Posted in California, decommissioning, Offshore Energy - General, tagged California, Chevron, Exxon, Santa Ynez Unit, write down on January 5, 2024| Leave a Comment »
Exxon has joined Chevron in announcing Q4 write downs associated with California operations. In Exxon’s case, the estimated $2.4 billion to $2.6 billion impairment is the result of their troubled Santa Ynez unit facilities in the Santa Barbara Channel where the unit’s 500+ million barrels of reserves are unlikely to ever be produced.
The Santa Ynez saga is really quite remarkable. More here and here.
Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged California, Chevron, decommissioning, losses on January 5, 2024| Leave a Comment »
On January 2, 2024, Chevron Corporation announced that for fourth quarter 2023, the Company will be impairing a portion of its U.S. upstream assets, primarily in California, due to continuing regulatory challenges in the state that have resulted in lower anticipated future investment levels in its business plans. The Company expects to continue operating the impacted assets for many years to come. In addition, the Company will be recognizing a loss related to abandonment and decommissioning obligations from previously sold oil and gas production assets in the U.S. Gulf of Mexico, as companies that purchased these assets have filed for protection under Chapter 11 of the U.S. Bankruptcy Code, and we believe it is now probable and estimable that a portion of these obligations will revert to the Company. We expect to undertake the decommissioning activities on these assets over the next decade.
SEC filing
On Monday, we will be posting comments on the proposed bankruptcy sale of Cox’s GoM assets and the related safety and decommissioning concerns.
Posted in Offshore Energy - General, Gulf of Mexico, tagged Anadarko, bp, Chevron, Christmas, Equinor, Gulf of Mexico, Hess, Lease Sale 261, Red Willow, Shell, Woodside on December 22, 2023| Leave a Comment »
Holiday greetings to our friends around the world!
Stocking stuffer for that special person! 😉
Posted in Gulf of Mexico, Offshore Energy - General, tagged Chevron, Hess, high bids, Lease Sale 261, top 10, tract evaluation on December 21, 2023| 1 Comment »
It’s always interesting to compare the high bids with the “runner-up” bids on the same tracts. Usually the gap is large and, as indicated in the table below, that is the case with the Sale 261 “top 10.” This tells us that bidding is independent, that tract evaluation is far from an exact science, that information and expert opinions differ, and that companies have different business and bidding strategies.
Particularly interesting in this sale were the tracts that both Hess and Chevron, its future parent, sought to acquire. Chevron and Hess bid against each other on two of the “top 10” tracts, and Hess outbid Chevron by wide margins. Will this affect post-merger relationships? 😉
In a future post, we’ll look at the 14 rejected Sale 259 high bids and the bidding on these tracts in Sale 261.
| block | high bid (million $) | company | 2nd highest bid (million $) | company |
| MC 389 | 25.5 | Anadarko | 1.9 | LLOG |
| GC 188 | 21.0 | Hess | 4.8 | Chevron |
| GC 151 | 18.0 | Hess | 3.0 | Anadarko |
| GC 723 | 17.2 | Anadarko (55%) Chevron (45%) | 2.0 | Equinor |
| GC 116 | 14.0 | Hess | 7.5 | Anadarko |
| GC 722 | 12.0 | Equinor | 1.4 | Chevron (55%) Anadarko (45%) |
| GC 72 | 7.5 | Hess | single bidder | |
| GC 232 | 7.0 | Hess | 1.1 | Chevron |
| GB 701 | 6.7 | Shell | single bidder | |
| KC 210 | 5.3 | Shell | single bidder |
Posted in energy policy, tagged Chevron, Hess, IEA, OPEC, World Energy Outlook 2023 on October 27, 2023| Leave a Comment »
Good article in OilPrice.com on the “notably politicized” IEA World Energy Outlook 2023.
The IEA’s assessments face criticism, particularly in terms of the agency’s optimistic outlook on the growth and impact of renewable energy worldwide. The report suggests that renewables will meet half of the world’s power demand by 2030, based on optimistic scenarios, including the proliferation of electric vehicles (EVs) and substantial investments in offshore wind, solar, green hydrogen, and ammonia. The IEA emphasizes the idea that consumers worldwide are enthusiastic about changing their heating systems to electricity or heat pumps.
