As explained in the attached Safety Alert, BSEE’s risk-based inspection program has identified deficiencies in safety device bypass practices including:
inadequate documentation
inoperative data history software
bypassing more devices than is necessary
bypassing devices for longer than necessary
missing audit documentation
mistakenly bypassing the entire safety system during production
The regulations restricting the bypassing of safety devices are core elements of OCS regulatory and operator management programs. Because they are critical to process safety, these requirements are widely supported and strictly enforced.
March Gulf of America oil production was nearly identical to the 2024/2025 average, and the trend line (red) is remarkably flat. However, production remains below the volumes forecasted by EIA and well below those forecasted by BOEM.
It appears that new deepwater production is replacing Gulf-wide production declines, but is not yet sufficient to increase total production. We will see if that changes as the year progresses.
March 2025 Gulf of America production: 1.793 million bopd
2024/2025 average production: 1.77 million bopd
2024/2025 average omitting Sept. 2024 (tropical storms): 1.784 million bopd
EIA forecast for 2025 (published 9/16/2024): 1.9 million bopd
BOEM forecast for 2025 (published in 2022, table below): 2.052 million bopd
Part VIII, Offshore OIl and Gas Leasing, is a good read for those interested in OCS leasing policy. This cleverly crafted part of the bill specifies leasing schedules, streamlines the leasing process, and minimizes litigation risks. Highlights:
Minimum royalty rates return to 12.5% from 16.67% post-IRA. (This is good for small, shelf producers.) The maximum rate remains 18.75%.
Requires a Gulf of America lease sale by 8/15/2025, a sale by 3/15 and 8/15 in each of the following 14 years (2026-2039), and a sale by 3/15/2040. 80+ million acres must be offered at each sale unless that amount of acreage is no longer available for leasing.
The lease form, lease terms, economic conditions, and stipulations 4 through 10 must be the same as for Lease Sale 254 (3/18/2020). Stipulations 1-3 may be updated.
Requires seven 1+ million acre (if available) Cook Inlet lease sales from 2026 – 2032. Beginning in 2035, 90% of the revenues go to the State of Alaska.
The required lease sales may be in addition to the lease sales held under the 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program.
Adherence with the Biological Opinion shall satisfy the Secretary’s obligations under the Endangered Species Act of 1973 and the Marine Mammal Protection Act of 1972
Previous EIS’s for the Gulf of Mexico shall satisfy the Secretary’s NEPA obligation.
Consistency determinations prepared by BOEM for Lease Sale 261 for the States of Texas, Louisiana, Mississippi, Alabama, and Florida will satisfy the Secretary’s CZMA obligations.
The Secretary may waive any requirement under the Outer Continental Shelf Lands Act that the Secretary determines would delay issuance of a lease.
A lease must be issued to the highest responsible qualified bidder not later than 90 days after the sale date.
The Secretary shall establish a process through which a Governor may nominate for leasing under a lease sale held under this section an area of the OCS that is adjacent to the waters of the State; and is unleased and available for leasing. If the Governor of a State nominates an area, the Secretary shall include the area in the next scheduled sale. (It appears that this provision applies only to the Gulf of America. Objective?)
G&G surveys must be approved within 30 days after a complete application is received.
A lease awarded under Lease Sale 259 or Lease Sale 261 shall not be set aside, vacated, enjoined, suspended, or cancelled except in accordance with section 5 the Outer Continental Shelf Lands Act (43 U.S.C. 1334). Also, new terms or conditions may not be added to these leases. (This protects lessees from pending litigation related to these leases).
Any action to approve, require modification of, or disapprove any exploration plan, development and production plan, bidding procedure, lease sale, lease issuance, or permit or authorization related to oil and gas exploration, development, or production, or any inaction resulting in the failure to hold a lease sale shall be subject to judicial review only in a United States court of appeals for a circuit in which an affected State is located.
