Norway’s Improved Recovery Award recognizes companies that apply new methods and technology to increase oil and gas recovery on the Norwegian Continental Shelf. This year’s winner is Okea, an operator of mid- and late-life assets.Okea seeks to extend field life, explore for new resources, and unlock value from existing infrastructure.
“The end is also a good start”
Okea is using geosteering technology and real-time data integration to drill and target record length horizontal wells. As a result, the production of marginal resources has become profitable. Their systematic exploration has also increased oil and gas reserves for both Brage and Draugen. The estimated life of these platforms has thus been extended to 2040.
BragaDraugen
The Brage field in the North Sea was discovered in 1980, and production began in 1993. The Draugen field in the Norwegian Sea was discovered in 1984, and started production in 1993. Impressively, the expected recovery rate has increased from 67.3 percent in 2019 to 72.6 percent in 2026.
This is an excellent awards concept that should be considered for US offshore operations, where companies in the Gulf, Pacific, and the Beaufort Sea/Cook Inlet are making special efforts to increase ultimate recovery from mature fields.
A New York Times article suggests that the consolidation of BOEM and BSEE into the Marine Minerals Administration will weaken environmental oversight. It will not. On the contrary, regulation is likely to be strengthened as resources shift from inter-bureau coordination and redundancy management to the primary safety and environmental protection missions.
Given the challenges associated with Federal reorganizations, agency heads often opt for the status quo. I’m pleased that the current DOI leadership team, with whom I disagree on some issues, chose to merge the bureaus.
Quotes from the NYT article followed by my comments:
NYT:The Trump administration is creating a new office that critics say could weaken the environmental oversight of oil drilling and seabed mining in territorial waters.
Comment: The functional overlap and associated uncertainty that permeates the offshore regulatory regime is a weakness, not a strength. Virtually every element of the regulatory program requires coordination between the two bureaus. This includes plan and permit approvals, decommissioning and financial assurance, spill response plans, lease stipulations, assignments, pipeline regulation, environmental reviews, enforcement actions, and geologic data collection and review. Note the list of MOUs that are intended to coordinate BOEM and BSEE redundancy. The documents often do more to confuse than clarify. For example, see the MOU entitled “Environmental and NEPA.”
Multi-bureau organizational complexity is not in the best interest of safety and environmental protection. Overlapping responsibilities, coordination challenges, and “turf” issues distract the technical staff from their important risk management duties, the work they are good at and enjoy doing. BSEE and BOEM should be overseeing the offshore industry, not each other.
NYT:The new agency, the Marine Minerals Administration, will be formed by reunifying two offices that had been split up after the 2010 Deepwater Horizon oil spill in an effort to increase environmental oversight of the energy industry and prevent future oil disasters. After the split, the Interior Department’s oil-leasing activities were separated from environmental regulation and financial management. (emphasis added)
Comment: The assertion that the leasing and environmental regulation were separated is false. The leasing bureau (BOEM) was assigned lead responsibility for the review and approval of the fundamental operational planning documents – Exploration Plans, Development and Production Plans, and Development Operations Coordination Documents. This includes the environmental reviews pursuant to NEPA.
NYT:The move is “worrisome because it has the potential of bringing things back where they were, where there was this inherent conflict of interest between promotion of offshore oil and gas, and oversight safety,” according to Donald Boesch, emeritus professor at the University of Maryland Center for Environmental Science.
“In recent years various bodies have concluded that certain MMS offices and programs have violated ethical rules or guidelines. In the wake of the Deepwater Horizon disaster, some questioned whether ethical lapses played any role in causing the blowout. The Chief Counsel‘s team found no evidence of any such lapses.“
NYT:The new bureau will also take on oversight of the Trump administration’s plans to lease waters in U.S. territories to deep-sea mining companies. The first of these sales, according to the spokeswoman for the Interior Department, are likely to happen next year.
Comment: DOI’s marine minerals program is decades old and is a priority for the current administration. Reorganization should not affect the MMA’s capability to oversee these activities.
