Posts Tagged ‘offshore oil’

Final text

  • 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.

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When we (MMS) drafted the OCSLA amendments (incorporated into the Energy Policy Act of 2005) that authorized offshore wind operations, we envisioned complementary and synergistic programs. Offshore wind and oil/gas development have many similarities and a common purpose – energy production. There is considerable overlap among the operating companies and contractors.

Unfortunately, politicians are better at dividing than uniting, and a provision in the Schumer-Manchin legislation pits the offshore wind and oil/gas programs against each other. The text (pasted below) from p. 646 of the bill restricts wind leasing when no oil and gas lease sale has been held in the prior year.

I share the concerns about the OCS program evolving into a wind-only program, as has already happened in the Atlantic (more on this at a later date). However, oil and gas sales should be held because they make economic and environmental sense, not because they are a condition for holding wind sales. Oil and gas sales are not punishment and wind sales are not rewards, and holding a single GoM lease sale each year does not balance the offshore program.

(b) LIMITATION ON ISSUANCE OF CERTAIN LEASES OR RIGHTS-OF-WAY.—During the 10-year period beginning on the date of enactment of this Act—

(2) the Secretary may not issue a lease for offshore wind development under section 8(p)(1)(C) of the Outer Continental Shelf Lands Act (43 U.S.C.1337(p)(1)(C)) unless—
(A) an offshore lease sale has been held during the 1-year period ending on the date of the issuance of the lease for offshore wind development; and (B) the sum total of acres offered for lease in offshore lease sales during the 1-year period ending on the date of the issuance of the lease for offshore wind development is not less than 60,000,000 acres.

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… especially those in Newfoundland where the only offshore oil and gas operations in the N. American Atlantic are being conducted.

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“The absolute earliest a new Lease Sale 257 could occur is July 2, which is after the expiration of the current five year program,” Interior said in a 28 February court filing (opting not to appeal the DC court decision invalidating the lease sale).


So, a new lease sale cannot occur until after the five year program expires and no sale may be held. Brilliant, Joseph Heller would be proud. It’s a good thing oil and gas supplies are plentiful and secure, and that prices are cheap.

Remember, the judge’s decision invalidating Sale 257 was that BOEM didn’t analyze the benefits of higher oil and gas prices (as a result of lower offshore production) in reducing international consumption and GHG emissions.

US offshore leasing – time for action

Previous posts on Sale 257.

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Per offshore-energy.biz, Russian giant Lukoil has closed a $450 million deal to acquire operator interest in Mexican offshore tracts. Not a good look for Mexico, but in their defense:

  • The deal was closed on 3 February.
  • Many countries, including the US, continue to import Russian oil and gas.
  • Lukoil continues to sell gasoline in the US and worldwide.
  • Unlike some elements of the US government, Mexico appreciates the domestic and international importance of expanding their offshore program.

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But here’s the thing. Whether you think it was the right thing to do, the reality is that passing legislation that is hostile to the U.S. oil and gas industry makes it even more difficult for domestic production to bounce back. So, instead of asking Russia and OPEC to pump more oil, we could look internally to what we could do in the U.S. to pump more oil. 


From a US offshore perspective, there should be serious dialogue about how we can increase exploration and production. The risks associated with over reliance on imports have been repeatedly demonstrated over the past 5 decades. The horizontal drilling/well stimulation revolution has been a blessing, but given the sharp decline rates for fracked wells, we cannot solely rely on onshore production from tight reservoirs.

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1,698,557 BOPD per BSEE. Updated recovery chart:

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  1. 5 workers killed – 4 contractors and one Pemex employee
  2. 6 workers injured, one in critical condition
  3. 2 workers are missing
  4. The fire occurred in the power generation and compression area of the platform
  5. Contractors Cotemar and BMCI were performing maintenance at the time of the incident
  6. The fire has now been extinguished
  7. No reports of an oil spill
  8. Massive loss of production – 421,000 BOPD shut-in

Defensive and rather shameful comments by the CEO:

“There is not a problem of lack of investment, there is not a problem of lack of resources,” Romero said. “The oil industry is a risky industry. We have had accidents, which in numbers are less than in previous years.”


