Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, tagged Andrew Konczvald, decommissioning, Pioneering Spirit, safety, Thunder Horse on January 26, 2024| Leave a Comment »
The financial, technical, and regulatory aspects of decommissioning have received much attention on this blog. Andrew Konczvald sends this photo with regrets that the behemoth “Pioneering Spirit” wasn’t available when he was concerned with such matters.
For comparison (size only given the different missions), the massive Thunder Horse floating production platform (see below) in the Gulf of Mexico is 136 m x 112 m, only 12 m narrower but just over 1/3 of the Pioneering Spirit’s length.
Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, tagged Bullwinkle, Cognac, compliance, decommissioning, Fieldwood, merger, QuarterNorth, Talos on January 23, 2024| Leave a Comment »
Safety first: As a descendant of troubled Fieldwood Energy, which had a very poor safety and compliance record, QuarterNorth Energy (QNE) had much to prove. That said, QNE has had a good compliance record in its brief 2 year history. During 76 facility inspections in 2022 and 2023, QNE was cited for only 15 Incidents of noncompliance, all but 2 of which were warnings. This is on par with the companies that had the best compliance records during that period.
BSEE’s incident statistics are hopelessly out-of-date, with the latest data being for 2021, so we have limited information on QNE safety incidents. However, BSEE’s District Investigation Reports, which document the more significant incidents, are relatively current and no QNE incidents were investigated in 2022 and 2023.
Platforms: Consistent with the general sense that QNE inherited the best of Fieldwood’s facilities, the company’s 15 platforms include Bullwinkle, the Thunder Hawk floating production unit in 6050′ of water, and prominent shelf platforms Tarantula and Hickory.
The acquisition reunites 2 iconic Shell platforms under the same ownership. QNE’s Bullwinkle, installed in 1988 in 1353′ of water, is the world’s tallest (non-compliant) steel tower platform. Talos’s Cognac, installed in 1978 in 1023′ of water, is the first platform in >1000′ of water.
Production and reserves: Per Talos, QNE adds 30,000 boe/d of production and 69 million boe of reserves.
Drilling: Per BSEE records, QNE was the operator for 2 deepwater exploration wells, both of which are classified as completed.
Active leases: The QNE acquisition will add 51 leases to the Talos’s 143 lease inventory.
Recent lease sale activity:
| Sale | QNE | Talos |
| 257 | 2/1 | 10/10 |
| 259 | 6/4 | 5/4 |
| 261 | 6/4 | 14/13 |
Sales price and decommissioning: QNE was already on the market for “more than $2 billion,” shortly after the company was formed. Talos is paying $1.29 billion consisting of 24.8 million shares of Talos’s common stock and approximately $965 million in cash. A case study of the complex Fieldwood bankruptcy and the outcomes for the various parties would be most interesting. Also of interest would be a study of the decommissioning obligations of the former companies and the extent to which the sale proceeds are being applied.
Posted in California, decommissioning, Norway, Offshore Energy - General, Offshore Wind, UK, tagged California, decommissioning, Equinor, floating turbines, Hywind, Morro Bay, Offshore Wind on January 22, 2024| 1 Comment »
It’s prudent, if not imperative, to tow floating wind turbines to sheltered coastal locations for major maintenance. For that reason, Hywind, the world’s first floating wind farm will be offline for up to 4 months this summer.
Hywind Scotland‘s operator, Norwegian power giant Equinor, says that operational data has indicated that its wind turbines need work. The pilot project has been in operation since 2017.
The five Siemens Gamesa turbines will be towed to Norway this summer. An Equinor spokesperson said, “This is the first such operation for a floating farm, and the safest method to do this is to tow the turbines to shore and execute the operations in sheltered conditions.”
electrek
Published data indicate that Hywind has been the UK’s best performing offshore wind farm. Performance data for Hywind, and a chart illustrating the capacity factors since commissioning, are posted below. The 2024 capacity factor will, of course, be substantially reduced as a result of the essential offsite maintenance.
| rolling 12 month capacity factor ending 5/2022 | life capacity factor | age (years) | installed capacity (MWp) | total elec generated (GWh) | power/ unit area spanned (W/m2) | |
| Hywind Scotland | 49.5% | 52.6% | 4.6 | 30 | 642 | 1.0 |
The first US floating turbines are expected to be at these California offshore leases, and Hywind operator Equinor is one of the lessees:
Given the financial challenges facing the offshore wind industry, the still emerging technology, and the risks inherent in California offshore development, the amounts bid on these leases only 13 months ago are stunning.
