Posted in Offshore Wind | Tagged 2024 election, bad day, Offshore Wind, Orsted | Leave a Comment »
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.” 😉
Posted in energy policy, Offshore Energy - General, Offshore Wind | Tagged 2024 elections, endangered species, Gulf of Mexico leasing, implications for offshore oil and gas, implications for offshore wind | Leave a Comment »
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 Anchor platform, Chevron, CNBC, Jim Kramer, Mad Money, Mike Wirth | Leave a Comment »
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 announcement | 10/29/2024 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:
Posted in climate, energy policy, Offshore Energy - General | Tagged 2050 production end, ban, Danish gas production, Denmark, oil and gas exploration, Orsted, Total | Leave a Comment »
“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.“
Posted in energy policy | Tagged Dan Yergin, energy independence, fracking | Leave a Comment »
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 area | sale date | leases sold | acres leased | bonus bids ($ millions) | $/acre |
| NY/NJ | 2/2022 | 6 | 488,000 | 4,370 | 8955 |
| California | 12/2022 | 5 | 373,268 | 757.1 | 2028 |
| Central Atl. | 8/2024 | 2 | 277,948 | 92.65 | 333 |
| Gulf of Maine | 10/2024 | 4 | 439,096 | 21.9 | 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.
Posted in Offshore Wind | Tagged Avangrid, BOEM, declining bids, fair market value, Gulf of Maine, Invenergy, Offshore Wind | Leave a Comment »
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.
Posted in Gulf of Mexico, hurricanes, Offshore Energy - General | Tagged August production, Gulf of Mexico, Hurricane Francine, Hurricane Helene, oil production, stability | Leave a Comment »
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.
Posted in energy policy, Offshore Wind | Tagged BOEM, COP, law suit, Maryland Offshore Wind, NEPA, Ocean City MD | Leave a Comment »
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.
Posted in Offshore Wind | Tagged Avangrid, BOEM, Gulf of Maine, Invenergy, results, wind lease sale | Leave a Comment »
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 |
| Average | 106,260 | 103,486 |
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?
Posted in Offshore Wind | Tagged 5 year leasing plan, BOEM, Gulf of Maine, Inflation Reduction Act, last sale, offshore wind lease sale, ruling against offshore oil and gas leasing | 2 Comments »
