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Posts Tagged ‘DOE’

Gulf of Mexico incidents and violations leader wants to develop a carbon sequestration hub

Posted in accidents, CCS, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , , on December 28, 2022| Leave a Comment »

Carbon-Zero US LLC of Dallas (a Cox Oil affiliate) has applied for up to $12 million in U.S. Department of Energy funds to develop a pilot sequestration hub in offshore storage fields about 20 miles from Grand Isle, according to officials from Cox Operating LLC, the Dallas operator that owns some of the storage fields.

Cox Operating LLC will “repurpose facilities and equipment” for the carbon storage project, according to a news release.

The Advocate

Should this company be authorized to repurpose Gulf of Mexico facilities for carbon sequestration?

  • Per BSEE Incident of Non-Compliance (INC) data for 2022, Cox had more component shut-in INCs (132) than any other company. Cox was second to the Fieldwood companies in the number of warning and facility shut-in INCs, and in the total number of INCs. 48% of the Cox INCs required either a component or facility shut-in.
  • Cox had an INC/facility-inspection ratio of 0.77, nearly 50% higher than the GoM average of 0.53.
  • Per the posted BSEE district investigation reports for 2022, Cox was responsible for 9 of the 30 incidents that were significant enough to require investigation. That is more than twice as many as any other company (next highest was 4).
  • The incidents included 3 serious injuries, 2 fires, a large gas leak, and oil spills of 114, 129, and 660 gallons. Per the posted reports, only one other company had an oil spill of >1 bbl. (Note: Only spills of > 1 bbl are routinely investigated by BSEE. One bbl = 42 gallons.)
  • While INCs were issued for only 3 of the 9 Cox incidents, a review of the reports suggests that INCs should have been issued for at least 4 of the other incidents.
  • Cox operates 375 platforms with installation dates as early as 1949. 134 of their platforms are > 50 years old. Only 66 were installed in the last 20 years and only 6 in the last 10 years (most recent December 2014). How will the carbon sequestration plans affect their massive decommissioning obligations?
  • Many of the Cox platforms were assigned by predecessor lessees. Those predecessors can only be held responsible for the decommissioning of facilities they installed, not for more recent wells or platforms and not for facilities that are repurposed for carbon sequestration.

Other more generic issues should be addressed before DOE awards funds for offshore sequestration projects.

Also, as noted in the discussion of Exxon’s 94 Sale 257 oil and gas leases, a competitively issued alternate use RUE is required (30 CFR § 585.1007) before sequestration operations may be conducted on an oil and gas lease.

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Funding studies to support a pre-determined narrative

Posted in climate, energy policy, tagged , , , on August 4, 2022| Leave a Comment »

WASHINGTON, D.C. — The Biden-Harris Administration, through the U.S. Department of Energy (DOE), today announced $26 million to fund projects that will demonstrate that America’s electricity grid can reliably run with a mix of solar, wind, energy storage, and other clean distributed energy resources.

DOE

Shouldn’t the research precede DOE’s declaration of victory?

Rest assured that none of the studies will question the reliability of a grid dependent on DOE’s preferred energy mix; nor will they raise concerns about the associated economic, national security, or environmental risks. These are the types of projects that the WSJ calls “Green Pork.”

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DOE production (not satire)

Posted in climate, energy policy, Uncategorized, tagged , , on August 2, 2022| Leave a Comment »

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Has the President, VP, or any member of the cabinet ever visited an offshore platform?

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , on July 14, 2022| Leave a Comment »

In particular, the Energy and Interior Secretaries would benefit from a visit to a deepwater production facility. They would no doubt be impressed and would be better able to make informed decisions affecting US offshore leasing, exploration, and development.

The offshore workers would be respectful and would welcome the opportunity to discuss the technology, safety precautions, and environmental protection measures.

Perdido

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Strategic Petroleum Reserve is now below 500 million barrels

Posted in energy policy, tagged , , , on June 29, 2022| Leave a Comment »

DOE update as of 6/24/2022

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Keeping an eye on the Strategic Petroleum Reserve

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on June 9, 2022| Leave a Comment »

SPR stocks are down 29% from the end of 2010 and 19% from the end of 2020. Continued declines of this magnitude would be a major concern. Should a major crisis arise, offshore production takes years to ramp up, especially given that the lease inventory is at historic low levels and exploration has thus been stymied. Shale producers can respond more quickly to market needs, but transportation bottlenecks, and staffing and equipment availability can limit near-term production growth.

As was noted here in April, the inconsistency of drawing heavily on the SPR while constraining leasing in the adjacent offshore waters is striking. Apparently, there is nothing to worry about because neither the Department of the Interior nor the Department of Energy home pages even mention the words oil or gas. This is pretty remarkable given their broad responsibilities for these vital resources, and the crippling effects of shortages and high prices.

SPR locations

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You can’t print oil

Posted in energy policy, tagged , on May 5, 2022| 1 Comment »

When you withdraw oil from the Strategic Petroleum Reserve, eventually you have to replace it. But don’t worry, DOE has got this.

