A full day ahead of the deadline! Waiting for an announcement and details.
Posts Tagged ‘Lease Sale 257’
BOEM awarded Sale 257 leases today…
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged BOEM, Lease Sale 257 on September 14, 2022| Leave a Comment »
Refreshing wisdom from Sale 257 bidders
Posted in Gulf of Mexico, Offshore Energy - General, tagged Blackcomb Energy, CSL Exploration, DG Exploration, Focus Exploration, Juneau Oil and Gas, Lease Sale 257, Otto Energy, Red Willow on September 14, 2022| Leave a Comment »
Some of the lesser known Sale 257 bidders are intriguing. These companies have a clear and refreshing sense of identity and mission. Observations:
Red Willow Offshore LLC, high bidder on 5 blocks, is a private oil and gas exploration and production company owned by the Southern Ute tribe and headquartered in Ignacio, Colorado. Great mission statement: “Our mission is to create value for the Southern Ute Indian Tribe by exploring for and developing oil and gas resources while prioritizing safety, fiscal responsibility and respect for the environment and Tribal Cultural resources.”
Otto Energy was high bidder on 1 block. If you wonder about the company name, Otto Energy was known as Ottoman Energy until 2006. Otto’s vision is to achieve outstanding business delivery as a partner of choice in the Gulf of Mexico. Their production base includes the South Marsh Island Block 71 field and interest in the Green Canyon 21 Bulleit field.
DG Exploration focuses on new play concepts for the mature continental shelf of the US Gulf of Mexico. They were the high bidder on 14 blocks. According to DG, these blocks control 5 of the best prospects in their portfolio. All the blocks are located in a prolific part of the basin where new high potential exploration has been absent since the early 1990s. By bringing in new technology and ideas, they aim to fundamentally reset the creaming curve for the Louisiana shelf.
Juneau Oil and Gas was high bidder on 4 blocks. Juneau was formed to focus a world class team of professionals on exploring the shallow waters of the Gulf of Mexico. Juneau Oil & Gas has returned to the roots of the founding members’ past success at an opportune and strategic time in the ever-evolving oil and gas industry. Juneau correctly notes that “lease acquisition costs and royalty rates in the shallow water Gulf of Mexico are low relative to other basins, and there has been little competition for these leases after the steep and sustained decline in activity over the past decade.”
Focus Exploration LLC was high bidder on 7 blocks. Like other GoM shelf companies, Focus’ principals created the company with the purpose of identifying and participating in high quality, low to moderate risk oil and gas projects.
CSL Exploration LP was high bidder on 1 block. CSL Capital Management, L.P. is an SEC registered investment firm focused on energy services and equipment businesses. Headquartered in Houston, the CSL team has deep sector expertise in the energy industry and takes a hands-on approach to investments, relying on organic growth and strategic thinking to generate investment success.
Blackcomb Energy LLC was the high bidder on 1 block. Information on this company is limited, but it looks like they have onshore production in Colorado.
Sale 257 bidders waiting for their leases
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged high bidders, Lease Sale 257 on September 13, 2022| Leave a Comment »
Per legislation signed by the President on 8/16/2022, Sale 257 oil and gas leases are to be issued this week. Below is a list of the high bidders. (The carbon sequestration bids are not believed to be valid and are not included in this list.) Note the number of smaller and relatively unknown companies that participated in the sale. These smaller operators and investment companies add significantly to the vitality of the OCS program. BOE will comment on some of these companies in future posts.
| Company | No. of high bids |
| Hess | 2 |
| Chevron | 34 |
| Shell | 20 |
| Walter | 2 |
| W&T | 2 |
| Houston Energy | 5 |
| LLOG | 6 |
| Anadarko | 30 |
| BHP | 8 |
| Arena | 11 |
| bp | 46 |
| Murphy | 3 |
| Red Willow | 5 |
| Equinor | 1 |
| Focus Exploration | 7 |
| Repsol | 5 |
| Byron | 1 |
| EnVen | 1 |
| CSL Expl | 1 |
| Talos | 10 |
| Kosmos | 1 |
| Beacon | 4 |
| Blackcomb Energy | 1 |
| Cantium | 3 |
| Otto Energy | 1 |
| Foster & Assoc. | 1 |
| Juneau Oil and Gas | 5 |
| DG Exploration | 14 |
| QuarterNorth | 1 |
Good picture, questionable message
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged bp ad, Gulf of Mexico production, Lease Sale 257 on September 9, 2022| Leave a Comment »
Is bp apologizing for the pictured workers and platform? With the demand for oil and gas expected to increase through 2050, and worldwide concerns about energy supply and security, ads like this make neither good business nor good social sense.