Some Central Coast residents are not enamoured with “another attempt to industrialize the coast.” Although the turbines will be >20 miles offshore, they will have to be towed to shore for major maintenance. For the Central California leases, nearby harbor areas like Morro Bay (pictured below) would be overwhelmed by the large structures and the maintenance and repair operations. Towing the towers to LA/Long Beach, albeit rather distant from the leases, would seem to be the preferred option for such work.
Ironically, a report for BOEM, points to synergies between the offshore wind industry and oil and gas decommissioning industry. Such synergies will only be possible if longstanding oil and gas decommissioning obstacles are satisfactorily addressed and the offshore wind projects proceed as planned.
Which will come first – platform decommissioning or wind turbine commissioning? For those young enough to find out, what is the over-under for the years until (1) half of those platforms are decommissioned, and (2) half of the wind turbines commissioned? Any number <10 is unrealistic for either.
Posted in decommissioning, energy policy, Offshore Energy - General, Offshore Wind, tagged BOEM, decommissioning, financial assurance, Vineyard Wind, waiver on January 18, 2024| 10 Comments »
BOEM is charged with protecting the public from financial risks associated with the decommissioning of offshore facilities. Previous posts have addressed oil and gas facility decommissioning issues and proposed revisions to BOEM’s financial assurance regulations for those operations.
Recent disclosures indicate that BOEM, which very publicly promotes the offshore wind projects that it regulates, has waived a fundamental financial assurance requirement at the request of Vineyard Wind (approval letter attached). Given its broad applicability, this precedential waiver could have the effect of revising a significant provision of the offshore wind decommissioning regulations without public review and comment.
The issue is the “pay as you build” financial assurance requirement at 30 CFR § 585.516, which was waived by BOEM. This requirement, which is intended to project the public from decommissioning liability, is fair and reasonable given that wind developers must only provide financial assurance “in accordance with the number of facilities installed or being installed.” Companies that don’t have sufficient financial strength to comply with this requirement should not be installing and operating offshore wind turbines.
Vineyard Wind was either unable or unwilling to comply with the requirement. They instead requested to defer providing the full amount of the required financial assurance until year 15 of actual operations. The waiver changes “provide assurance when you install” to provide assurance 15 years after installation if everything goes as planned (hoped?).
After their waiver request was denied in 2017, Vineyard Wind resubmitted the request in 2021 seeking a favorable decision from an administration concerned that project cancellation or delay might tarnish the program that they were enthusiastically promoting.
BOEM (as directed from above?) granted the waiver, citing the general departure authority at 30 CFR § 585.103. However, that authority is intended for special situations, not for broadly applicable waivers that have the effect of revising the regulations without the public review required by the Administrative Procedures Act and Executive Orders 12866 and 13563.
There are no criteria in the Vineyard Wind waiver approval that could not apply to other wind developers. Vineyard Wind has simply committed to the same “risk-reduction factors” that apply to all offshore wind projects: damage insurance, the “use of proven turbine technology,” and long-term power purchase agreements. How could BOEM deny the same request from other companies?
It’s noteworthy that the regulations specific to financial assurance at 30 CFR § 585.516 provide no criteria for waiving the assurance requirements; nor do the regulations provide for the 15-year payment plan approved by BOEM. Given the precedential nature of the BOEM action and its enormous financial implications, a revision to the decommissioning regulations that provides criteria for such payment schemes should be promulgating before any similar departures are approved.
In light of the waiver, the public will likely incur substantial costs if Vineyard Wind fails, walks away, doesn’t fully fund their decommissioning account in a timely manner, or seeks new concessions after some or all of the 62 turbines have been installed.
