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The 2024 election results will have major implications for the OCS program

November 6, 2024 by offshoreenergy

Offshore oil and gas:

  • The current 5 year OCS oil and gas leasing plan, which provided for the fewest sales in history, will be rewritten.
  • The new program will include at least one Gulf of Mexico lease sale annually.
  • Where there is State support (e.g. Alaska), other offshore areas may be added to the program.
  • Reversal of the Beaufort Sea Presidential withdrawals, either by executive order or, if necessary, by congressional action, is a distinct possibility.
  • A Gulf of Mexico oil and gas sale will be held during the first half of 2025. This can be accomplished under the Biden administration’s 5 year plan.
  • Judge Boardman’s ruling requiring a new biological opinion under the Endangered Species Act (ESA) has created some uncertainty regarding the timing of a GoM sale. Her decision is being litigated and the effective date of her ruling is now 5/21/2024 (see attached). Congressional action could also reverse this decision.
  • Expect other litigation on NEPA and ESA grounds with the intent of stalling oil and gas leasing. Congressional action could reverse or limit such litigation.

Offshore wind:

  • Expect offshore wind leasing to be “paused.”
  • Current leaseholders are contractually entitled to continue developing and operating their leases. Expect construction and operation plans to be more closely scrutinized.
  • Expect BSEE’s report on the Vineyard Wind turbine blade failure to receive added attention and publicity.
  • Expect considerable tension between North Atlantic governors, strong supporters of offshore wind, and the new administration.

Expect less babble about absurd topics like “petro-masculinity.” 😉

241021 – NMFS GOM BiOp – Order for MarylandDownload

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Chevron CEO sums up US production leadership nicely in <1 minute

November 5, 2024 by offshoreenergy

Mike Werth’s response to Jim Kramer’s question about US production leadership is spot-on (see the clip below).

Kudos to Kramer for visiting Chevron’s Anchor platform in the Gulf of Mexico. More business/energy reporters and government officials with energy responsibilities need to (1) learn more about offshore oil and gas exploration and development and (2) visit offshore facilities.

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

Denmark’s “ban” on oil and gas exploration, campaign against fossil fuels

November 4, 2024 by offshoreenergy

As the table below illustrates, Denmark’s highly publicized oil and gas exploration ban is more pragmatic than has been reported in the media. The expansion of production from existing fields is not restricted.

12/4/2020 policy announcement10/29/2024 discovery announcement
Denmark has brought an immediate end to new oil and gas exploration in the Danish North Sea as part of a plan to phase out fossil fuel extraction by 2050. TotalEnergies announces that the Harald East Middle Jurassic nearby exploration well (HEMJ-1X) has discovered additional gas condensate resources in the Harald field, in the Danish North Sea.“The success of the Harald East Middle Jurassic well, nearby our Harald facilities in Denmark, demonstrates the strength of our Exploration strategy.” 

As a result of new exploration, Danish gas production is on the rise (graphic below) after two decades of decline. August 2024 production (165.8 MMCFD) was 21% higher than August 2023 production (136.9 MMCFD)

While Total has proven to be resourceful in sustaining North Sea gas production, Denmark’s refusal to hold new licensing rounds dooms their production over the longer term. This is consistent with Denmark’s intent to cease domestic production by 2050. (Those of you who are young enough can report on whether that deadline is met 😉).

The demand for fossil fuels, which has yet to peak, will still be strong in 2050 and beyond. Phasing out domestic production may be Denmark’s choice, but it’s not a good choice for much of the world.

Denmark is a lovely country, but their rather smug commitment to “lead a global campaign on the role of fossil-fuel producing countries” is not universally welcome. Similarly, companies like Orsted (50.1% Danish govt ownership) are not always the best ambassadors for exporting Danish energy policy.

Other governments, including the US, are quite capable of risking their economic growth and energy security without Denmark’s help.

