The Honor Roll companies for 2023 (listed alphabetically) are Anadarko, bp, Cantium, Chevron, Eni, Hess, LLOG, Murphy, QuarterNorth, and Shell.
BOE Honor Roll 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 3.3 types of inspections in 2023. 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, district investigations and media reports are used to make this determination.
platforms
2023 well starts
2023 (10 mos.) oil prod. (million bbls)
2023 (10 mos.) gas prod. (bcf)
Anadarko
10
11
66
60
BP
7
11
105
65
Cantium
96
10
5
6
Chevron
8
10
67
39
Eni
3
1
6
13
Hess
3
3
18
36
LLOG
10
7
25
35
Murphy
7
4
42
57
QuarterNorth
9
1
13
23
Shell
20
20
141
140
Also noteworthy:
Zero shut-in violations for Anadarko in 2023
<1 INC for every 10 facility inspections for Anadarko, Chevron, and Murphy
<1 INC for every 20 inspections (all types) for Anadarko, bp, Chevron, LLOG, Murphy, and QuarterNorth
Biggest prize at the holiday party went to Anadarko: Mississippi Canyon 389 – 5 bids, $25.5 million high bid
Biggest holiday shopping spree: Shell’s 65 high bids accounted for 24% of the sale’s high bids (excluding CCS bids).
Big spender award: Hess – $88.3 million on only 20 high bids. Does Chevron approve? 😀
Aussie, Aussie, Aussie, Oi, Oi, Oi: Strong performance by Woodside. 18 high bids, $24.8 million
Heia Norge!: Equinor continues to shine in the GoM! 13 high bids, $20.6 million
Spirit of America award to Red Willow Offshore which is owned by the Southern Ute tribe. 22 high bids!
Deepwater independents for (energy) independence: Beacon, Murphy, LLOG, Kosmos, Talos, Houston Energy, Ridgewood, QuarterNorth, Alta Mar, CSL, CL&F, and Westlawn
Even pace wins the race: Another solid lease sale for bp – 24 high bids.
So happy together 😀: Chevron and Hess combined for 48 high bids, $114 million
Coal in their stockings? Repsol (Sale 261) and Exxon (Sales 257 and 259) made up their own rules for acquiring carbon dumping leases. Perhaps some solid carbon in their Christmas stockings would be appropriate.
Christmas in July?: A lease sale in 2024 is needed. Sometime near the 4th of July holiday would be good. It’s up to you Congress!
Holiday greetings to our friends around the world!
It’s always interesting to compare the high bids with the “runner-up” bids on the same tracts. Usually the gap is large and, as indicated in the table below, that is the case with the Sale 261 “top 10.” This tells us that bidding is independent, that tract evaluation is far from an exact science, that information and expert opinions differ, and that companies have different business and bidding strategies.
Particularly interesting in this sale were the tracts that both Hess and Chevron, its future parent, sought to acquire. Chevron and Hess bid against each other on two of the “top 10” tracts, and Hess outbid Chevron by wide margins. Will this affect post-merger relationships? 😉
In a future post, we’ll look at the 14 rejected Sale 259 high bids and the bidding on these tracts in Sale 261.
The IEA’s assessments face criticism, particularly in terms of the agency’s optimistic outlook on the growth and impact of renewable energy worldwide. The report suggests that renewables will meet half of the world’s power demand by 2030, based on optimistic scenarios, including the proliferation of electric vehicles (EVs) and substantial investments in offshore wind, solar, green hydrogen, and ammonia. The IEA emphasizes the idea that consumers worldwide are enthusiastic about changing their heating systems to electricity or heat pumps.
Simultaneously, the ongoing contentious relationship between the IEA and OPEC is poised to reach new levels of disagreement. The release of the IEA’s report shortly after OPEC’s relatively optimistic oil market report gives the impression that Paris is attempting to alarm markets without substantial grounds. It’s worth noting that, despite its inherent bias, OPEC’s reports have historically demonstrated a higher level of accuracy compared to the IEA reports from the early 21st century. Even OPEC’s most optimistic scenarios regarding hydrocarbon demand growth have been realized sooner than expected. The current IEA report appears to resemble a modern-day version of “Crying Wolf.” It’s possible that the underlying strategy of Paris and its supporters is to induce significant fear among investors, including clients, in the hope that their biased outlook becomes a reality. However, at present, such a scenario appears unlikely. It’s essential to keep in mind that the IEA will need to present a doomsday scenario for hydrocarbons, as it faces a different audience in Dubai in the coming weeks.
WP: “Chevron is acquiring oil driller Hess in a $53 billion all-stock deal announced Monday, bringing the energy giant deeper into the fossil fuel business at a time when policymakers are pressing for a broader transition to renewables.”
Comment: Many who live and work outside of the Post’s policy bubble differ on the urgency and practicality of the transition. Their primary concerns are reliable, secure, and affordable energy. Many elected representatives agree, which is why there is little national support for legislation restricting fossil fuels and imposing rigid transition timelines. Administrative actions, like the 5 year leasing plan, that handicap US offshore production are also being questioned.