Their filing is attached. I found the following points to be particularly compelling:
p.3: “Despite no evidence that an Oil and Gas Program vessel has ever struck a Rice’s whale, the 2025 BiOp projects that Oil and Gas Program vessels will lethally strike numerous Rice’s whales over the term of the 2025 BiOp. On that basis alone, the Service found that the Oil and Gas Program will jeopardize the continued existence of the Rice’s whale, and developed a multi-step reasonable and prudent alternative which it asserts will reduce projected vessel strikes to zero.“
p. 4: “The Rice’s whale is a rarely found animal that the Service first identified as a new species (separate from the non-endangered Bryde’s whale) in 2021. 86 Fed. Reg. 47,022 (Aug. 23, 2021). There is no evidence that an Oil and Gas Program vessel has ever struck a Rice’s whale (or a Bryde’s whale) despite continued operation in the Gulf over many decades.”
p. 5: “The 2025 BiOp disregards the Bureaus’ logical, fact-based conclusion. Instead, the Service’s 2025 BiOp engages in speculation and guess-work to surmise that Oil and Gas Program vessels could be striking and killing Rice’s whales on a regular basis. The Service ignores the best available data (i.e., showing no recorded observations of an oil and gas vessel striking a Rice’s whale) and instead presumes that forceable and lethal collisions between oil and gas service vessels and 60,000-pound whales are regularly occurring but somehow going unnoticed by the vessels and their crews and that the carcasses silently disappear into the water, never to be seen again.“
Section 7(a)(4) of the Endangered Species Act (ESA) requires federal agencies to confer with NMFS on any action that is likely to jeopardize the continued existence of proposed species or result in the destruction or adverse modification of proposed critical habitat.
Section 7(b)(3) of the ESA requires that at the conclusion of consultation, NMFS provides an opinion stating whether the Federal agency’s action is likely to jeopardize ESA-listed species or destroy or adversely modify designated critical habitat.
p. 598: The proposed action is not likely to jeopardize the continued existence of sperm whale, Northwest Atlantic loggerhead sea turtle, Kemp’s ridley sea turtle, North Atlantic DPS green sea turtle, leatherback sea turtle, hawksbill sea turtle, or Gulf sturgeon.
The proposed action is not likely to destroy or adversely modify loggerhead or Gulf sturgeon designated critical habitat, or proposed critical habitat for green sea turtle North Atlantic DPS or Rice’s whale.
p. 599: The operation of oil and gas vessels in the Gulf of America, in an area where the endangered Rice’s whale occurs, is likely to jeopardize the continued existence of the whale due to the risk of vessel strike.
According to NMFS, the reasonable and prudent alternative (see below) reduces or avoids the primary threat to Rice’s whales, the risk of injurious and lethal vessel strike interaction.The impacts of other stressors are more limited in space and time, diffuse, or not likely to result in adverse effects to Rice’s whale.
The reasonable and prudent alternative (RPA) requires the following as it relates to vessel activity in the action area. More detail on p. 601:
Immediately begin to use technology to enable Rice’s whale vessel strike avoidance and monitoring of presence of Rice’s whale.
Establish an expert working group to support development and implementation of a Rice’s whale vessel strike avoidance technology plan (RW Tech Plan)
Improve understanding of Rice’s whale vessel strike risk associated with the proposed action
Develop a Rice’s whale vessel strike avoidance technology plan (RW Tech Plan)
Undertake independent peer review
Implement Rice’s whale vessel strike technology plan
Monitor Rice’s whales to ensure no likelihood of jeopardy during RPA implementation
Comment: Because the risk to the Rice’s whale in the central and northwestern GoA is highly speculative (see analysis by Darren Ireland), the RPA is arguably excessive. However, I like the RPA’s technological and management system focus.
Unsurprisingly, Earth Justice et al found the NMFS opinion inadequate and filed a suit (attached) in Maryland calling on the court to vacate the opinion and grant injunctive relief.
How can they sue in a Federal court in Maryland, far away from the Gulf? The venue was ostensibly chosen because NMFS headquarters are located in a Maryland suburb of DC. The Maryland court is also likely to favor the plaintiffs, which may have been a factor in the choice of venue. It’s a great country! 😉
Farther in the past, there were noteworthy failures (below) like Mobil’s acquisition of Montgomery Ward, Exxon’s investment in Reliance Electric, and Gulf’s real estate ventures.
Mobil – Montgomery WardExxon – Reliance ElectricGulf Land – Reston
Finally, don’t expect the carbon sequestration boom that some are forecasting. As wind investors have discovered, industries dependent on mandates and subsidies are risky.
Not much unites climate activists and skeptics, but they are largely aligned in their opposition to carbon sequestration (euphemism for disposal), as are fiscal conservatives. The word chutzpah comes to mind when companies seek public funds to dispose of emissions associated with the combustion of their products.
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).
