“In the evolving landscape of Guyana’s oil and gas industry, few have managed to carve out a niche quite like Koaito Grant. A name synonymous with corporate photography, Grant’s journey from discovering his passion for capturing moments to becoming a sought-after photographer within the oil and gas sector is as inspiring as it is instructive.“
So true:“It’s the best feeling when a client reaches out and says you were very highly recommended by this or that person.” His professionalism and work ethic have been key differentiators. “I have a client that always asked if I was Guyanese because I’m always early for all projects and activities.”👍 💯
Reuters has published an interesting article on the Exxon/CNOOC vs. Chevron/Hess dispute scheduled for arbitration next year in Paris. According to Reuters (emphasis added):
“Getting the panel to consider the appraised value is central to Exxon’s claim that the deal is an asset acquisition disguised as a merger. Exxon believes the Guyana asset is so valuable that the merger would trigger a change of control and give Exxon and CNOOC a right of first refusal to the asset sale, the people said.“
The Exxon argument implies that Hess’s only major asset is its share of Stabroek, which is hardly the case. Hess’s 30% Stabroek share is without question an important asset with great long-term potential, but Hess is also a major player elsewhere, most notably in the Bakken formation in North Dakota and the Gulf of Mexico. Implying that Hess was a single asset acquisition is thus misleading:
In Q4 of 2023, Hess produced 194,000 boepd in the Bakken formation vs. a Stabroek share of 128,000 bopd.
In 2023, Hess produced 20 million barrels of oil in the GoM and 40 bcf of gas making them the 8th highest oil producer and 7th highest gas producer.
Hess acquired 20 GoM leases in Sale 261, ranking first in total high bids ($88 million) among all participants.
Chevron and Hess GoM assets have significant potential for synergy. The combined company would be the 3rd largest GoM oil producer (behind Shell and bp) and the second largest gas producer (behind only Shell).
This dispute will continue to smolder given the delay in the arbitration hearings until May 2025. As previously mentioned, I believe the Government of Guyana should have intervened. I’m all for companies settling their disputes privately, but this dispute is over Guyanese resources, and the protracted delay could have implications for Guyana.
Four of the five simpler, safer, greener deepwater platforms featured on this blog are now producing. The 5th platform (Whale) is on location and scheduled to begin production later this year.
platform
operator
first production
King’s Quay
Murphy
April 2022
Vito
Shell
Feb 2023
Argos
bp
April 2023
Anchor
Chevron
Aug 2024
Whale
Shell
late 2024
These platforms are in 4000 to 8600′ of water, are expected to reach peak production rates of 100-150,000 boe/day, and have favorable emissions characteristics on a per barrel basis.
This is all good, but what is next? Will technological advances once again sustain GoM production? The short answer appears to be yes!
The efficiencies achieved with the simpler platform designs combined with the high pressure (>15,000 psi) technology developed over the past 2 decades will facilitate production from the highly prospective Paleogene (Wilcox) deepwater fans. (For those interested in learning more about the geology, see the excellent presentation by Dr. Mike Sweet, Univ. of Texas, that is embedded below.)
Chevron’s Anchor is the first deepwater, high-pressure development. Three similar deepwater hub platforms (table below) will begin production over the next 5 years. These host platforms will also facilitate additional production from nearby fields. Each will have production capacities of approximately 100,000 boe/day. Note the long lead times in achieving first production given the technological issues that had to be evaluated and addressed.
platform
operator
discovery date
first production
Kaskida
bp
2006
2029
Sparta
Shell
2012
2028
Shenandoah
Beacon
2009
2025
Wood Mackenzie sees these high pressure projects as the key to sustaining GoM production rates. Their projections for 2024 and 2025 seem optimistic based on 2024 YTD data, which adds to the importance of the projected new production.
In the wake of last week’s lackluster Atlantic wind lease auction (summarized above), an excellent Renewable Energy World article documents the sharp decline in participation and bidding since the massive February 2022 sale of 6 leases offshore NY and NJ. That sale garnered bids ranging from $285 million to an astounding $1.1 billion, with total high bids of $4.37 billion! The sale was touted as the “nation’s highest grossing competitive energy lease sale in history.” The extravagant bidding, which made little sense then, seems downright irrational now.
Even the December 2022 California offshore lease sale, where development will be dependent on more expensive floating turbines, attracted substantially higher bids for leases (5) smaller than those auctioned last week.
The highly promoted Gulf of Mexico wind auctions were busts with the first sale receiving only one bid for $6.5 million and the second being cancelled due to lack of interest.