And what are we transitioning to? Wind and solar are intermittent energy sources that can complement fossil fuel power generation, but not replace it. Nuclear energy has strong proponents, but faces stiff opposition, much of which is from the same groups that oppose fossil fuels. Other energy alternatives like ultradeep geothermal are very promising but are still years away.
WP: “The investments run counter to U.S. and global climate policies, which aim to rapidly phase out the internal combustion engine and shift power grids to zero emissions energy. The International Energy Agency reported last month that demand for oil, gas and coal will peak by 2030 before going into a steady decline, leading its executive director, Fatih Birol, to warn oil company executives that decisions to double down on fossil fuel infrastructure could prove misguided.“
Comment: Fortunately, IEA does not dictate corporate investment decisions. Perhaps IEA should look more closely at their own forecasts which show essentially no decline in oil or gas demand through 2050. Their assertion that demand for all fossil fuels will peak by 2030 is based on their speculative forecast calling for a sharp decline in coal demand, even though coal consumption is currently at record levels. IEA’s forecasts are also dependent on questionable assumptions such as this: “50% of new US car registrations will be electric in 2030.”
WP: “Still, the massive acquisitions from both Chevron and Exxon indicate their executives believe fossil fuels will continue to drive their business well into the future. Emphasizing affordability, company executives have said they see oil and gas alongside renewables.”
Comment: Spot-on. The WP could have shortened their commentary to these 2 sentences.
WP: Alex Witt, senior adviser for oil and gas at the advocacy group Climate Power, said the Hess acquisition shows the company’s true priorities. “Today’s news proves what we already knew — Chevron executives only care about the short-term, putting potential profits over the lives of families and the future of our planet,” Witt said in a statement Monday.
Comment: Or perhaps both Chevron and the lives of families will benefit, as they have in the past.
“Stampede,” Gulf of Mexico: Hess 25% owner and operator, Chevron 25% owner
Most importantly, both companies have excellent safety and compliance records as evidenced by their Honor Roll achievements.
Hess is an attractive company with impressive assets. Were there other suitors?
Chevron is currently a partner on the Stampede, Esox, and Tubular Bells deepwater projects that are operated by Hess. There is thus an established deepwater development relationship.
The acquisition of Hess means that Exxon and Chevron will now be partners in Guyana. That should be interesting.
Chevron’s CEO Mike Wirth is quoted as saying “We’ve got too many CEOs per BOE, so consolidation is natural.” That comment seems a bit self-serving, but makes sense from the perspective of an acquiring CEO. Employees of the companies being acquired may have a somewhat different view.
In the Gulf of Mexico, will the combined company be greater than the sum of the parts in terms of lease acquisition, exploration, and development?
Will combining the companies limit the diversity of geological assessments and exploration strategies?
Consolidation affects participation in workshops and on committees engaged in assessing technology and developing standards. More limited participation in these activities, which are critical to offshore safety, was a justified concern of my former boss, the late Carolita Kallaur.
Add Hess to the list of important offshore operators that, for all intents and purposes, no longer exist. This list includes (among others): Amoco, Arco, Texaco, Getty, Gulf, Unocal, Sun, Anadarko, BHP, Mobil, Phillips (or Conoco), Noble Energy, Pennzoil, Kerr-McGee, and Newfield.
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
Cantium’s record is especially impressive given that most of their platforms were installed more than 40 years ago and some date back to the 1950s. They have also been a very active development well driller.
While Kosmos and Beacon have somewhat lower violation and penalty exposure because their production is via subsea wells tied back to surface facilities operated by other companies, they are demonstrating that entrepreneurial deepwater independents can also be safety leaders.
“The Pickerel-1 prospect was our first (exploration well on the Mississippi Canyon 727) and we are delighted that it was an oil discovery. Black Pearl will be the next and that will hopefully be a tieback (to Tubular Bells with first oil expected mid-2024).
“Then we have a wildcat opportunity (the Vancouver exploration prospect) later in the year in the Green Canyon. With the other 80 exploratory blocks that we have in the Gulf, we will be actively drilling for the next several years,” Hess said.
Of course, the 3 Stabroek Block partners who are responsible for this production – Exxon (45%), Hess (30%), and CNOOC (25%) – are also doing quite well. If you are wondering about this curious mix of companies – a US supermajor, a large US independent, and a state-owned Chinese mega-company – this OilNow post explains what happened.
Initially, Exxon and Shell were 50/50 partners in the Stabroek Block. Shell thought the chances for success were slim and opted out a year before the world class Liza discovery (ouch!). After Shell departed, Exxon sent “at least 35 letters” to prospective partners and only Hess and CNOOC responded favorably (actually, it was Nexen, not CNOOC that responded). The Liza discovery followed and the rest is history.
Will exploration offshore Jamaica and Barbados also prove successful? Stay tuned.
Bud's Offshore Energy (BOE) 