Moving away from oil and gas and becoming a “very different” company in the 2030’s won’t make bp the “leading energy company in the world.” On the contrary, a “very different” bp will likely be less influential, less profitable, and more dependent on government mandates and subsidies.
Contrary to the ad (and to the company’s credit), bp seems committed to Gulf of Mexico production well beyond the 2030’s. They are the number 2 oil producer in the Gulf (behind Shell), continue to drill exploration and development wells, and were the most active participant at Lease Sale 257. Bp was the high bidder on 46 tracts, 12 more than no. 2 Chevron. The Department of the Interior has been legislatively directed to award Sale 257 leases by 9/15/2022, but has yet to comment publicly on the matter.
Action by DOI on Lease Sale 257 required in 15 days
Posted in CCS, climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged CCS, fair market value, Inflation Reduction Act, Lease Sale 257 on August 31, 2022| Leave a Comment »
Per legislation signed by the President on Aug. 16, 2022:
(b) LEASE SALE 257 REINSTATEMENT.—
(1) ACCEPTANCE OF BIDS.—Not later 30 days after the date of enactment of this Act, the Secretary shall, without modification or delay—
(A) accept the highest valid bid for each tract or bidding unit of Lease Sale 257 for which a valid bid was received on November 17, 2021; and
(B) provide the appropriate lease form to the winning bidder to execute and return.
The Department of the Interior has been silent on their implementation of this provision. We are particularly interested in:
Is the Sale 257 victory dance premature?
Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged BOEM, CCS, DOI, Inflation Reduction Act, Lease Sale 257 on August 22, 2022| 1 Comment »
Contrary to some media reports and industry comments, the Inflation Reduction Act does NOT require the Department of the Interior (DOI) to award leases to the high bidder on each Sale 257 tract. The legislation requires DOI to accept the highest valid bid for each tract.
As BOE has previously explained, the 94 carbon sequestration bids were clearly not valid, and leases should not be awarded. These bids accounted for 30.5% of the entire sale in terms of the number of tracts receiving bids. (More on the CCS bids.)
There is also the matter of fair market value. Only 9 of the 214 (non-CCS) tracts received more than one bid and none received more than 2 bids. DOI/BOEM may determine that some of the bids did not pass the fair market value test. Are such bids “valid” under the terms of the IRA legislation? Note that 7 of the 93 high bids submitted at the previous sale (Lease Sale 256, November 2020) were rejected on fair market value grounds. All 7 were single bid tracts.
Lastly, there is the unresolved matter of the decision by Judge Contreras to vacate Sale 257. While the legislation seems to clearly supersede that decision, who knows what might happen next on the litigation front.
Inflation Reduction Act: BOE’s top 3 takeaways
Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged flaring, Inflation Reduction Act, Lease Sale 257, offshore oil, Offshore Wind on August 15, 2022| Leave a Comment »
- The flaring provision complicates compliance and may increase safety risks: (p. 649) Exception 1 exempts “gas vented or flared for not longer than 48 hours in an emergency situation that poses a danger to human health, safety, or the environment.” This is inconsistent with the carefully constructed BSEE regulations which allow limited (48 hours cumulative) flaring for certain operations (e.g. during the unloading or cleaning of a well, drill-stem testing, production testing, and other well-evaluation testing). Such flaring is essential but not normally “an emergency situation.” The bill could thus compromise safety by unnecessarily restricting or complicating well operations and by limiting flaring in circumstances where such flaring reduces safety risks.
- Time for BOEM to get to work 😉: (p. 650): Per our previous post, the highlight section of the bill (from an offshore oil and gas standpoint) reinstates Lease Sale 257 (GoM) and requires that the scheduled 2022 lease sales 258 (GoM) and 259 (Cook Inlet) be held by 12/31/2022. Lease Sale 261 (GoM) must be held by 9/30/2023.