Tyler Priest, the leading historian on US offshore oil and gas operations, has informed me that his much anticipated book, “Offshore Oildom,”is now available for order from LSU Press.Tyler’s book is a fascinating account of the history of the technologically innovative and economically important, yet controversial, OCS Oil and Gas program. See the attached flyer.
Consider this recommendation by Daniel Yergin:
“Tyler Priest, a preeminent historian of energy and the environment, explores how a single well drilled off a pier near Santa Barbara in 1898 gave rise to a major American industry—offshore oil and gas. In spirited prose, Priest demonstrates how this U.S. industry was created not only by innovation, creative engineering, and complex execution; it was also the result of fierce political battles.” ~Daniel Yergin, Pulitzer Prize–winning author of The Prize: The Epic Quest for Oil, Money, and Power and The New Map: Energy, Climate, and the Clash of Nations.
Ekofisk was Norway’s first commercial oil discovery in 1969, with first production in 1971. Another redevelopment phase could extend production to 2050 and beyond. This is a good example of how technology and reservoir management can extend field life indefinitely. Finite resources are not really finite.
Ekofisk production history; water injection began boosting production in 1987. The expected final recovery factor for Ekofisk is now estimated to be >50%.
ConocoPhillips and partners have approved the redevelopment of three gas and condensate fields depicted below — Albuskjell, Vest Ekofisk, and Tommeliten Gamma. Better well placement and the use of horizontal well technology will increase resource recovery.
The $1.8 billion project consists of four new subsea templates and 11 production wells tied back to the Ekofisk complex. First production is planned towards the end of 2028. Recoverable gas and condensate reserve additions are estimated at between 90 million and 120 million barrels of oil equivalent.
If you ever get to Stavanger, be sure to visit the Petroleum Museum! HIghly recommended!
Will the oil and gas lease sale boldly named Big Beautiful Gulf 1 (BBG1) live up to its grand name? Given the more favorable lease terms and the 2 year gap since the last sale, BBG1 should surpass the previous 3 sales (table below). Questions:
Which majors will be the most active bidders? Chevron? Shell? BP? Oxy/Anadarko?
Will former Gulf of Mexico stalwarts Exxon and Conoco Phillips participate for the first time in years? Probably not, but US super-majors should participate in the US offshore program.
How many companies will submit bids? Would like that to be a number >35.
How many tracts will receive bids? A number >300 would be very encouraging.
Will the total high bids exceed $400 million?
Will we see an increase in shelf interest?
Which independents will be the most active?
After the not-so-clever carbon disposal acquisitions in the last 3 sales, will the number of carbon disposal bids be zero? For the first time ever, the Federal government felt compelled to stipulate the obvious (see the proposed notice for OCS Sale 262) – that an Oil and Gas Lease Sale is only for oil and gas exploration and development.
See the summary data below for the last 3 Gulf lease sales. We’ll fill in the blanks next week.
Sale No.
257
259
261
BBG1
date
11/17/2021
3/29/2023
12/20/2023
12/10/2025
companies participating
33
32
26
total bids
2233
2842
3161
tracts receiving bids
2143
2442
2751
sum of all bids $millions
198.5
309.8
441.9
sum of high bids ($millions)
101.7
263.8
382.2
highest bid company block
$10,001,252.00 Anadarko AC 259
$15,911,947 Chevron KC 96
$25,500,085 Anadarko MC 389
most high bids company sum ($millions)
46 bp 29.0
75 Chevron 108.0
65 Shell 69.0
sum of high bids ($millions) company
47.1 Chevron
108 Chevron
88.3 Hess
most high bids by independent
14-DG Expl.
13-Beacon 13-Red Willow
22-Red Willow
1excludes 36 leases improperly acquired for carbon disposal purposes; 2excludes 69 leases improperly acquired for carbon disposal purposes; 3excludes 94 leases improperly acquired for carbon disposal purposes
“We will explore more, find more and extract more. Therefore, it is important to ensure that companies have stable access to exploration areas. Never before has a larger area been advertised in a licensing round. It is good for Norway and for Europe,” Energy Minister Terje Aasland said in a statement.