Simultaneously, the ongoing contentious relationship between the IEA and OPEC is poised to reach new levels of disagreement. The release of the IEA’s report shortly after OPEC’s relatively optimistic oil market report gives the impression that Paris is attempting to alarm markets without substantial grounds. It’s worth noting that, despite its inherent bias, OPEC’s reports have historically demonstrated a higher level of accuracy compared to the IEA reports from the early 21st century. Even OPEC’s most optimistic scenarios regarding hydrocarbon demand growth have been realized sooner than expected. The current IEA report appears to resemble a modern-day version of “Crying Wolf.” It’s possible that the underlying strategy of Paris and its supporters is to induce significant fear among investors, including clients, in the hope that their biased outlook becomes a reality. However, at present, such a scenario appears unlikely. It’s essential to keep in mind that the IEA will need to present a doomsday scenario for hydrocarbons, as it faces a different audience in Dubai in the coming weeks.
Cyril Widdershoven for Oilprice.com
Major media outlets will, of course, run with the IEA assessment, as did the Washington Post when criticizing Chevron’s acquisition of Hess.
Posted in energy policy, Offshore Energy - General, Uncategorized, tagged Chevron, Hess, IEA, merger, OPEC, S&P Global on October 25, 2023| Leave a Comment »
Washington Post article (mainly commentary) on the Hess acquisition. Excerpts:
WP: “Chevron is acquiring oil driller Hess in a $53 billion all-stock deal announced Monday, bringing the energy giant deeper into the fossil fuel business at a time when policymakers are pressing for a broader transition to renewables.”
Comment: Many who live and work outside of the Post’s policy bubble differ on the urgency and practicality of the transition. Their primary concerns are reliable, secure, and affordable energy. Many elected representatives agree, which is why there is little national support for legislation restricting fossil fuels and imposing rigid transition timelines. Administrative actions, like the 5 year leasing plan, that handicap US offshore production are also being questioned.
And what are we transitioning to? Wind and solar are intermittent energy sources that can complement fossil fuel power generation, but not replace it. Nuclear energy has strong proponents, but faces stiff opposition, much of which is from the same groups that oppose fossil fuels. Other energy alternatives like ultradeep geothermal are very promising but are still years away.
WP: “The investments run counter to U.S. and global climate policies, which aim to rapidly phase out the internal combustion engine and shift power grids to zero emissions energy. The International Energy Agency reported last month that demand for oil, gas and coal will peak by 2030 before going into a steady decline, leading its executive director, Fatih Birol, to warn oil company executives that decisions to double down on fossil fuel infrastructure could prove misguided.“
Comment: Fortunately, IEA does not dictate corporate investment decisions. Perhaps IEA should look more closely at their own forecasts which show essentially no decline in oil or gas demand through 2050. Their assertion that demand for all fossil fuels will peak by 2030 is based on their speculative forecast calling for a sharp decline in coal demand, even though coal consumption is currently at record levels. IEA’s forecasts are also dependent on questionable assumptions such as this: “50% of new US car registrations will be electric in 2030.”
S&P Global sees oil demand rising by about 7 million b/d to 109.3 million b/d in 2030, before a gentle decline in the latter half of the 2030s, with oil falling to 100.8 million b/d in 2050. OPEC expects global oil demand to rise to 110 million barrels per day (bpd) and overall energy demand to rise 23% by 2045.
WP: “Still, the massive acquisitions from both Chevron and Exxon indicate their executives believe fossil fuels will continue to drive their business well into the future. Emphasizing affordability, company executives have said they see oil and gas alongside renewables.”
Comment: Spot-on. The WP could have shortened their commentary to these 2 sentences.
WP: Alex Witt, senior adviser for oil and gas at the advocacy group Climate Power, said the Hess acquisition shows the company’s true priorities. “Today’s news proves what we already knew — Chevron executives only care about the short-term, putting potential profits over the lives of families and the future of our planet,” Witt said in a statement Monday.
Comment: Or perhaps both Chevron and the lives of families will benefit, as they have in the past.