- Petty but perhaps necessary: p. 655: The provision restricting wind leasing when no oil and gas lease sale has been held in the prior year is in the final bill.
Alarmist leasing rhetoric resurfaces as Sale 257 nears reinstatement
Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged Lease Sale 257, Manchin, Schumer on August 7, 2022| 1 Comment »
Tucked into the end of the nearly $370 billion deal struck last week by Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) is a requirement for the Interior Department to reinstate a massive 80 million-acre Gulf of Mexico lease sale that a federal judge blocked earlier this year for violating NEPA.
E&E News
Tracts covering 1.7 million acres received bids at Lease Sale 257. 30.5% of those tracts received bids for CCS purposes, leaving about 1.2 million acres receiving bids for oil and gas exploration. Nonetheless, some continue to distort the magnitude of this rather ordinary lease sale. It’s also important to note that the number of active US offshore leases has declined by 72% since 2011, and is now under 2000 for the first time in decades.
An example of why it is important for the Lease Sale 257 decision to be reversed, either by appeal or legislation
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged BHP, East Breaks, Hoodoo, Lease Sale 257, Westwood on August 5, 2022| Leave a Comment »
Westwood has highlighted 13 wells planned for the remainder of 2022 as ‘key wells to watch’. These include a number of frontier play tests, for example Raia offshore Mozambique, and Pensacola, offshore UK; extensions of proven plays, including Zanderij offshore Suriname and Hoodoo, US Gulf of Mexico; and large prospects in proven plays, such as Wei, offshore Guyana.
Westwood
The Hoodoo prospect cited by Westwood is operated by BHP and is in East Breaks Blocks 699 and 700. At Sale 257 (11/17/2021), BHP was the sole bidder on 4 blocks just to the north of this prospect. The lease sale was vacated by a Federal judge in January. If the vacature of Sale 257 is not reversed, either by appeal or legislation, one or both of the following outcomes could easily occur:
- BHP loses the opportunity to potentially develop those blocks as part of or in conjunction with the Hoodoo project.
- Based on their knowledge of the BHP bids, which are public information, other companies could submit bids for these blocks in a future sale. BHP would have to defensively raise their bids or lose the blocks to another company.
Either outcome would be unfair to BHP and would discourage investment in OCS exploration and development.
If the Schumer-Manchin bill is enacted, what happens to the Sale 257 CCS bids?
Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged carbon sequestration, CCS, Exxon, infrastructure bill, Lease Sale 257, Manchin, Schumer on August 2, 2022| Leave a Comment »
The subject legislation requires the Secretary of the Interior to accept the highest valid bid that was received for each tract offered in OCS Lease Sale 257. Exxon was the sole bidder on 94 tracts on the nearshore Texas shelf. The leases were to be acquired for carbon sequestration purposes.
The CCS bids should not be considered valid given that:
- Sale 257 was an oil and gas lease sale. The Notice of Sale said nothing about carbon sequestration and did not offer the opportunity to acquire leases for that purpose. Therefore, the public notice requirements for CCS leasing (30 CFR § 556.308) were not fulfilled.
- Because there was no draft or final Notice of Sale, interested parties and the public did not have the opportunity to consider and comment on CCS leasing, tract exclusions, bidding parameters, and other factors.
- 30 CFR § 556.308 requires publication of a lease form. No CCS lease form was posted or published for comment.
- CCS operations were not considered in the environmental assessments conducted prior to the sale.
- No evaluation criteria for CCS bids have been published.
Unexpectedly, the Infrastructure Bill, signed on 11/15/2021 (just 2 days before Sale 257) included a provision for OCS carbon sequestration. However, that legislation did not require CCS leasing or authorize DOI to sell CCS leases as part of an oil and gas lease sale; nor did it exempt DOI from complying with its leasing regulations. Instead, It gave the Secretary a year (until 11/15/2022) to promulgate necessary implementing regulations. If carbon sequestration in the Gulf of Mexico is deemed to be desirable, a separate CCS sale should be held when the regulatory framework has been established.
Bud's Offshore Energy (BOE) 