With Sept. production revised down slightly, there have been no 2 million bopd months for 4 years (since Nov. 2019).
Posted in Gulf of Mexico, Offshore Energy - General | Tagged 2 million bopd, Gulf of Mexico, Nov. 2023, oil production | Leave a Comment »
As previously posted here and here, carbon disposal bidding at the last 3 oil and gas lease sales has made a mockery of the leasing process and the regulations that guide it.
Hopefully, the carbon sequestration regulations that are under development will preclude conversion of leases acquired at Sales 257, 259, and 261. At a minimum, these regulations should require a competitive process for converting any oil and gas leases.
Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation | Tagged accidents, bid acceptances, carbon disposal, Exxon, Lease Sale 261, Repsol | Leave a Comment »
A friend owns land in the Texas Permian. His family gets a nice royalty check every month that has helped them get through some difficult times. Texas Permian production is almost entirely from private land, which is a big part of the success story. Payments to private land owners by responsible producers engender public support, access to resources, and growth in production. Add to that the continuous improvements in horizontal drilling, well stimulation and completion practices, and you have the success story that is the Texas Permian.
Similarly, private and state land plus technology launched the natural gas boom in my native state of Pennsylvania. When I was a student, we looked back at the Titusville/Colonel Drake glory days, and no one dreamed that the state would become a major natural gas exporter. Today, pipeline constraints, particularly in NJ and NY (which has managed to prevent access to the state’s substantial Marcellus and Utica shale resources) are preventing PA from further increasing gas sales.
The offshore lands on the US Outer Continental Shelf are a different story. Unfriendly, bordering on hostile, leasing policy (and not just during the current administration) has been partially overcome by advances in deepwater well and facility design that have lowered costs and increased productivity. However, OCS oil production is a fraction of what it could be.
OCS gas production has fallen dramatically since the turn of the century. Ultradeep (subsurface) gas production was not economically viable and production was fading even before onshore shale gas began to dominate US gas markets. Most of the current OCS gas production is associated with deepwater oil production.
The charts below tell the story.
Posted in energy policy, Gulf of Mexico, natural gas | Tagged Marcellus Shale, OCS oil and gas, Pennsylvania, private land, shale gas, Texas Permian | Leave a Comment »
In the wake of the decision to “pause” LNG export approvals, it’s important for us to also pause and reflect on the natural gas revolution.
Gas now accounts for 40% of our power generation.
The gas boom’s economic and environmental benefits are compelling. Greenhouse gas emissions currently get most of the attention. In that regard, methane (CH4) is a hydrogen transporter that emits far less CO2 than other fossil fuels when burned.
Less attention has been given to natural gas’s other important air quality advantages – low NOx. SO2, and particulate emissions. These emissions have greater local significance from a human health standpoint. Those who have ridden a bike behind a natural gas powered bus have no doubt experienced the natural gas advantage firsthand.
Other environmental considerations particularly favor offshore natural gas when compared to energy alternatives. These include low well and facility density, no groundwater pollution risk, and minimal risk to wildlife.
Compiled below are links to BOE posts on natural gas issues and advantages.
- 2/4/2010: Natural gas bonanza – why aren’t we celebrating?
- 10/12/2010: There are always tradeoffs
- 3/3/2011: Natural gas vehicles gaining momentum? Role for offshore gas?
- 6/23/2011: Shale gas and international intrigue
- 12/6/2021: Opportunity lost
- 12/14/2021: EQT makes compelling case for natural gas
- 12/16/2021: The decline in GoM nonassociated gas production and why we care
- 2/11/2022: It’s a good thing most US shale production is on private land
- 3/28/2022: Remember when the US was strictly an LNG importer?
- 4/3/2022: LNG projects should give a boost to Gulf of Mexico natural gas production
- 4/13/2022: Reminder about the massive natural gas resources in the eastern US
- 8/9/2022: Shale gas production, mostly on private lands in TX, PA, and LA, made this possible
- 1/11/2023: Saluting the contrarian GoM producers: 11 operators are producing more nonassociated (gas-well gas) than associated (oil-well gas)
- 9/19/2023: Mandates vs. energy realities
Posted in climate, energy policy, natural gas, Offshore Energy - General | Tagged GHG emissions, LNG export pause, natural gas, offshore gas | Leave a Comment »
Key takeaways after reviewing the BOEM/NOAA strategy document:
- The document effectively summarizes the dire state of the North Atlantic Right Whale.
- The BOEM/NOAA strategy is to monitor and further assess the impacts.
- The need for mitigation will be determined through collaborative processes.