Further exploration and more discoveries are crucial to limiting the decline in production on the continental shelf after 2030. The expansion this year gives companies access to significant new acreage in the Barents Sea and we are thus even better positioned to clarify the resource base in the north,” added Aasland.
Comments:
This is a prudent policy decision that underscores Norway’s commitment to sustaining oil and gas production.
This should be good news for Equinor, which is 2/3 Norwegian govt owned and has made some ill-advised offshore wind investments.
Based on the Energy Minister’s quotes (above), one senses that Equinor’s wind investments, particularly those in the US, may not be fully aligned with Norwegian policy.
Is this a bit embarrassing for the UK, which has essentially been sanctioning its own offshore oil and gas industry? Only last week, Aasland met with his UK counterpart Ed Miliband and entered into a “green industrial partnership” (photo below).
Industry sources tell us, authoritatively, that the North Sea could produce around half of all the oil and gas the UK will need up until at least 2050 – if new projects are developed. Meanwhile, as instead we shut down our existing wealth, China continues burning dirty coal and making us more dependent on their products.
As it stands, Offshore Energies UK (OEUK) says the UK is on track to produce just four billion of the 13-15bn barrels of oil and gas the country will need over the next 25 years.
It is time for those making decisions in London and Edinburgh to put away all the green zealotry nonsense and get the UK powerhouse moving again. Given 25 years they could make a good start on installing small, clean, nuclear plants dotted across the UK to help in great part to pick up the load.
We need planning, not zealotry. It is now even more clear the green emperor is not wearing clothes. When will Energy Secretary David Miliband be convinced?
As someone who actually works in the North Sea on oil rigs I have heard almost all my life how the oil and gas will be gone in 10 years. 35 years in this industry and the first time I am likely to be unemployed is because of the government. Not the end of oil fields.
50 wells were drilled in the Atlantic between 1975 and 1985. The drilling followed the oil embargoes, gas lines, and price surges in the 1970s. Waiting for similar turmoil to overturn the leasing bans would not be prudent given the time that is needed to issue, explore, and develop leases. The optimal approach would be limited, staged leasing to better assess the resource potential in these areas.
Sec. 12(a) of the Outer Continental Shelf Lands Act (OCSLA, 43 U.S. Code § 1341(a)): “The President of the United States may, from time to time, withdraw from disposition any of the unleased lands of the outer Continental Shelf.”
As previously posted, the Sec. 12(a) authority has been cynically exercised by Presidents from both parties and should be repealed or revised.
Unsurprisingly, there are now reports that President Biden intends to permanently withdraw large areas of the OCS from leasing consideration before he leaves office in 2 weeks. Apparently, the leasing ban will include large segments of the Atlantic, Pacific, and the eastern Gulf of Mexico.
Sec. 12(a) facilitates (encourages?) rash, politically motivated decisions that could have major long-term implications for energy security and the economy, and allows Presidents to ignore the deliberate, multi-phase review and comment process that has been established for making leasing decisions.
Can a President reverse a Sec. 12(a) decision made by a predecessor? That is a massive legal question that has yet to be fully considered by the legal system.
Could legislative action reverse a Sec. 12(a) decision? Yes, but such legislative action would be difficult to enact (just as it would have been difficult for any of the Sec. 12(a) withdrawals to have been enacted legislatively).
Is a revision to Sec. 12(a) being considered? Not that I am aware of. Given that the authority has been exercised by both parties and that strong opposition is likely, a revision would be challenging.
API is challenging the Dept. of the Interior’s 5 year oil and gas leasing plan, which includes the fewest lease sales in program history. That challenge was filed on 12 February, 60 days after Secretary Haaland approved the 5 plan and the first day appeals could be filed pursuant to 43 U.S. Code § 1349.
18 weeks after the API suit was filed, the Supreme Court overturned the Chevron Doctrine. That doctrine (described above) instructed judges to defer to agency interpretations when the language in a law was unclear.
Extending the Secretary’s general safety and environmental authority for OCS operations to include global climate considerations is a stretch and the type of interpretive administrative decision that the Supreme Court struck down.
Bud's Offshore Energy (BOE) 