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JL Daeschler, pioneering subsea engineer and BOE contributor, recounted a frightening incident in 1976, a year after UK North Sea production began:

We found ourselves in a drastic situation. While working on a subsea well, the wireline retrievable tubing safety valve got tangled up in the tree area. We had an open well situation and couldn’t cut the wire in the subsea tree. Further, the weather was bad, and keeping on location was difficult. The riser hydraulic release was faulty, so there was an imminent high risk of a “jammed ” subsea tree, bent/damaged riser, and uncontrollable well flow.

We got through this, but recognized that improved well control capabilities were needed during workover operations. Management decided that any future workover operations on a subsea tree/well would require a small diameter workover BOP with shearing capability immediately above the Xmas tree. A year later, we had the hybrid kit pictured below (with JL). Note that the guide funnels are slim to run on guide lines and not overshoot the guide base posts.

JL’s story reminds us once again that safety achievement is dependent on continuous improvement driven by experience, research, and technological advances.

When I was a young engineer with the US Geological Survey, the OCS safety regulator at the time, my boss and mentor Richard Krahl (known as “Mr. OCS” for his commitment to offshore safety) slammed😀 a copy of the first edition of API RP 14C (Analysis, Design, Installation, and Testing of Safety Systems for Offshore Production Facilities) on my desk and told me to read it carefully. That pioneering process safety document has grown with the offshore industry and is now in its 8th edition.

Similarly, API RP 2A-WSD (Planning, Designing, and Constructing Fixed Offshore Platforms— Working Stress Design) is now in its 22nd edition and API STD 53 (Well Control Equipment Systems for Drilling Wells) is in its 5th edition. There are countless other examples of the progression in safety equipment and practices.

As individuals, companies, agencies, and collectively as an industry, there can be no standing still. Nothing is routine and the challenges continue to grow: deeper wells, more complex geology, higher temperature and pressure, deeper water, harsher environments, remote locations, new security risks, and more. We get better or we get worse, and the latter is not an option. Onward!

“Exxon Mobil has led a persistent and apparently successful lobbying campaign behind the scenes to push the US federal government to adopt rules that would allow the conversion of existing oil and gas leases in the Gulf of Mexico into offshore carbon capture and storage (CCS) acreage, according to documents seen by Energy Intelligence and numerous interviews with industry players.” Energy Intelligence

The Energy Intelligence article documents the ongoing carbon disposal lobbying by Exxon and others. Those meetings are okay prior to publishing a Notice of Proposed Rulemaking (NPRM) for public comment. However, the article implies that the next step is a final rule: “Whether or not Exxon succeeds will become fully clear when the US issues final rules guiding CCS leasing, expected sometime this year.”

A final rule this year is unlikely, because an NPRM has to be published first for public comment. The only exception would be if BOEM was able to establish “good cause” criteria for a direct final or interim final rule in accordance with the Administrative Procedures Act. Such an attempt at corner cutting seems unlikely, especially in an election year when all regulatory actions are subject to additional scrutiny.

Exxon must have thought they had a clear path forward after 11th hour additions to the “Infrastructure Bill” authorized carbon disposal on the OCS, exempted such disposal from the Ocean Dumping Act, and provided $billions for CCS projects. Keep in mind that the Infrastructure Bill was signed just two days before OCS Oil and Gas Lease Sale 257, at which Exxon acquired 94 leases for carbon disposal purposes.

What the Infrastructure Bill did not provide is authority to acquire carbon disposal leases at an oil and gas lease sale. Now the lobbyists are apparently scrambling to overcome that obstacle administratively.

BOEM, which arguably made a mistake in accepting irregular carbon disposal bids at the last 3 oil and gas sales, should not amplify Exxon’s unfair advantage (also Repsol at Sale 261) by allowing the conversion of these leases (map below). This is not a small matter given that Exxon has publicly projected that carbon disposal is a $4 trillion market opportunity.

A single company or small group of companies should not be dictating the path forward for the Gulf of Mexico. Super-major Exxon is a relative minnow in the Gulf of Mexico OCS. They have not drilled an exploratory well since 2018, not drilled a development well since 2019, operate only one platform (Hoover, installed in 2000), ranked 11th in 2023 oil production, and ranked 29th in 2023 gas production.

Lastly, and most importantly, public comment on the myriad of technical, financial, and policy issues associated with GoM carbon disposal is imperative. That input is essential before final regulations are promulgated.

At Sale 261, Repsol was the sole bidder for 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 and 259.

It’s OTC week and optimism abounds. We are so back!”

Preachin’ to the choir:

  • Deepwater is back in vogue.” (Pablo Medina, Welligence)
  • “Newer deepwater projects have the attributes oil and gas companies are looking for: longer-term production, lower breakeven costs, big resource potentials and lower carbon emissions.” (Medina)
  • Capital spending on all-new deepwater drilling is poised to hit a 12-year high next year (Rystad)
  • Investment in all-new and existing deepwater fields could hit $130.7 billion in 2027, a 30% jump over 2023 (Rystad)
  • Deepwater resources offer lower carbon emissions intensity than shale and other tight oils, averaging 2kg of carbon dioxide per barrel less than shale. (Rystad)
  • “The return of offshore and deepwater operations is going to be a big topic at OTC, and Namibia is going to be talk of the show.” (James West, Evercore)
  • Enthusiasm for offshore has climbed with discoveries and technology breakthroughs. Namibia’s Mopane is forecast to hold as much as 10 billion barrels of oil. (Portuguese oil company Galp Energia)
  • Rates for some rigs have surpassed $500,000 a day and contract durations are lengthening as supply dwindles.
  • Deepwater development: simpler, safer, greener!
  • Chevron is preparing to start ultra-high pressure production at their Anchor platform.

