The carbon disposal industry, which overplayed its hand on the OCS, has managed to alienate traditional oil and gas industry supporters, sparking grassroots opposition in conservative areas of Louisiana. Carbon Capture and Sequestration (CCS) is also opposed by climate activists and the environmental justice movement.
The Advocate has nicely summarized opponents concerns: “land rights; the impact on underground aquifers if CO2 leaks; skepticism of climate change; skepticism of its effectiveness in fully capturing CO2; and opposition to the use of federal money and tax credits to finance the effort.”
Gov. Landry issued an executive order on Oct. 15 in an apparent attempt to calm the opposition. Following 34 “whereas” clauses intended to justify carbon disposal in Louisiana, the EO directs a pause in the review of new Class VI CO2 disposal wells. As evidenced by the attached press release, Save My Louisiana and other opposition groups are far from satisfied.
Unsurprisingly, the carbon capture and sequestration (CCS) hype is fading fast. No other carbon strategy is so strongly opposed by both climate change activists and skeptics.
Support for CCS seems to be limited to those seeking to profit from subsidies, mandates, and disposal fees. In 2022, Exxon projected a $4 trillion CCS market by 2050. Pipe dream?
“Highlights” of the Gulf of America OCS carbon disposal era:
amended the OCS Lands act to authorize “the injection of a carbon dioxide stream to sub-seabed geologic formations for the purpose of long-term carbon sequestration.”
exempted CO2 injection from the restrictions on ocean dumping by stipulating that such injection “shall not be considered to be material (as defined in section 3 of the Marine Protection, Research, and Sanctuaries Act of 1972.” Without this exemption, CO2 streams would clearly be “material,” as defined in 33 U.S.C. 1402, and would be subject to the stringent requirements of that act.
directed that “not later than 1 year after the date of enactment of this Act, the Secretary of the Interior shall promulgate regulations to carry out the amendments made by this section.” (This deadline is long past, which is not uncommon for such legislative directives.)
11/17/2021: Not coincidentally, two days after the enactment of this legislation, Exxon was the sole bidder on 94 nearshore tracts with very limited oil and gas production potential. This was an oil and gas lease sale and there were no provisions for carbon sequestration leasing. Nonetheless, Exxon was awarded leases for all 94 tracts. As a result of litigation delaying the issuance of Sale 257 leases until Oct.1, 2022, those 5 year leases will expire in 2027.
3/29/23: Exxon bid at Sale 259 on 69 nearshore tracts with little oil and gas potential. Once again, this was strictly an oil and gas lease sale and Exxon’s CCS intentions were clear. Nonetheless, the leases were awarded.
6/25/2025: For the first time ever, the Federal government felt compelled to stipulate the obvious (proposed lease sale notice for OCS Sale 262) – that an Oil and Gas Lease Sale is only for oil and gas exploration and development.
Gulf of America lease map: 199 oil and gas leases were wrongfully acquired for carbon disposal purposes. At Sale 261, Repsol acquired 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon had acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 (94) and 259 (69).
Even those of us who are supporters of responsible offshore oil and gas production find it a bit unsavory that some companies are looking to cash in on (and virtue signal about) carbon collection and disposal at the public’s expense. Perhaps companies that believe oil and gas consumption is harmful to society should be seeking to reduce production rather than engaging in enterprises intended to sustain it.
Exxon CEO Darren Woods’ is concerned that US withdrawal from the Paris climate agreement would threaten carbon capture and sequestration (CCS), the foundation for which is government mandates and generous taxpayer subsidies.
Exxon sought an edge over CCS competitors by improperly acquiring 163 OCS oil and gas leases (map below) for carbon disposal purposes. Conversion of these leases is not authorized, which means they will expire at the end of their primary (5 year) term absent legislative or regulatory action.
The only solid support for CCS is from companies hoping to benefit from subsidies and charges to industries and individual energy consumers. It’s time to end the Federal government’s CCS programs.
199 oil and gas leases were wrongfully acquired at Sales 257, 259, and 261 with the intent of developing these leases for carbon disposal purposes. Repsol was the sole bidder at Sale 261 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 (94) and 259 (69).
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 (94) and 259 (69).
The 199 oil and gas leases that were wrongfully acquired for carbon disposal purposes remain idle with the government collecting rental payments at the rate of $10/acre/yr ($7 for Sale 257 leases). Collectively, this amounts to approximately $10 million/yr.
Presumably, the lessees cannot claim CCS tax credits for their bonus and rental payments.
The primary term for these leases is only 5 years, and the clock is ticking. The 94 oil and gas leases acquired by Exxon at Sale 257 for carbon disposal purposes are approaching the end of their second year. They would be almost a year older if litigation hadn’t delayed the issuance of Sale 257 leases (break for Exxon?).
No exploration plans have been filed for any of these leases. Presumably Exxon and Repsol do not intend to drill any wells unless the leases are converted to authorize carbon disposal.
The “Infrastructure Bill,” signed 2 days before Sale 257, required the Secretary of the Interior to promulgate regulations not later than one year after the date of enactment (11/15/2021). That deadline has long passed.
The delay in the regulations is understandable given the complex lease management, operational, and environmental issues.
Like the practices and operations they are intended to enable, the regulations are certain to be divisive. Neither the offshore industry nor the environmental community are of one mind on these issues, particularly with regard to the acquisition of oil and gas leases for carbon disposal purposes.
