Bud's Offshore Energy (BOE)

500 days (and counting) since the last US offshore oil and gas lease sale. Abbreviated chronology:

• 11/18/2020 – BOEM holds Gulf of Mexico oil and gas lease sale 256 (listing of all offshore oil and gas leases sales); WTI = $41.64/bbl
• 1/27/2021 – President Biden issues EO 14008 which pauses all oil and gas leasing on Federal lands, onshore and offshore; WTI = $52.81/bbl
• 6/15/2021 – Federal court in the Western District of Louisiana issues a preliminary injunction blocking the administration’s leasing moratorium
• 7/1/2021: WTI price reaches 75.23/bbl
• 8/11/2021 – White House urges OPEC to increase oil production.
• 8/16/2021 – The administration appeals the Louisiana Federal court injunction that blocked the leasing pause
• 8/31/2021 – BOEM issues Record of Decision (ROD) to proceed with Sale 257 Concurrently, a suit is filed in DC Federal Court to block the sale. WTI= $68.43/bbl
• 9/30/2021 – BOEM announces Lease Sale 257 as necessary to comply with the order of the Louisiana Federal Court. DOI will “continue its comprehensive review of the deficiencies associated with its offshore and onshore oil and gas leasing programs.”
• Oct/Nov 2021 – Media coverage sensationalizes Sale 257, a typical GoM lease sale, by focusing on the sale area, of which the area receiving bids is just a small fraction.
• 11/15/2021 – Press Secretary Psaki: “We believe the (Louisiana court) decision is wrong, and the Justice Department is appealing it.  So it’s in the courts; it’s in a legal process.  We’re required to comply with the injunction.  It’s a legal case and legal process, but it’s important for advocates and other people out there who are following this to understand that it’s not aligned with our view, the President’s policies, or the executive order that he signed.” WTI = $80.85/bbl
• 11/17/2021: Sale 257 bids opened and announced despite pending litigation. In a surprising twist, Exxon was the sole bidder on 94 carbon sequestration tracts offshore Texas. Neither the Notice of Sale nor the environmental review announced or assessed carbon sequestration operations in Federal offshore waters. BOEM/DOI have not commented publicly on the CCS bidding.
• 11/26/2021: DOI issues report on the Federal Oil and Gas Leasing Program. With regard to the offshore program, the report is rather moderate in tone and no new deficiencies are identified.
• 1/27/2022: Judge Contreras, DC Federal Court, vacates Sale 257. The Judge agreed with the plaintiffs’ assertion that BOEM failed to consider the effect that reduced production (and thus higher prices) would have on foreign consumption and the associated GHG emissions. The judge not only decided in favor of the plaintiffs, but ruled that BOEM’s omission was so serious that the lease sale had to be vacated. The judge reached this decision even though (1) the five year leasing plan expires in June leaving the timing of any future sale very much in doubt and (2) all of the sale 257 bids, which are based on proprietary assessments, are now public information, thus compromising the integrity of the leasing process at the next sale (if and when that occurs). WTI= $87.61/bbl
• 2/8/2022: API and the State of Louisiana appeal the Sale 257 decision.
• 2/24/2022: Russia invades Ukraine
• 2/28/2022: The Administration announces that it will not appeal the Sale 257 decision. WTI = $96.13
• 3/8/2022: WTI peaks at $123.70/bbl
• 3/30/2022: EIAP Report for API and NOIA estimates economic impacts from leasing program delays noting: In most cases, additional leases are required to produce an existing field fully or to underpin the economics of processing and transportation infrastructure. It is thus important for the industry to have continued opportunities to secure leases through a predictable leasing program. (US lease blocks are too small for optimal development in deepwater and frontier areas, increasing the importance of regular lease sales.)
• 3/31/2022: President Biden directs the release of 1 million bbls/day from the Strategic Petroleum Reserve for 6 months, lowering oil prices.
• 3/31/2022: Senators Manchin (D-WV) and Kelly (D-AZ) urge President BIden to develop and implement the new 5 year leasing plan without delay.
• 4/2/2022: 500 days since the last lease sale. WTI = $99.27

Read Full Post »