Posts Tagged ‘Hess’

companyno. of Sale 259 high bids
(Sale 257 in parentheses)
total Sale 259 high bids
($ millions)
Chevron75 (34)108
BP37 (46)46.7
Shell21 (20)20.1
Equinor16 (1)18.3
Beacon13 (4)9.0
Anadarko (Oxy)13 (30)8.6
Red Willow13 (5)3.8
Hess12 (2)8.3
Woodside12 (8)6.3
Houston Energy8 (5)11.6
from BOEM data

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Some may not be aware that the Chinese government, through a fully owned subsidiary of the China National Offshore Oil Corp. (CNOOC), is a leaseholder in the US Gulf of Mexico. Per BOEM records, CNOOC Petroleum USA Inc currently has ownership in 12 OCS leases. Most significantly, CNOOC holds 21% interest in the Appomattox Field, operated by Shell, and a 25% working interest in Stampede, operated by Hess. Peak oil production for these projects is expected to be 175,000 bopd for Appomattox and up to 80,000 bopd for Stampede.

CNOOC acquired the Gulf of Mexico properties through its purchase of Nexen, a Canadian company, in 2013.

The state-owned Chinese oil explorer surrendered operating control of those assets to quell U.S. national security concerns, said two people familiar with the agreement who asked not to be named because the terms aren’t public.

FInancial Post

Reuters has reported that CNOOC is considering an exit from its operations in the US, Canada, and the UK because of sanctions concerns. JPMorgan is reportedly assisting with the sale of the US assets.

Stampede TLP

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The Honor Roll companies for 2022 (listed alphabetically) are Anadarko (Oxy), bp, Cantium, Chevron, Contango, Hess, LLOG, Murphy, and Shell.

Our criteria:

  • Must average <0.3 incidents of noncompliance (INCs) per facility-inspection.
  • Must average <0.1 INCs per inspection-type. (Note that each facility-inspection may include multiple types of inspections (e.g. production, pipeline, pollution, Coast Guard, site security, etc). On average, each facility-inspection included 3.25 types of inspections in 2022. Here is a list of the types of inspections that may be performed.)
  • Must operate at least 3 production platforms and have drilled at least one well (i.e. you need operational activity to demonstrate compliance and safety achievement).
  • May not have a disqualifying event (e.g. fatal or life-threatening incident, significant fire, major oil spill). Due to the extreme lag in updates to BSEE’s incident tables, investigation and news reports are used to make this determination.
  • Pacific and Alaska operations will be considered separately.
oil (million bbls)gas (BCF)
2022 production through Oct.

Mid-Year 2022 review

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Only 3 years after first oil, Guyana’s offshore production has soared to nearly 400,000 BOPD, and that rate should triple by 2027. If you want to see the production details, Guyana is doing a good job posting their oil and gas production data.

The startup and compressor issues that contributed to high gas flaring volumes seem to have been resolved, and the recent flaring record is exceptional. Over the month of November 2022, the volume flared averaged less than 0.2% of the gas produced, better than the 1.0-1.5% flaring/venting rate for oil-well gas in US GoM from 2015-2021. Using the World Bank’s flaring intensity metric (m3/bbl), the current flaring intensity for Guyana is a remarkable ~0.07 m3 flared per bbl of oil produced.

The next step is to use the associated offshore gas to power Guyana. The two videos embedded below, while promotional, provide good information on plans to use natural gas for onshore power generation, new industry, and other beneficial purposes. This step will only use 50 million cu ft/day, leas than 1/8 the volume that is currently being reinjected. Increased use of the associated gas resource will be dependent on expanded pipeline and power generation capabilities, and LNG facilities to provide for gas exports.

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Offshore gas has important environmental advantages, particularly nonassociated gas-well gas (GWG). While the GoM production chart (below) is not pretty, there are signs that gas production may have bottomed and is slowly rising. This is largely due to growth in oil-well gas (OWG) associated with deepwater oil production.

A successful offshore program requires a mix of strategies, and it is encouraging that companies are still pursuing natural gas on the GoM shelf. The second chart (below), based on BOEM data, shows 2022 YTD (probably through Oct.) GWG production for the 11 companies that (1) produced more GWG than OWG and (2) produced more than 1 BCF of GWG.

Interestingly, 100% of the gas produced by Contango, Samchully, and Helis in 2022 was from gas wells. Contrast this with bp, the third largest GoM gas producer. None of bp’s gas production was from gas wells.

One has to wonder about the extent to which deepwater gas reservoirs are being stranded due to the less favorable economics. Preventing such resource losses was once an important regulatory consideration given the conservation mandate in the OCS Lands Act and the importance of maximizing the public benefit. However, current policy, as expressed in the proposed 5 year leasing plan, is to phase out offshore production rather than sustain it. This is difficult to reconcile.