WASHINGTON, D.C. — The U.S. Department of Energy (DOE) today announced it is initiating a long-term replenishment plan for America’s Strategic Petroleum Reserve (SPR) to ensure that it will continue to deliver on its mission as an available resource to alleviate domestic and global crude oil supply disruptions. The buyback process will begin with a call for bids to repurchase a third of the 180 million emergency barrels released as part of a coordinated action with our international partners … 

Feel better now?

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Intermediate term BOE forecast: higher oil prices and increased OPEC+ market dominance

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged , , , , , on January 4, 2022| 2 Comments »

Declines in drilling activity and discoveries suggest that higher real oil prices are on the horizon. We may be fortunate enough to escape significant price hikes and supply disruptions over the next couple of years, but they are coming.

Rystad’s not-so-cheery pre-Christmas press release reported that, on a volume basis, 2021 oil and gas discoveries had sunk to the lowest level in 75 years.

20211220 OG global discoveries PR chart.png
Rystad Energy

US offshore trends are even more troubling. Per BOEM’s database, no deepwater fields were discovered in 2021 and there were only 2 discoveries in the past 3 years (see chart below). HartEnergy reports 5 announced discoveries in 2021, none of which has been determined by BOEM to be commercially producible. Regardless of the status of those 2021 determinations, recent discoveries have not been sufficient to reach and sustain GoM production volumes at the 2019 peak (August) of 2.044 million BOPD. 2019 was the first year since 1982 without a confirmed deepwater discovery and the trend (below) is not encouraging. Schlumberger data through 2016 indicated GoM depletion rates greater than 20%, and the subsequent low discovery rates do not bode well for future production trends.

from BOEM data

You can’t make discoveries without drilling and only 9 companies drilled deepwater GoM exploratory wells in 2021 (34 wells total). With the Pacific in decommissioning mode, the Atlantic and Eastern GoM off-limits, limited options offshore Alaska, and the decline of the GoM shelf, the deepwater GoM is the only important US offshore production option. The exploration numbers below are therefore concerning.

The shale revolution made the US a net oil exporter, but skepticism about shale production forecasts suggests the need for other supply sources. Given the shale uncertainty and the unrealistic expectations regarding the energy transition, greater US dependence on imported oil is on the horizon. This bodes well for OPEC, but not so well for US and international consumers.

Meanwhile, the US Dept. of Energy shows no evidence of concern about oil and gas production. Although oil and gas account for about 70% of our energy consumption, there has been no mention of either on the DOE homepage for months. DOE does express a strong interest in “energy justice.” Perhaps they can explain how increased imports and higher energy prices benefit the poor. They should also explain how oil imports are environmentally and economically superior to domestic oil and gas production, when the reality is exactly the opposite.

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$Billions in the Infrastructure Bill for CCS; what could possibly go wrong?

Posted in CCS, climate, decommissioning, energy policy, Gulf of Mexico, tagged , , , on December 28, 2021| Leave a Comment »

Quite a bit per the GAO, and their report only deals with DOE management of demonstration projects. The Infrastructure Bill authorizes $2.5 billion for commercial projects (and much more for other CCS purposes).

DOE provided nearly $684 million to eight coal projects, resulting in one operational facility. Three projects were withdrawn—two prior to receiving funding—and one was built and entered operations, but halted operations in 2020 due to changing economic conditions. DOE terminated funding agreements with the other four projects prior to construction.

DOE provided approximately $438 million to three projects designed to capture and store carbon from industrial facilities, two of which were constructed and entered operations. The third project was withdrawn when the facility onto which the project was to be incorporated was canceled.

GAO

So DOE’s actual success ratio was 0.182 (2 for 11) – not very compelling.

With regard to proposals for offshore carbon sequestration, who will be liable for future cost overruns, operating losses, infrastructure failures including pipeline and well leaks, and decommissioning costs? Who ensures that there will never be any leakage from CO2 disposal reservoirs? Does all of this fall on the Federal government?

Corporations that want to engage in carbon sequestration for commercial or other purposes should fund the projects with their own revenues or fees charged to the companies whose emissions they are collecting. The Outer Continental Shelf is publicly owned and those wishing to dispose of substances should pay a usage fee, be responsible for all costs, and be liable for pollution and damages.

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DOE announces Strategic Petroleum Reserve release

Posted in energy policy, tagged , on November 23, 2021| Leave a Comment »

WASHINGTON, D.C.— At the direction of President Biden, U.S. Secretary of Energy Jennifer M. Granholm authorized that 50 million barrels of crude oil from the U.S. Department of Energy’s (DOE) Strategic Petroleum Reserve (SPR) be made available. 

DOE

Not a fan of this decision. Using the SPR in an attempt to manipulate prices discourages the investment needed to ensure ample secure oil supplies in the future.

Will OPEC respond?

“The battle lines are being drawn,” said John Kilduff, founding partner at Again Capital LLC.  “Certainly, OPEC and the Saudis can win this in that they are holding all the cards. They can keep more oil off the market than a SPR release can put on the market. If you see WTI get under $70, then I would expect a response from OPEC+.”

World Oil

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