“The Bureau of Ocean Energy Management’s analysis reveals an additional 1.30 billion barrels of oil equivalent since 2021, bringing the total reserve estimate to 7.04 billion barrels of oil equivalent. This includes 5.77 billion barrels of oil and 7.15 trillion cubic feet of natural gas—a 22.6% increase in remaining recoverable reserves.”
Year
Number of fields
Original Reserves
Historical Cumulative Production
Reserves
Oil Bbbl
Gas Tcf
BOE Bbbl
Oil Bbbl
Gas Tcf
BOE Bbbl
Oil Bbbl
Gas Tcf
BOE Bbbl
1975
255
6.61
59.9
17.3
3.82
27.2
8.66
2.79
32.7
8.61
1980
435
8.04
88.9
23.9
4.99
48.7
13.66
3.05
40.2
10.20
1985
575
10.63
116.7
31.4
6.58
71.1
19.23
4.05
45.6
12.16
1990
782
10.64
129.9
33.8
8.11
93.8
24.80
2.53
36.1
8.95
1995
899
12.01
144.9
37.8
9.68
117.4
30.57
2.33
27.5
7.22
2000
1,050
14.93
167.3
44.7
11.93
142.7
37.32
3.00
24.6
7.38
2005
1,196
19.80
181.8
52.2
14.61
163.9
43.77
5.19
17.9
8.38
2010
1,282
21.50
191.1
55.5
17.11
179.3
49.01
4.39
11.8
6.49
2015
1,312
23.06
193.8
57.6
19.58
186.5
52.78
3.48
7.3
4.78
2016
1,315
23.73
194.6
58.4
20.16
187.5
53.58
3.57
6.8
4.79
2017
1,319
24.65
195.2
59.7
20.78
188.9
54.21
3.87
6.3
5.00
2018
1,319
24.86
195.5
59.7
21.42
189.8
55.21
3.44
5.7
4.45
2019
1,325
26.77
197.0
61.8
22.12
190.9
56.09
4.65
6.1
5.74
2023
1,336
30.43
201.2
66.2
24.66
194.0
59.19
5.77
7.2
7.04
Oil and gas reserves and cumulative production at end of year, 1975-2023, Gulf of America, Outer Continental Shelf and Slope. “Oil” includes crude oil and condensate; “gas” includes associated and non-associated gas. Reserves estimated as of December 31 each year.
This increase in reserves will not please those responsible for the current 5 Year Oil and Gas Leasing Plan. They told us that we don’t need more OCS lease sales and that our biggest concern is producing too much oil and gas for too long!
The long-term nature of OCS oil and gas development, such that production on a lease may not begin for a decade or more after lease issuance and can continue for decades, makes consideration of net-zero pathways relevant to the Secretary’s determinations on how the National OCS Program best meets the Nation’s energy needs.“
“Crude reserves are being found and developed at a much slower pace than they’ve been in the past. Specifically, she said the world has only newly identified less than half the amount of crude it’s consumed over the course of the past 10 years. Given the current trends, this means demand will exceed supply before the end of 2025.“
A bit off-topic, but Jeff Walker, a former colleague and the MMS Regional Supervisor in Alaska, had the best quip about reserve numbers. In explaining an operator’s revised reserve numbers for a producing unit which had leases with different royalty rates, Jeff noted that “oil always migrates to the lower royalty leases.”😉
China National Offshore Oil Corp. (CNOOC) has surrendered its 21% interest in the Appomattox (Mississippi Canyon 391, 392, and 393) project and its 25% stake in Stampede (Green Canyon 468, 511, and 512). Those ownership positions were acquired in CNOOC’s takeover of Calgary-based Nexen in 2013.
BSEE incident investigations are another window into OCS safety performance.
Panel reports are published for the most significant OCS incidents (e.g. fatalities, serious injuries, significant pollution). Unfortunately, these reports have been unacceptably delayed in recent years. Status reports are not provided leaving the public in the dark as to what is being investigated and why.
The more common investigations, conducted by BSEE’s district offices, are timely and informative. The Districts typically investigate lost time (>72 hours) injuries, crane and lifting equipment incidents, small fires, pollution events, property damage > $25k, gas releases, and other incidents requiring workers to muster for possible evacuation.
The number of District investigations in 2024 declined significantly to 31, one-third fewer than the average of 46.25 for the past 4 years.
Violations were not identified for 2/3 of the incidents.
A complete list of the 2024 District investigations follows. Hyperlinks are provided for those who want to review the reports.
Bud's Offshore Energy (BOE) 