Given the decommissioning obligations, what company would want to step in and assume responsibility for a failing project 10-15 years from now? What happens if Vineyard Wind’s project revenues don’t meet expectations and contributions to their decommissioning account are insufficient or used improperly? More concessions? We’ve seen this dance before.
Whether the project is for oil, gas, or wind energy, protecting the public from decommissioning liabilities should always be prioritized over facilitating development.
Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, Regulation, tagged asset sale, bankruptcy, carbon sequestration pilot, Cox Operating, decommissioning, safety record, W&T offshore on January 8, 2024| Leave a Comment »
Cox proposes to sell its Gulf of Mexico assets to W&T Offshore for $88.5 million. The bankruptcy case docket has 64 pages of linked documents including many objections to the terms of the sale.
The bankruptcy court’s priorities should be 1) minimizing safety and environmental risks and 2) protecting the public from the massive decommissioning liabilities.
Per the latest BOEM information, Cox and affiliates Energy XXI and EPL operate 477 platforms, which is 31% of the Gulf of Mexico total! (See the related information posted last June.) BSEE estimates that the decommissioning costs for these platforms will exceed $4.5 billion!
Per BSEE data, Cox and its affiliates were cited for 780 incidents of noncompliance (violations) in 2023. They thus accounted for 43% of all 2023 GoM INCs.
Questions:
The Cox bankruptcy is yet another costly lesson for Federal regulators. Moving forward, decommissioning and lease assignment policies must prioritize safety, environmental protection, and protection of the public’s financial interests.
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 California, decommissioning, Offshore Energy - General, tagged BSEE, California, decommissioning, partial removal, PEIS, ROD on December 27, 2023| Leave a Comment »
This Santa Barbara Independent article discusses the Record of Decision (ROD) for the Programmatic Environmental Impact Statement on Pacific OCS Decommissioning. A quote from the article regarding BSEE’s support for complete removal of all infrastructure follows:
“It’s great that the federal government finally has a loose game plan for getting oil companies to clean up their rusty messes,” said Miyoko Sakashita, oceans program director at the Center for Biological Diversity.
Apparently the Center for Biological Diversity supports complete removal, the decommissioning alternative that would destroy “the most productive marine habitats per unit area in the world.” How’s that for irony?
Complete removal may be the most politically expedient alternative in California, but it is by far the most environmentally damaging and poses the greatest safety risks. Old disputes about offshore oil and gas production should not be driving decommissioning policy.
Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, rigs-to-reefs, tagged decommissioning, Gulf of Mexico, OCS facility dashboard, rigs to reefs on November 22, 2023| Leave a Comment »
BSEE’s Facility Infrastructure Dashboard is a useful tool for tracking decommissioning activity in the Gulf of Mexico. A few numbers from the dashboard:
Planned disposition of the 291 pending removals (25% of the structures to be reefed):
Posted in California, decommissioning, Offshore Energy - General, UK, tagged assessment, California, decommissioning, John B. Smith, Robert Byrd on October 30, 2023| Leave a Comment »
An excellent paper by John Smith and Bob Byrd is attached.
The authors recommend the operators of large OCS platforms offshore California and in the Gulf of Mexico who propose to partially remove platform jackets prepare Comparative Assessments to support their decommissioning applications. The Comparative Assessments can also be prepared to support the case for allowing partial removal of smaller platform jackets and allowing pipelines and drill muds and cuttings to remain in-situ.
Posted in accidents, conferences, decommissioning, NOPSEMA, Offshore Energy - General, tagged Bryan Domangue, capping stack, decommissioning, idle iron, incident investigation, IRF conference, NOPSEMA on October 24, 2023| Leave a Comment »
NOPSEMA has kindly provided links for the slides presented at the 3-4 October International Regulators’ Forum Offshore Safety Conference in Perth, Australia. They will be uploading the video recordings at a later date.
On day 2 (stream 2) Bryan Domangue (BSEE) presented updated data on the progress that is being made in plugging inactive wells and decommissioning idle platforms (see the charts pasted below). In the following session, Bryan made an interesting presentation on the capping stack deployment exercises in the GoM (picture below).
For excellent slides on investigation and sharing the lessons learned, see session 9 (day 2, stream 1).
Bud's Offshore Energy (BOE) 