- This industry-friendly strategy contrasts sharply with the restrictive operating requirements proposed for the more speculative Rice’s whale expanded area in the Gulf of Mexico.
NARW status (pages 7-14):
- Roughly 237 NARWs have died since the population peaked at 481 in 2011, exceeding the potential biological removal (PBR) level on average by more than 40 times for the past 5 years (Pace III et al. 2021).
- Human-caused mortality is so high that no adult NARW has been confirmed to have died from natural causes in several decades (Hayes et al. 2023).
- Most NARWs have a low probability of surviving past 40 years even though the NARW can live up to a century.
- There were no first-time mothers in 2022.
- About 42% of the population is known to be in reduced health (Hamilton et al. 2021)
- A NASEM study confirmed that offshore wind has the potential to alter local and regional hydrodynamics
- “Effects to NARWs could result from stressors generated from a single project; there is potential for these effects to be compounded by exposure to multiple projects.” (p. 14)
BOEM/NOAA strategy:
- No new mitigation is recommended pending further study.
- “BOEM and NOAA Fisheries will work together alongside our partners (including the OSW industry) to further develop the information and science the agencies will use to inform their decisions to responsibly develop OSW while protecting and recovering NARWs.” (Comment: While regulator-industry collaboration is essential for effective offshore development, be it wind or oil and gas, regulators and operating companies have distinctly different missions and responsibilities and should not be viewed as partners.)
- (p. 15): “As the OSW industry continues to grow and as projects begin construction, BOEM and NOAA Fisheries will continue to work with our partners to evaluate existing strategies and to further collect and apply newly available information to inform future decisions. This Strategy is an integral step to organize BOEM, NOAA Fisheries, and their partners around a shared vision and clear path to effectively study and manage this issue moving forward.” (???)
- (p.17): BOEM will “attempt to avoid issuing new leases in areas that may impact potential high-value habitat and/or high use areas for important life history functions such as NARW foraging, migrating, mating, or calving. For areas that are leased, permitting activities should minimize any known or potential threat to NARWs and their habitats, and developers and BOEM should support research and monitoring.”
Questions:
- How are the NARW threats identified in the NASEM study being mitigated?
- What is the status of the Nantucket Shoals conservation buffer zone recommended by NOAA (see the May 2022 letter attached to linked post)?
- Why are the Rice’s whale litigants okay with the more compelling threat to the NARW?
- What happens if the hydrodynamic threats identified by the NASEM panel are confirmed?
- Why isn’t this collaborative approach being pursued in assessing and mitigating risks to the Rice’s whale?
- Can we expect the Federal government’s leading offshore wind promoter to impose restrictions that further weaken the economics of offshore wind development?
Pictured below: density of NARWs near wind leases and hydrodynamic effects of turbines
Posted in energy policy, Offshore Wind | Tagged BOEM, NASEM, NOAA, Offshore Wind, Rice's whale, RIght Whale, strategy | 2 Comments »
On January 28, 1969, well A-21, the 5th well to be drilled from Union Oil Company’s “A” platform began flowing uncontrollably through fractures into the Santa Barbara Channel.
The absence of any well casing to protect the permeable, fractured cap rock meant that the operator couldn’t safely shut-in a sudden influx of hydrocarbons into the well bore (i.e. a “kick”). Shutting-in the well at the surface would create well bore fractures through which oil and gas could migrate to shallow strata and the sea floor. The probability of an oil blowout was thus essentially the same as the probability of a kick (>10-2). Compare this with the historical US offshore oil blowout probability (<10-4) and the probability of <10-5 for wells with optimal barrier management.
Here, in brief, is the well A-21 story:
- Well drilled to total depth of 3203′ below the ocean floor (BOF).
- 13 3/8″ casing had been set at 238′ BOF. The well was unprotected from the base of this casing string to total depth.
- Evidence of natural seeps near the site suggested the presence of fracture channels
- The well was drilled through permeable cap rock and a small high pressured gas reservoir before penetrating the target oil sands.
- When the well reached total depth, the crew started pulling drill pipe out of hole to in preparation for well logging.
- The first 5 stands of drill pipe pulled tight; the next 3 pulled free suggesting the swabbing of fluids into the well bore..
- The well started flowing through the drill pipe. The crew attempted to stab an inside preventer into the drill pipe, but the well was blowing too hard. The crew then attempted unsuccessfully to stab the kelly into the drill pipe and halt the flow.
- The crew dropped the drill pipe into the well bore and closed the blind ram to shut-in the well.
- Boils of gas began to appear on the water surface. Oil flowed to the surface through numerous fracture channels. The above sketch by former colleague Jerry Daniels (RIP) depicts the fracturing, which greatly complicated mitigation of the flow.