Related posts:

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Dan Yergin: “America Can’t Do Without Fracking”

November 1, 2024 by offshoreenergy

Wisdom from Daniel Yergin, Pulitzer Prize Winner and the world’s leading energy authority: (emphasis added):

“This year’s presidential race features an oddity: a discussion about a ban on fracking. What’s striking is that such a conversation is happening at all. This talk takes participants through the Wayback Machine to the first two decades of this century, when hydraulic fracturing and horizontal drilling—together known as fracking—came to public attention. The U.S. was then the world’s largest importer of oil. Today it is energy-independent with, S&P Global estimates, more than 70% of its oil and more than 80% of its natural gas produced through fracking. The process has become essential to the nation’s energy supply and can’t be eliminated.“

“Not long ago the prospect of U.S. energy independence seemed fanciful. For more than four decades every president aspired to it, but their goal seemed unattainable. Many observers considered the U.S. destined to grow more dependent on imports. In recent years, however, America has achieved energy independence on a net basis. U.S. output is closing in on 13.5 million barrels of crude oil a day, exceeding that of perennial big producers Saudi Arabia and Russia by several million barrels per day. Add what are called natural-gas liquids, and the U.S. produces around 20 million barrels per day.“

WSJ article

More from Dan Yergin

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Atlantic wind lease bids have declined by 99.4%. Is $50/acre fair market value?

November 1, 2024 by offshoreenergy

The table below illustrates the dramatic decline in bidding for Atlantic wind leases over the past 2 years. (The California sale is also included in the table.)

offshore areasale dateleases soldacres leasedbonus bids
($ millions)		$/acre
NY/NJ2/20226488,0004,3708955
California12/20225373,268757.12028
Central Atl.8/20242277,94892.65333
Gulf of Maine10/20244439,09621.9 50

Accepting that bidding at the 2/2022 sale, which averaged nearly $9000/acre, was irrationally exuberant, bidding at this week’s sale was still incredibly weak. Even the bids at the Central Atlantic sale, just 2 months ago, averaged $333/acre, 6.7 times higher than the Gulf of Maine bids.

Energy giants Equinor, Repsol, and Total were among the eligible Gulf of Maine bidders that opted not to participate.

Do the Gulf of Maine bids pass BOEM’s fair market value tests? Apparently so; the sale notice established $50/acre as the minimum bid, and that is where the bidding started and ended. Invenergy and Avangrid had no competition and presumably got the tracts they wanted at the lowest possible price. We’ll see how this works out for the companies and power consumers.

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GoM production remained remarkably stable through August

October 31, 2024 by offshoreenergy

The streak of unprecedented Gulf of Mexico oil production stability was extended to 7 months in August.

As a result of shut-ins for Tropical Storms Francine and Helene, the streak will end when the production for Sept. is posted.

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Ocean City MD et al sue to vacate Maryland Offshore Wind approval

October 30, 2024 by offshoreenergy

As promised, Ocean City, Maryland, neighboring towns, counties, fishing groups, the Save Right Whales Coalition, and a long list of commercial entities have sued BOEM for approving the Construction and Operations Plan (COP) for the Maryland Offshore Wind project. The complete filing is attached.

The plaintiffs’ discussion of BOEM’s failure to consider true alternatives (begins on p. 43) is particularly interesting. They contend that “BOEM rejected out-of-hand all true alternatives, and selected alternatives with only minor differences in number of turbines and the route for the power cables from the proposed action.“

The plaintiffs also assert (p. 44) that “BOEM flatly rejected the option of not authorizing the Maryland Offshore Wind Project—as though approval were foreordained, with only the details to be determined.“

The plaintiffs’ argue further (p. 46) that BOEM failed to analyze the 3 phases of the project, particularly the third phase which is open-ended at this time.

Blade failure concerns are discussed beginning on p. 49. Excerpt:

“Missing from BOEM’s Final EIS is any discussion or analysis of the environmental impacts in the event of blade and turbine failure and the degradation of Project components, which are known and foreseeable possibilities that should have been reviewed and analyzed by BOEM. Risks of blade and turbine failure and component degradation are not hypothetical. Rather, they pose real dangers to the water quality of the ocean, fish and essential fish habitats, marine mammals, benthic resources, and recreational and commercial boaters.”

As previously recommended, wind leasing and plan approvals should be paused until BSEE’s investigation of the Vineyard Wind blade failure and the associated environmental damage study have been completed.

There is much more in this filing for those who want to take a closer look.

093114415371Download

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Gulf of Maine wind lease sale results

October 29, 2024 by offshoreenergy

Four of the eight tracts that were offered received bids. Only two companies participated, and the amounts were a fraction of the bids submitted for just two leases at the last Central Atlantic sale.

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Today’s Gulf of Maine offering may be the last wind sale for some time.