Posted in Gulf of Mexico, Guyana, Offshore Energy - General, Uncategorized, tagged Chevron, deepwater development, Gulf of Mexico, Guyana, Hess, merger, Stampede on October 23, 2023| Leave a Comment »
Posted in energy policy, Offshore Energy - General, tagged Chevron, Israel, Leviathan, natural gas, Noble Energy, US and Israel offshore gas on October 9, 2023| Leave a Comment »
This may come as a surprise to many, but Israel produced 752 billion cubic feet of gas in 2022, which is nearly equivalent to US offshore gas production (788 bcf in 2022).
Chevron is the main operator in Israel, having purchased Noble’s assets in 2020. Absent Noble’s bold and pioneering exploration in the Eastern Mediterranean, Israel would have continued to be an energy importer dependent on coal for power generation.
Presumably, the protection of these offshore assets is a high priority for the Israeli Navy.
Posted in drilling, Gulf of Mexico, Offshore Energy - General, tagged bp, Chevron, deepwater drilling, diligence, Gulf of Mexico, Hess, Shell, Talos, transocean on September 27, 2023| Leave a Comment »
Seven of the deepwater exploratory wells drilled in the Gulf of Mexico in 2023 (YTD) were spudded within 4.5 years of the effective date of their leases. Three of these wells were spudded within 3 years of their lease effective dates (see table below).
These are impressive achievements when you consider the time required for consultation with partners (if any) and contractors, site surveys, exploration plan development and approval, well planning, and drilling permit preparation and approval.
The subject wells accounted for 28% of the deepwater exploratory well starts in 2023 (25 net YTD wells after subtracting restarts at the same location).
| date lease effective | spud date | elapsed time (months) | water depth (ft) | operator |
| 3/1/2021 | 8/27/2023 | 30 | 6498 | Shell |
| 8/1/2020 | 5/21/2023 | 34 | 2211 | Talos |
| 8/1/2020 | 3/15/2023 | 31 | 3338 | Talos |
| 12/1/2019 | 6/5/2023 | 42 | 4228 | Chevron |
| 11/1/2019 | 6/1/2023 | 43 | 4603 | Hess |
| 7/1/2019 | 7/11/2023 | 48 | 7486 | Kosmos |
| 12/1/2018 | 6/6/2023 | 54 | 4127 | bp |
Below are the exploration plan (EP) and permit (APD) approval timeframes for these 7 wells. With the exception of the Kosmos EP which required a number of modifications, the regulator actions appear to have been timely. For the bp, Shell, and Chevron wells, only 4-6 months elapsed between EP submittal and APD approval.
| operator | block | date EP received | date EP approved | APD received | APD approved |
| Shell | WR 365 | 3/1/2023 | 5/17/2023 | 5/11/2023 | 8/8/2023 |
| Talos | GC 78 | 1/19/2021 | 4/16/2021 | 3/8/2023 | 5/26/2023 |
| Talos | MC 162 | 4/1/2022 | 7/13/2022 | 8/2/2022 | 3/2/2023 |
| Chevron | MC 937 | 12/7/2022 | 5/19/2023 | 4/21/2023 | 5/21/2023 |
| Hess | MC 727 | 8/30/2022 | 11/3/2022 | 12/21/2022 | 4/24/2023 |
| Kosmos | KC 964 | 1/3/2020 | 10/12/2022 | 4/18/2023 | 7/3/2023 |
| bp | GC 436 | 1/18/2023 | 4/14/2023 | 3/29/2023 | 6/5/2023 |
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged API, Chevron, injunction, Lease Sale 261, Louisiana, Rice's whale on September 22, 2023| Leave a Comment »
For the reasons stated above, the court hereby ORDERS that the Motions for Preliminary Injunction be GRANTED. Accordingly, the government defendants are enjoined from implementing the acreage withdrawal and Stipulation 4(B)(4) as described in the Final Notice of Sale and Record of Decision for Lease Sale 261. Government defendants are ordered to proceed with Lease Sale 261, absent the challenged terms, by September 30, 2023.
Full docket: State of Louisiana v. Haaland (2:23-cv-01157)
Bud's Offshore Energy (BOE) 