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Posts Tagged ‘carbon sequestration’

If the Schumer-Manchin bill is enacted, what happens to the Sale 257 CCS bids?

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , on August 2, 2022| Leave a Comment »

The subject legislation requires the Secretary of the Interior to accept the highest valid bid that was received for each tract offered in OCS Lease Sale 257. Exxon was the sole bidder on 94 tracts on the nearshore Texas shelf. The leases were to be acquired for carbon sequestration purposes.

The CCS bids should not be considered valid given that:

  1. Sale 257 was an oil and gas lease sale. The Notice of Sale said nothing about carbon sequestration and did not offer the opportunity to acquire leases for that purpose. Therefore, the public notice requirements for CCS leasing (30 CFR § 556.308) were not fulfilled.
  2. Because there was no draft or final Notice of Sale, interested parties and the public did not have the opportunity to consider and comment on CCS leasing, tract exclusions, bidding parameters, and other factors.
  3. 30 CFR § 556.308 requires publication of a lease form. No CCS lease form was posted or published for comment.
  4. CCS operations were not considered in the environmental assessments conducted prior to the sale.
  5. No evaluation criteria for CCS bids have been published.

Unexpectedly, the Infrastructure Bill, signed on 11/15/2021 (just 2 days before Sale 257) included a provision for OCS carbon sequestration. However, that legislation did not require CCS leasing or authorize DOI to sell CCS leases as part of an oil and gas lease sale; nor did it exempt DOI from complying with its leasing regulations. Instead, It gave the Secretary a year (until 11/15/2022) to promulgate necessary implementing regulations. If carbon sequestration in the Gulf of Mexico is deemed to be desirable, a separate CCS sale should be held when the regulatory framework has been established.

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Questions about Gulf of Mexico carbon sequestration

Posted in CCS, climate, energy policy, Gulf of Mexico, pipelines, Regulation, tagged , , , , , , , , on May 12, 2022| Leave a Comment »

Background:

Questions:

  • What are the costs per ton of offshore carbon sequestration including emissions collection, offshore wells and platforms, the associated pipeline infrastructure, ongoing operational and maintenance costs, and decommissioning?
  • What is the timeframe given that the starting point is likely years away?
  • How long would CO2 sequestration continue.
  • Who pays? Polluters? Federal subsidies? Tax credits?
  • Who is liable for:
    • safety and environmental incidents associated with these projects?
    • CO2 that escapes from reservoirs, wells, and pipelines (now and centuries from now)?
    • decommissioning?
    • hurricane preparedness and damage?
  • For Gulf of Mexico sequestration, how much energy would be consumed per ton of CO2 injected? Power source? Emissions?
  • To what extent will these operations interfere with other offshore activities?
  • Relatively speaking, how important is US sequestration given:
  • What are the benefits of offshore sequestration relative to investments in other carbon reduction alternatives?
  • Will BOEM conduct a proper carbon sequestration lease sale with public notice (as required by BOEM regulations) such that all interested parties can bid?
    • What will be the lease terms?
    • Environmental assessment?
    • How will bids be evaluated?
  • What happens to the Exxon bids if the Judge’s Sale 257 decision is reversed?
  • What is the status of the DOI regulations mandated in the legislation with an 11/15/2022 deadline?
    • When will we see an Advanced Notice or Notice of Proposed Rulemaking?
    • Given that DOI has no jurisdiction over the State waters and onshore aspects of these projects, what is the status of parallel regulatory initiatives?
  • Finally and most importantly, how does drilling offshore sequestration wells instead of exploration and development wells increase oil and gas production?
highly simplified conceptual diagram

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More on the Lease Sale 257 decision

Posted in CCS, Gulf of Mexico, Offshore Energy - General, Offshore Wind, Wind Energy, tagged , , , , on February 2, 2022| Leave a Comment »

The judge correctly dismissed the unfounded claim that new oil and gas leasing would preclude wind development in the Gulf. BOE comments:

  • The number of GoM platforms is down 75% from its peak and continuing to decline.
  • Most new production is in the deepwater GoM and is accomplished with very few, remote and widely dispersed facilities. There are currently only 57 deepwater platforms across the entire Gulf.
  • The wind industry appreciates the synergy between offshore oil and gas and offshore wind operations. Indeed the oil industry has been very supportive of offshore wind, and some of the same operating companies and contractors are major players in both industries.
  • t has been 17 years since the enabling legislation was passed, yet we are still awaiting the first commercial wind project in the US Atlantic. You can’t blame the oil and gas industry for that delay. To the contrary, one can make the case that the presence of oil and gas operations would have accelerated Atlantic wind development.
  • The enabling legislation for offshore wind was drafted by the agency that managed the offshore oil and gas program and recognized the compatibility of oil and wind development. Wind development is clearly a high priority for BOEM, the current OCS land manager.

Will the Administration appeal the court decision to vacate the lease sale or does the decision assist them by reinstating their leasing pause? How will the conflict between the DC court decision and the injunction invalidating the leasing pause (Federal Court for the Western District of Louisiana) be resolved?

What does this mean for the 94 leases that were to have been acquired for carbon sequestration purposes? Will BOEM have a proper CCS sale after conducting an environmental assessment, determining bidding terms and evaluation criteria, and publishing a Notice of Sale? Or will there be a legislative end run that authorizes the issuance of the leases without these steps?

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