October 29, 2024 by offshoreenergy

Gulf of Maine Final Lease Areas, Acres, and Assigned Region

Lease Area ID Total Acres Developable Acres 
OCS-A 0562 97,854 97,854 
OCS-A 0563 105,682 105,682 
OCS-A 0564 98,565 93,756 
OCS-A 0565 103,191 103,191 
OCS-A 0566 96,075 96,075 
OCS-A 0567 117,780 113,208 
OCS-A 0568 124,897 116,363 
OCS-A 0569 106,038 101,757 
Total 850,082 827,886 
Average106,260103,486
Note that the ave. lease size is 18.4 times larger than a typical Gulf of Mexico oil and gas lease

Today’s Gulf of Maine sale will likely be the last wind lease sale for at least a year.

Per a provision in the “Inflation Reduction Act,” no offshore wind leases may be issued after 12/20/2024, the one year anniversary of the last oil and gas lease sale (no. 261).

Perhaps as a result of the legislative restriction, their desire to maximize wind leasing, and their plan to hold the fewest oil and gas lease sales in the history of the OCS program, BOEM front-loaded the 5 year wind leasing plan to include 4 sales from Aug. – Sept. 2024 (see schedule below). However, contrary to plan, the Gulf of Mexico sale was cancelled for lack of interest and the Oregon sale was cancelled at the request of the Governor in response to tribal and coastal county opposition.

The date of the next oil and gas lease sale is anyone’s guess. Next week’s elections are, of course, the elephant in the room. However, there is also an enormous ruling by a Federal judge in Maryland that would halt the issuance of Gulf of Mexico oil and gas leases and the approval of operating plans effective Dec. 20, 2024. Ironically (or perhaps not?), this is the same date after which no wind leases may be issued absent an oil and gas lease sale.

Chevron and industry trade associations have appealed Judge Boardman’s ruling. (Given the enormous implications of that ruling on current and future Gulf of Mexico production, I’m curious as to why Chevron is the only major producer that is a party in this appeal. Chevron was also the only producer that was a party in the litigation overturning the restrictive Sale 261 lease sale provisions. I’m assuming there is some legal or tactical reason for the absence of participation by Shell, bp, and Oxy?)

Finally, given the legislation linking future wind sales with oil and gas sales, are the Sierra Club et al, the plaintiffs in this case, comfortable with Judge Boardman’s decision? Perhaps they are okay with the judge’s ruling given the absence of any planned Atlantic wind leasing until 2026?

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NJ poll finds that offshore wind is not a high priority

October 28, 2024 by offshoreenergy

Attached are the full results of a Stockton University poll that assessed New Jersey voters’ support for offshore wind development. Stockton’s methodology is explained on the last page of the attachment (also pasted below).

Observations:

  • The poll does not appear to be agenda driven, either for or against offshore wind development.
  • The sharp decline in public support (first slide below) was contrary to the advocacy flow in that it occurred during a period of strong and persistent State and Federal promotion of offshore wind energy.
  • More than half of the respondents were from North Jersey, the region that is more closely aligned politically with the Governor and the Federal Administration. Only 16% of the respondents were from South Jersey where opposition to offshore wind projects is the strongest. The imbalance is understandable in that it is consistent with the regional imbalance in population.
  • Unsurprisingly, support for offshore wind is lowest in coastal counties. In that regard, more granularity would have been nice. Cape May County is the US epicenter of resistance to offshore wind development and is engaged in litigation with the Federal government over the Ocean Wind 1 project. Polling specific to Cape May and each of the other coastal counties would be beneficial.
  • The polling data suggest that offshore wind projects are not a priority for most New Jersey voters. Only 24% of both coastal and non-coastal residents view offshore wind as a major priority (third slide below).

Methodology
The poll of New Jersey registered voters was conducted by the Stockton Polling Institute of the William J. Hughes Center for Public Policy from Oct. 10-14, 2024. Stockton University students texted cell phones with invitations to take the survey online and Opinion Services supplemented the dialing portion of the fieldwork, which consisted of cell and landline telephone calls. Overall, 91% of interviews were conducted on cell phones and 9% on landline phones. In terms of mode, 65% were reached via dialing and 35% were reached via text-to-web. A random sample of 616 New Jersey registered voters were interviewed. Both cell and landline samples consisted of random digit dialing (RDD) and voter list sample from MSG. Data are weighted based on U.S.Census Bureau ACS 2023 data for the citizen voting age population in New Jersey on variables ofage, race, education level, and sex. The poll’s margin of error is +/- 3.9 percentage points at a95% confidence level. MOE is higher for subsets. Sampling error does not account for other potential sources of bias in polls such as measurement error or non-response.

Stockton_Univ_Poll_Offshore_Wind_Full_Results_10-2024Download

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