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Was 2021 the low point? Hopefully that is the case, but consistent leasing is essential.

Looks like Woodside is now officially the GoM operator of record (was BHP prior to merger). Kudos to them.

Shell continues to be the GoM bellwether. There is no OCS program without them.

What’s up with BP and Chevron? Big declines from both.

US super-majors Exxon and ConocoPhillips remain out of the picture, both in terms of lease acquisition and exploration. Disappointing.

Tip of the hat to Hess, LLOG, Murphy, and Talos – independents committed to deepwater production.

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Operating companies (listed alphabetically): Arena, Anadarko (Oxy), BHP, bp, Cantium, Chevron, Hess, Murphy, Shell, and Walter


  • Must average <0.3 incidents of compliance (INCs) per inspection. (This is less than half the GoM 2022 YTD average of 0.64 INCs/inspection.)
  • Must operate at least 3 production platforms.
  • Must have drilled at least one well.
  • Pacific and Alaska operations will be considered in a separate post.


  • Impressive performance by Hess: 21 inspections and no INCs
  • Cantium and Walter averaged less than 0.1 INCs/inspection. The INC rates for Anadarko (Oxy), BHP, and BP were only slightly higher.
  • Among the Honor Roll companies, Shell (highest production, 9 deepwater platforms, and 13 well starts) and Arena (115 shelf platforms and 12 well starts) were the deepwater and shelf activity leaders.They thus had the highest INC exposure.
  • Although CSI and FSI INCs are typically more significant than W INCs, that is not always the case, so the INCs have not been weighted by type.
  • As has been previously noted, more inspection data should be readily available online. At a minimum, the specific INC (type) numbers (e.g. P-103, G-110, etc) should be posted so the public can better assess performance. Absent this information, interested parties are left to speculate about the significance of the violations.
  • Incident data should also be considered in performance assessments. Unfortunately, the inexplicable lag in the posting of BSEE incident tables, precludes the use of these data in our analysis.

Compliance vs. Safety

While compliance is not synonymous with safety, most experienced observers believe there is a strong correlation. In the 1990’s, John Shultz, a PhD candidate at Carnegie Mellon Univ., studied US offshore facilities and safety data and developed expert and regression models to predict the likelihood of accidents and spills. That was a data rich era in that there were ~4000 US offshore platforms (more than twice the current number) and ~100 well starts/month (>10 times the current rate). In John’s thesis, he found that INCs are a very good predictor of accidents and spills. The offshore world has changed and further study of the correlation between compliance and safety performance is highly recommended.

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  • Operating companies that produced >1 million bbls of oil or >1 BCF of gas in 2021 are listed in descending order based on oil production.
  • Both the total number of well starts and the number of exploratory wells are indicated
  • An INC is an Incident of Noncompliance (i.e. a violation). W=warning, CSI=component shut-in, and FSI=facility shut-in are the enforcement actions.
  • All of the below data are publicly available on the BSEE-BOEM websites.
oil (MMbbls)
gas (BCF)
well starts

Anadarko (Oxy)67.757.88-68-5-1
QuarterNorth4.28.3no data
GoM Shelf2.34.852-5-2
Samchully0.021.2no data


  • “Energy transition” companies Shell and bp still love the Gulf of Mexico, which is a good thing for them and us. Together they accounted for 42.4% of the 2021 oil production.
  • The top 4 producers, Shell, bp, Chevron (includes Unocal), and Anadarko accounted for 2/3 of GoM oil production, nearly all of which was from deepwater leases.
  • Those are impressive production numbers for Anadarko (Oxy). No wonder Warren Buffett likes Oxy stock.
  • The relative number of deepwater exploratory wells is mildly encouraging given our concerns about sustaining production.
  • Exploratory well determinations are rather subjective and may not be entirely consistent.
  • Understandably, no exploratory wells were drilled by Arena or Cantium, the companies responsible for most well operations on shelf (shallow water) leases.
  • Overall, the INC numbers are impressively low for the deepwater operators, with Chevron and LLOG standing out. BSEE does not post the specific violation information (more on this in an upcoming post), so it’s difficult to properly assess a company’s compliance record.
  • Unfortunately, incident data could not be included on the scoreboard. BSEE’s incident tables are badly out of date, and no 2021/2022 summaries have been posted.
  • Fieldwood’s disturbing INC numbers were discussed earlier this year. High INC rates for 3 other operators have also were noted last month.
  • Exxon production is limited to the Hoover Diana spar, which was installed 22 years ago. The largest US oil company has only drilled one GoM exploratory well (2018) in the past 5 years. Currently, their main GoM interest seems to be the sequestration (disposal) of onshore emissions. (More on this topic in an upcoming post.)

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