Here is the link to an excellent US Geological Survey report from 1969 that describes the geologic setting, well activities, and remedial measures after the blowout.
We need to continue studying these historically important incidents, not just the technical details but also the human and organizational factors that allowed such safety and environmental disasters to occur. The idea is not to shame, but to remember and better understand.
Posted in accidents, California, Offshore Energy - General, oil spill response, seeps, well control incidents | Tagged 1969, Dos Cuadras field, Platform A, Santa Barbara blowout, Union Oil Company | Leave a Comment »
The financial, technical, and regulatory aspects of decommissioning have received much attention on this blog. Andrew Konczvald sends this photo with regrets that the behemoth “Pioneering Spirit” wasn’t available when he was concerned with such matters.
For comparison (size only given the different missions), the massive Thunder Horse floating production platform (see below) in the Gulf of Mexico is 136 m x 112 m, only 12 m narrower but just over 1/3 of the Pioneering Spirit’s length.
Posted in decommissioning, Gulf of Mexico, Offshore Energy - General | Tagged Andrew Konczvald, decommissioning, Pioneering Spirit, safety, Thunder Horse | Leave a Comment »
Posted in energy policy | Tagged SPR refill, Strategic Petroleum Reserve | Leave a Comment »
15,531 of the 15,537 comments on the bid adequacy rule were from a single organization, Friends of the Earth. I have no problem with the Friends of the Earth campaign given that their comment letter is pertinent to the topic. Their main point is that the bid adequacy process fails “to factor in the climate and social costs of continued Outer Continental Shelf oil and gas lease sales into the bid process.” Although that may be a reasonable position, those issues are addressed in the programmatic and sale specific environmental reviews which factor into when and where sales are held, tract exclusions, special lease stipulations, and the comprehensive operating regulations. Once bids are submitted, the issue (and the sole purpose of the bid adequacy rule) is whether those bids represent fair market value for the oil and gas resource potential of the leases being offered.
Given that 96.3% of the US OCS is off-limits to oil and gas leasing, only 0.7% is currently open to exploration, and the new 5 year plan includes the fewest lease sales in OCS program history, it’s rather a stretch to argue that environmental concerns are not being prioritized.
The State of Alaska submitted very good comments (attached) that point to the historical differences in Gulf of Mexico and Alaska leasing. The State argues that a simpler approach to determining fair market value would encourage exploration and development on offshore lands that have seen little of either in recent years. Knowing BOEM’s expectations prior to the sale, perhaps through higher minimum bid requirements, would ensure that companies do not underbid and that tracts are successfully leased.
The Gulf of Mexico leasing program of today is looking more like the frontier area leasing of the past. As previously noted, the uncertainty regarding future sales changes the historic GoM leasing dynamic. The next opportunity for purchasing unleased GoM tracts is now a troubling unknown. This would seem to make it less prudent to reject bids based on uncertain prospect evaluations. Absent leasing and exploration, the true resource and revenue potential will never be known.
It was good to see the strong comments submitted by my former Minerals Management Service colleagues Dr. Marshall Rose and Ted Tupper. Marshall, who was our Chief Economist, commented that the proposed rule did not identify the problem and explain how the rule addressed that problem. Ted, a senior statistician, points to past failures of the bid adequacy process and proposes specific changes. It’s great to see the passion that our retired employees have for the program they were so instrumental in developing and managing.
Posted in Alaska, Gulf of Mexico, Offshore Energy - General, Regulation | Tagged Alaska, bid adequacy procedures, BOEM, fair market value, Friends of the Earth, Gulf of Mexico, Marshall Rose, OCS oil and gas program, Ted Tupper | Leave a Comment »
“We are very pleased to announce the agreement of terms for a two-year license extension in Jamaica. United has dedicated significant effort to the technical aspects of this asset, which has over 2.4 billion barrels of unrisked oil potential and the promising Colibri prospect. This extension will empower us to confidently continue our farm-out campaign, seeking a strategic partner to unlock the immense potential in this region. The support from the Government of Jamaica underscores our relationship and the optimistic industry outlook in Jamaica. We will continue to focus on the recent positive interest that has been shown by a number of parties, and with the extended licence, this is a significant opportunity for the benefit of all stakeholders.”
United Chief Executive Officer, Brian Larkin, 1/22/2024
Posted in Jamaica, Offshore Energy - General | Tagged extenstion, farmout, Jamaica, United Oil and Gas, Walton Morant License | Leave a Comment »
Bud's Offshore Energy (BOE) 