So as not to kill the buzz, I won’t mention the 5 Year (no)Leasing Plan and other troubling US matters, at least for one day.

The government’s decision to require that a capping stack be located in Guyana is prudent. Although the need for a capping stack is dependent on multiple barrier failures and is thus extremely low, the environmental and economic consequences of a prolonged well blowout warrant timely access to this tertiary well control option.

A capping stack must be properly maintained and deployable without delay. In that regard, BSEE has a good program for testing Gulf of Mexico capping stack readiness. Capping stack drills are an important post-Macondo addition to the unannounced oil spill response program that dates back to 1981.

The capping stack designed during the Macondo blowout shut-in the well on 15 July 2010. The decision process that allowed the well to remain shut-in was a bit perplexing, and we had a bizarre situation where the Federal Incident Commander threatened to require the resumption of the blowout. The same well integrity concerns had prematurely ended the “top kill” operation on 28 May, allowing the well to flow unnecessarily into the Gulf for an additional 48 days (5/28-7/15). (See this important paper by LSU Petroleum Engineering professor Dr. Mayank Tyagi et al: Analysis of Well Containment and Control Attempts in the Aftermath of the Deepwater Blowout in MC252)

“Troy Naquin, BSEE New Orleans District, observes as a capping stack is carefully lowered onto the deck of ship to be transported more than 100 miles offshore for a drill designed to test industry’s ability to successfully deploy it in case of an emergency, May 8, 2023.” BSEE photo/Bobby Nash

Chevron wants in, Exxon and China want bigger pieces, and Venezuela claims it all.

Exxon CEO Darren Woods sums it up:“I believe Guyana will go down as one of the most successful deepwater developments in the history of the industry.”

Nice production growth and this is just the beginning:

OilNow Guyana

As promised, the Norwegian petroleum safety regulator (Havtil) has posted their risk trend report (RNNP) for 2023 in English.

Havtil prioritizes risk assessment and publishes their comprehensive annual analysis of safety trends in a timely manner. The 2023 RNNP was posted in Norwegian earlier this year and the summary report is already available in English. RNNP reports are an important safety resource that should be reviewed and discussed wherever oil and gas operations are conducted.

As an example of the breadth of these reviews, the two sets of charts below convey data that are not typically documented by offshore safety regulators. The first set documents near-misses that did not result in injuries, but did expose workers to that risk.

The second set of charts is a summary of worker responses to a survey, a means of assessing the safety culture. The big jump in favorable responses to the HSE questions is encouraging. In particular, the report notes (p. 14) that responses to a question about being pressured not to report incidents has moved in a positive direction in the last two surveys. Hopefully, this is an industry-wide trend.

To what extent was the Main Pass Oil Gathering (MPOG) system shut-in responsible for the Nov. to Feb. production decline (chart below)? The MPOG wasn’t cleared for production until earlier this month, so we may not know until the investigation report is published and the EIA posts April 2024 production data (2 month lag).

The NTSB is leading the investigation on the MPOG spill. This short summary is all they have posted so far, but we should see a preliminary report soon. The NTSB’s final reports are frequently delayed. They still haven’t finalized their report on the Dec. 2022 Gulf of Mexico helicopter crash.

The Valaris DS-17 drillship is now on location to drill the Algerich-1 well for Equinor 315 km from Mar del Plata in 1527 m of water at Block CAN 100.

Concurrently, at the opposite end of the Pan American continents, the Stena DrillMAX is closing in on Exxon’s Orphan Basin location offshore Newfoundland to drill another high potential well.

Meanwhile, the US Atlantic is “wind-only,” despite high deepwater oil and gas potential. The late Paul Post, an esteemed colleague and the leading expert on the petroleum geology of the US Atlantic, believed the deepwater US Atlantic could contain >20 billion BOE. No other Pan American nation has completely closed its Atlantic margin to oil and gas exploration.

Can a nation with a debt of $35 trillion afford to ignore oil and gas resources that will remain in high demand for decades?

As reported in January, United Oil and Gas received a 2 year extension from the Government of Jamaica on their Walker Morant License. Below is a United video produced for prospective partners.

While the investment risk is undeniable, the reward potential is high.

Below is an interesting slide from the United presentation that compares the government’s take of production revenues for various African and S. American nations.

After the announcement of further restrictions on resource development in the National Petroleum Reserve of Alaska (NPR-A), Senator Sullivan (AK) called on the administration to stop sanctioning Alaska and to instead restore sanctions on Iran

The US OCS is being similarly sanctioned by its own government. The 5 year OCS “leasing plan” not only excludes all areas except the Gulf of Mexico, but authorizes a maximum of only 3 sales, the fewest ever for a 5 year program. The number of sales may well have been zero were it not for the requirement to hold an oil and gas sale during the year prior to the issuance of a lease for wind development.

2024–2029 Proposed Final Program Lease Sale Schedule
CountSale NumberSale YearOCS Region and Program Area
12622025Gulf of Mexico:  GOM Program Area
22632027Gulf of Mexico:  GOM Program Area
32642029Gulf of Mexico:  GOM Program Area
Most limited 5 year leasing program in history