued after Sale 261

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2019 vs. 2025 Gulf oil production: dead heat

April 6, 2026 by offshoreenergy

The EIA has revised Gulf of America oil production slightly downward for Nov. and Dec. such that we now have an absolute dead heat between 2025 and 2019. Production for both years averaged exactly 1.898 million bbls/day.

Because of the ~6 month lag in obtaining verified OCS production data from the Office of Natural Resources Revenue (ONRR), the monthly EIA reports are based on ONRR’s more timely sales of production data. The final sales and production numbers are typically very close. For the 2019 record OCS production year, both the EIA and ONRR report identical Gulf production of 1.898 million bopd.

Meanwhile, 2026 Gulf production (chart below) is off to a strong start – 2.019 million bopd in January. This is the third highest monthly oil production in the history of Gulf operations.

Finally, California OCS oil production, which has been hobbling along at ~10,000 bopd (2nd chart) will see a massive increase of up to 500% should Santa Ynez Unit production continue.

Posted in California, Gulf of Mexico, Offshore Energy - General | Tagged , , , , , , , , | Leave a Comment »

Breaking news: BOEM and BSEE to be combined to form the Marine Minerals Administration

April 3, 2026 by offshoreenergy

“The Department of the Interior today announced the start of a phased plan to establish the Marine Minerals Administration, bringing together the functions of the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement. This action is intended to improve coordination and increase efficiencies across offshore leasing, permitting, inspections and environmental oversight, while maintaining all existing regulatory protections and rigorous safety standards. 

This streamlined approach reflects the evolution of offshore energy development and the need for a more integrated approach to managing conventional and emerging resources such as critical minerals. By aligning planning, leasing and oversight functions, the Department is positioning the agency to better meet current and future energy demands.“

This is an excellent step that many OCS program veterans have been advocating. In addition to the inefficiencies associated with overlapping and intertwined BOEM and BSEE responsibilities, the associated regulatory fragmentation is a significant safety risk factor.

See the comments that I submitted to the Dept. of the Interior in response to their request for regulatory reform recommendations.

Posted in energy policy, Regulation | Tagged , , , , , , , | Leave a Comment »

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