Production at Chevron’s Leviathan, a giant offshore gas field
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.
Pictured: Transocean’s Deepwater Proteus. T/O should name one of their drillships Deepwater Diligence 😉
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 thedeepwater 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
Notes: EP=Exploration Plan, APD=Application for Permit to Drill, WR=Walker Ridge, GC=Green Canyon, MC=Mississippi Canyon, KC=Keathley Canyon
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.
This Court should grant Plaintiffs—the State of Louisiana, the American Petroleum Institute (“API”), and Chevron U.S.A. Inc. (“Chevron”)—a preliminary injunction and prevent those unlawful provisions from permanently disrupting the result of the fast-approaching lease sale (which Congress has directed must occur by September 30, and which cannot be delayed without causing Plaintiffs even more serious injury).
From a regulatory policy standpoint, this appears to be a strong filing. Operationally, the most important points pertain to the costly and premature Rice’s whale restrictions first discussed on this blog.
Most notably, the plaintiffs seek (p.39):
A preliminary and permanent injunction striking, setting aside, and enjoining BOEM from implementing the specific challenged provisions of the Final Notice of Sale and Record of Decision for Lease Sale 261;
An order vacating the specific challenged provisions of the Final Notice of Sale and Record of Decision for Lease Sale 261;
An order compelling Defendants to proceed with Lease Sale 261 on September 27, 2023, without the challenged provisions;
Keathley Canyon (KC) Block 96, the tract receiving the highest bid in the entire sale ($15,911,947 by Chevron), had a BOEM MROV of only $576,000. Clearly, Chevron and the government have a very different view of the value of this tract. BP was the second bidder for KC 96, and their bid ($4,003,103) was also considerably higher than BOEM’s MROV. This one will very interesting to follow.
The only bid that was rejected in Sale 257 was the BP/Talos bid of $1.8 million for Green Canyon Block 777. BOEM’s MROV in the Sale 257 evaluations was $4.4 million. BP again bid on GC 777 in Sale 259, but their bid was only $583,000 (even though BOEM’s Sale 257 evaluation was public information). BOEM’s MROV was reduced only slightly to $4.2 million, and they again rejected BP’s bid. We’ll see what happens in the next sale.
51 of the 230 accepted bids were >$1 million, all for deepwater tracts. All of the rejected bids were for deepwater tracts, and a higher percentage (4/14) were >$1 million. This makes sense given that the higher potential prospects are in deepwater.
These results demonstrate again that resource evaluation is far from an exact science. BOEM is not selling barrels of oil and cubic feet of gas. BOEM is evaluating prospects, and companies are bidding on the opportunity to explore these prospects.
Bidding strategies differ; the more companies participating, the better the long-term prospects for the OCS program.
Per the BSEE borehole file, there were 2 deepwater exploratory well starts since 4/1/2023. The Shell well is another GoM milestone in that it is the 150th well spudded in >8000′ of water. The first was in the year 2000.
Operator
spud date
location
water depth
Chevron
5/5/2023
Mississippi Canyon 608
6678′
Shell
4/13/2023
Alaminos Canyon 728
8660′
Arena and Cantium continue to drive shelf drilling. Below are the shelf development wells since 4/1/2023:
Based on drilling contractor rig activity reports, the table below lists 19 deepwater MODUs under or soon to begin contracts in the GoM. (Further details are pasted at the end of this post.) Per the Valeris report, platform rigs are operating on bp’s Thunder Horse and Mad Dog platforms. Per the BSEE borehole file, Arena and Cantium continue to drill development wells on the GoM shelf.
Prior to the installation of these platforms, the last deepwater platform addition was Shell’s Appomattox in 2018. That gap in deepwater platform installations was the longest since Bullwinkle was installed in 1988.
The 5 new structures will increase the deepwater platform count by 9% from 56 to 61, and in the next few years should account for approximately 1/4 of GoM oil production.
Bud's Offshore Energy (BOE) 