Energy Intelligence suggests that final carbon disposal regulations will be promulgated this year. This is highly unlikely, given that a proposed rule must first be published for public comment.
Publication of a proposed rule prior to the election is unlikely – too controversial.
Presumably, the regulations will establish a competitive process for the conversion of any oil and gas leases.
The leases that were wrongfully acquired at Sales 257, 259, and 261 should not be extended for any period of time, even if their expiration date approaches before a competitive process is established.
“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.
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.
Updated BSEE incident data tables. The last data are for 2021. The public should have timely access to information about safety and pollution events on Federal lands and the performance records of companies conducting these operations. During the MMS era, these tables were updated quarterly and the Directors (all administrations) did not tolerate delay.
The final NTSB report on the 12/29/2022 GoM helicopter crashthat killed 4. The preliminary report was timely, but the final report has yet to be published. Is the NTSB considering the muddled regulatory regime for helidecks. (Regulatory fragmentation is a safety risk factor).
Corrected IRF performance data. This is arguably the IRF’s most important work stream and the data should be accurate. Some commentary about safety performance would also be helpful. What do the incident trends tell us? How does safety performance compare internationally?
Data on safety incidents associated with the OCS wind program during the site assessment, construction, and operational phases.
Information on the mysterious sinking of the Aban Pearl semi-submersiblein May 2010. We know an investigation was conducted. 14 years have now elapsed and the report has still not been shared.
Ignore the significant oil and gas potential of arctic and subarctic Alaska, the Atlantic, the Pacific, and the Eastern Gulf of Mexico (where the best prospects are >125 miles from the coast of Florida).
BOEM’s Final Sale Notice for the upcoming Gulf of Mexico wind auction identifies 3 lease areas (see map below). Wind operations in these areas should not significantly conflict with other GoM activities, including oil and gas operations.
Those who followed Exxon’s recent lease acquisitions may be amused by the map below from BOEM’s siting analysis document. The 94 Exxon leases acquired at Oil and Gas Lease Sale 257 (yellow blocks) are misidentified as “Carbon Capture Lease Blocks.” As has been discussed at length on this blog (most recently here), Sales 257 and 259 were oil and gas lease sales. Although Exxon’s intentions are now well known, they may not conduct carbon sequestration operations on these leases unless they are competitively reissued or converted. (Is BOEM’s siting document implying that conversion of the Exxon leases is a fait accompli?) The regulations for such conversions, and for CCS operational activities, have yet to be promulgated. A draft of these regulations is expected later this year, and the comments should be spirited and diverse.
ENERGYWIRE has reported that the Department of the Interior will publish the legislatively mandated carbon sequestration rule later this year. Given that even close followers of the OCS program were completely unaware of the enabling legislative provisions prior to their enactment, the proposed DOI rule will provide the first opportunity to formally comment.
Within the oil and gas industry and the environmental community, there are considerable differences of opinion about carbon sequestration in general, and more specifically, offshore sequestration. All interested parties are encouraged to submit comments on these important regulations.
Some background information on the sequestration legislation and subsequent actions:
amend the OCS Lands act to authorize “the injection of a carbon dioxide stream to sub-seabed geologic formations for the purpose of long-term carbon sequestration.”
exempt CO2 injection from the restrictions on ocean dumping by stipulating that such injection “shall not be considered to be material (as defined in section 3 of the Marine Protection, Research, and Sanctuaries Act of 1972.” Without this exemption, CO2 streams would clearly be “material,” as defined in 33 U.S.C. 1402, and would be subject to the stringent requirements of that act.
direct that “not later than 1 year after the date of enactment of this Act, the Secretary of the Interior shall promulgate regulations to carry out the amendments made by this section.” (This deadline has been missed, which is rather common for such directives.)
3/29/23: Exxon bid at Sale 259 on 69 nearshore tracts with little oil and gas potential. Once again, this was strictly an oil and gas lease sale and Exxon’s CCS intentions were clear. Nonetheless, the leases were awarded.
Exxon and other companies intend to commercialize carbon sequestration, and Exxon projects an astounding $4 trillion CCS market by 2050. Such a market will of course be dependent on mandates and subsidies, and the costs will ultimately be borne by taxpayers and consumers.
Is it not a bit unsavory and hypocritical for hydrocarbon producers to capitalize on the capture and disposal of emissions associated with the consumption of their products? Perhaps companies that believe oil and gas production is harmful to society should exit the industry, rather than engage in enterprises that sustain it.
Last week, BOEM announced the acceptance of all 69 of Exxon’s Sale 259 carbon sequestration bids. This is despite these facts: (1) Exxon’s intentions were known, (2) there were no provisions for CCS bidding in the Notice of Sale, (3) no environmental review of CCS leasing was conducted, and (4) there are no procedures for evaluating CCS bids.
Absent some type of legislative maneuver, carbon sequestration is not authorized under these leases. If Exxon is just acquiring the leases for evaluation purposes in preparation for a possible CCS sale in the future, their lease acquisitions may be okay. If they are planning on retaining these leases for actual sequestration operations, that is not okay, at least not until a competitive process has been established for awarding or reclassifying such leases.
It’s also noteworthy that there was a second bidder for th blocks (in red above). Presumably that company, Focus Exploration, was interested in acquiring the tract for oil and gas exploration purposes. However, the Focus bid was a bit lower, so Exxon got the tract.
Bud's Offshore Energy (BOE) 