As explained in the attached Safety Alert, BSEE’s risk-based inspection program has identified deficiencies in safety device bypass practices including:
inadequate documentation
inoperative data history software
bypassing more devices than is necessary
bypassing devices for longer than necessary
missing audit documentation
mistakenly bypassing the entire safety system during production
The regulations restricting the bypassing of safety devices are core elements of OCS regulatory and operator management programs. Because they are critical to process safety, these requirements are widely supported and strictly enforced.
Offshore Newfoundland, a particularly hostile operating environment (“North Sea plus icebergs“), continues to be the only producing area in the North American Atlantic, a distinction that is unlikely to change for at least the next decade.
Production is holding firm and there was a nice bounce in December when 7.5 million barrels were produced (242,000 bopd ave.). December’s production was the highest since May 2022 and and was a respectable 57% of the May 2007 peak.
Most impressively, according to CNLOPB data, no fatalities or significant injuries occurred over the past 3 years.
The pioneering Hibernia platform (pictured above), where Newfoundland offshore production began in Nov. 1997, keeps chugging along at 60 to 80,000 bopd. The Hibernia field has produced more than double the original resource estimate of 520 million barrels. Very impressive!
Hebron, the current top producer, continues to produce 100,000+ bopd
The Terra Nova field contributed ~40,000 bopd in Dec., the highest output since production resumed in late 2023 after extensive downtime to refurbish the FPSO.
While checking for updates on the important Orphan Basin well, I looked at Newfoundland production data and found it surprisingly encouraging:
The pioneering Hibernia field has produced more than double the original resource estimate of 520 million barrels, and is still chugging along at about 60,000 bopd.
Hebron, the current top producer, is holding strong at 100,000+ bopd.
White Rose, which was in danger of being abandoned, is poised for a renaissance with the installation of the West White Rose concrete gravity structure.
Terra Nova is once again producing at near 2019 levels after a four year hiatus. The Terra Nova story has many important technical, management, regulatory, safety, and logistical elements, and presents good case study opportunities for Newfoundland academics (Memorial University?).
With prospects for production at Bay du Nord brightening and interesting targets like the Orphan basin being explored, pessimistic forecasts for Newfoundland’s resilient offshore sector may be a bit premature.
Given that further depletion of the SPR was no longer politically acceptable, a cynic might suggest that oil market considerations associated with the end of SPR withdrawals and OPEC tightening (Iran is currently exempt from OPEC quotas) factored into decisions regarding the relaxation of sanctions on Iran.
The plan looks good. It appears to be consistent with previous contingency plans. Offshore operations should not be impacted.
“During the shutdown BSEE will continue critical permitting, oversight, preparedness verification, and related activities that are necessary to protect workers and the environment from operations associated with conventional and renewable energy development on the Outer Continental Shelf. Approximately 40% of the 851 BSEE employees will be retained to accomplish these activities and will be designated as exempt, as their salaries will be funded from non-lapsing prior year carryover. Should an extended shutdown occur, exhausting current funding sources, all the exempt personnel would be designated as excepted as they are essential for life and safety.”
Despite continuous legal and policy headwinds, and the absence of some historically important US companies, technological innovation is sustaining US offshore production at about 1.7 to 1.8 million BOPD. BOE will continue to monitor drilling, production, and safety performance and draw attention to the leading companies.
Think about where we would be today without the shale revolution and onshore production on private lands. Grateful!
This article is primarily about Texas shale oil production. Offshore production, particularly in deepwater areas, is much more capital intensive, requires longer lead times, is exclusively on government leases, and is highly regulated by multiple agencies. These factors weigh against quick responses to market conditions. A Bloomberg article about Shell’s Vito project provides a good offshore perspective.
Vito
Another important factor in the offshore sector is that the major oil and gas producers seem to be going through an identity crisis, torn between what they are and what they (aided by some loud and powerful voices) think they should be. The future of these companies is dependent on how they navigate through all of this. The need for oil and gas is clearly not going away (see EIA projection below). Who will provide the supply and where will it be produced?
“Today, we only have 2% of effective spare capacity, which is an imbalance,” Nasser said. “You need a resilient and strong spare capacity to make sure that you can absorb any supply shocks. Look at what’s happening. Before the Ukraine crisis, the spare capacity was declining fast.”
Oxy CEO Vicki Hollub’s comments further justify our concerns about US over-reliance on shale production. She noted these impediments to production growth in the Permian Basin, the world’s largest shale basin:
Meanwhile, however, drillers may be running out of sweet spots in the shale basins of the country. In an article citing well data, the Wall Street Journal reported earlier this month that because of the quick depletion rates of shale wells, low-cost resources are giving way to higher-cost deposits. And this is motivating a warier approach to production growth.
The shale revolution made the US a net oil exporter, but skepticism about shale production forecasts suggests the need for other supply sources. Given the shale uncertainty and the unrealistic expectations regarding the energy transition, greater US dependence on imported oil is on the horizon. This bodes well for OPEC, but not so well for US and international consumers.
Platforms Hogan and Houchin, Santa Barbara Channel: When will we learn more about the Inspector General’s findings regarding the improper use of decommissioning funds? Why was the lessee, Signal Hill, allowed to withdraw funds from those accounts for purposes unrelated to decommissioning? How does this affect the liability of predecessor lessees?
Globetrotter 2 incident during Hurricane Ida: When will the Coast Guard issue their report on the delayed relocation of the Noble Globetrotter 2 drillship during Hurricane Ida? In light of this incident, the fatality on the Pacific Khamsin prior to Tropical Storm Laura (2020), and similar incidents, further attention to the timely relocation of dynamically positioned drillships would seem to be in order.
Bud's Offshore Energy (BOE) 