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In the early 1990’s, Department of the Interior (DOI) and Department of Energy (DOE) leadership dabbled at re-branding the OCS Oil and Gas Program by reversing the order of the words. Clever? Perhaps by Washington public relations standards. One senior manager even changed his license plate from “OCS OIL” to “MMS GAS” (not much competition for those tags 😃). Technical staff were less enthused about this simplistic marketing gimmick that misrepresented the historical and scientific facts about oil and gas production. For many years, natural gas was a byproduct of oil production that was commonly flared. (This practice continues in some regions of the world, although to a lesser extent than in the past.)

Understandably, the Oil and Gas Journal wasn’t very impressed by the change. I saved a copy of their 1/24/1994 editorial (attached) on the subject. Per the OGJ:

We at the Journal love natural gas. But that doesn’t warrant an attempt to repeal the laws of nature and ignore the weight of tradition by renaming everything “gas and oil” this and that.

John L. Kennedy, Editor, Oil and Gas Journal, 1/24/1994)

To their credit, BOEM and BSEE web pages and announcements during recent administrations (both parties) indicate a preference for the more traditional “oil and gas.” (The DOE website largely ignores the existence of either oil or natural gas.) Surprisingly, the American Petroleum Institute (API), an industry trade organization with more than 100 years of history, is now consistently using “natural gas and oil.” This rearrangement of words is not entirely consistent with the interest of API’s members. In the offshore sector, the primary interest of API members is in finding and producing oil. if you think otherwise, look at the EIA GoM gas production data. Most of the Gulf’s declining gas production is now associated with deepwater oil production, and BSEE rightfully requires that this gas be used for fuel or transported for sale. Similarly, gas is a secondary consideration for API members exploring in Alaska given that 35 trillion cu ft of North Slope gas still awaits a pipeline.

Oil companies, and those who represent them, should be proud of their current and historical role in producing oil (and gas) for our economy, security, and way of life; and of the men and women who have toiled to locate and produce petroleum resources for the benefit of society. Are there better energy alternatives? Perhaps, but issues with these alternatives remain to be resolved, and oil and gas will continue to be important. Let’s focus on producing these resources as safely, cleanly, and reliably as possible.

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Following the Piper Alpha tragedy (1988) and the Exxon Valdez spill (1989), the Minerals Management Service, under the direction of Dr. Charles Smith, embarked on new research to address the human and organizational factors that are fundamental to offshore safety. An important 1993 report, MMS project 167, Management of Human Error in Operation of Marine Systems by Robert Bea and William Moore, observed that:

High consequence accidents resulted from a multiplicity of compounding sequences of breakdowns in the human, organization, and system; often there are precursors or early-warning indications of the breakdowns that are not recognized or are ignored.” The human element is complex and “states” such as “fatigue, negligence, ignorance, greed, folly, wishful thinking, mischief, laziness, excessive use of drugs, bad judgement, carelessness, physical limitations, boredom, and inadequate.” Environmental factors such as weather conditions, time of day, smoke, and noise further complicate human performance.

Bea and Moore, 1993

COVID 19 has further complicated human performance and facility management. In an effort to better understand human factors during COVID, NOPSEMA (the Australian offshore safety regulator) has partnered with industry, and labor organizations, and universities to survey offshore workers.

Per the survey announcement:

Your unique insight on the impacts of the COVID-19 pandemic on members of the offshore workforce are vital to informing industry and the development of strategies that best support employee mental health and well-being.

BOE is looking forward to learning about the results of this survey and other efforts to better assess and understand mental health challenges facing offshore workers. The effective integration of mental health considerations into management systems is critical to safety achievement.

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