Major oil companies like bp and Shell seem to have exited the market for new US offshore wind leases. That leaves Equinor (2/3 Norwegian govt ownership) as the only major oil company pursuing US offshore wind leases.
“Today’s lease sale reflects the forward momentum we are seeing to power millions of American homes with clean energy and create good-paying, climate jobs,” said White House National Climate Advisor Ali Zaidi. “With nine commercial-scale projects approved in the last three years and more to go, we are using every available tool to grow the American offshore wind industry as we strengthen the nation’s power grid and tackle the climate crisis.”
The 45 day payment period, that the President of Guyana believes is unnecessarily long, is actually shorter than the 60+ days required by many large companies. It’s unfortunate that these companies have to be jawboned into paying contractors in a timely manner.
Making money from the “float” at the expense of small contractors makes poor business sense as well as poor social sense. Successful companies understand the importance of small business partners in growing production, innovating, expanding supply options, and garnering local and national support. Do the financial gains associated with delayed payments justify alienating the individuals and small businesses that should be the strongest proponents of your company and your industry?
Rystad Energy projects a 10% annual compound growth rate for the subsea market from 2024 to 2027, with total spending anticipated to exceed $42 billion by the end of this period.
Brazil dominates the subsea umbilical risers and flowlines (SURF) market. Unsurprisingly, the US is lagging given the absence of a robust offshore leasing program and the dearth of deepwater discoveries in recent years.
"German Prosecutor General Jens Rommel has issued the first arrest warrant for the main suspect in the 2022 Nord Stream blowing-up case, a Ukrainian named Volodymyr, who lived in Poland until recently. Polish Prosecutor's Office reports that suspect in blowing up Nord Stream… pic.twitter.com/56ixGiRAix
Skepticism about these charges is running high given the apparent political convenience of the “private Ukrainian citizens” sabotage scenario. The German govt has been under pressure to identify the responsible party following the decisions by Denmark and Sweden to drop their investigations.
Additionally, ultimate authority over the wind farm remained unclear, with various federal agencies claiming responsibility over different portions of the permitting, licensing, review, and operation of the wind farm.
“Sometimes I have a hard time figuring out, who do we talk to? Who is going to keep us safe? Who is the responsible boss here? Who is going to make the hard decision?” Select Board member Matt Fee asked.
Separate legislation granting redundant or overlapping authority to different departments or agencies.
Legislation that is non-specific, assigning broad authority to the President or cabinet level level officials, leaving it up to the bureaus to resolve.
Bi- and multi-lateral agreements like MOA’s and MOU’s, which are intended to “coordinate the redundancy,” often cause more confusion than they prevent, creating gaps in the process.
“Fixing” problems by adding redundancy.
The Dept. of the Interior’s division of responsibilities for offshore wind, which was finalized in January 2023, inexplicably assigns review and approval of Construction and Operations Plans to the Bureau of Ocean Energy Management (i.e. the land manager, lessor, and wind energy promoter) rather than the Bureau of Safety and Environmental Enforcement (i.e. the principal regulator of the activities described in those plans).
More significantly, the offshore wind responsibilities of the 2 bureaus are so intertwined (as is also the case for offshore oil and gas), that attempts to separate the functions have, at a minimum, created inefficiencies and increased regulatory and operational costs.
FTR, the idea that having the BOEM and BSEE functions combined in a single bureau, as was the case with the predecessor bureau (MMS), had anything to do with the Macondo blowout is a complete fallacy. Regarding the accusations that were made toward MMS, the Chief Counsel for the national commission that investigated the tragic incident found no evidence that ethical lapses on the part of MMS employees played any role in causing the blowout.
There were important regulatory changes made after the Macondo blowout. These included capping stack requirements, mandatory safety management systems, and updated rules and standards for cementing/zonal isolation and blowout preventer systems. None of these improvements were precipitated by or dependent on the division of MMS into two bureaus.
API is challenging the Dept. of the Interior’s 5 year oil and gas leasing plan, which includes the fewest lease sales in program history. That challenge was filed on 12 February, 60 days after Secretary Haaland approved the 5 plan and the first day appeals could be filed pursuant to 43 U.S. Code § 1349.
18 weeks after the API suit was filed, the Supreme Court overturned the Chevron Doctrine. That doctrine (described above) instructed judges to defer to agency interpretations when the language in a law was unclear.
Extending the Secretary’s general safety and environmental authority for OCS operations to include global climate considerations is a stretch and the type of interpretive administrative decision that the Supreme Court struck down.
Bud's Offshore Energy (BOE) 