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Posts Tagged ‘oil and gas leasing’

End game for OCS carbon disposal?

Posted in CCS, energy policy, Regulation, tagged , , , , , , on August 25, 2026| Leave a Comment »

Gulf of America lease map: 199 oil and gas leases were wrongfully acquired for carbon disposal purposes. At Sale 261, Repsol acquired 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon had acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 (94) and 259 (69).

In pursuit of a “$4 trillion industry” funded by tax credits and energy consumers, Exxon tarnished the corporation’s impressive Gulf of Mexico legacy by acquiring oil and gas leases solely for carbon disposal purposes (see caption above). That gambit and Repsol’s copycat strategy have apparently failed.

On June 29, 2026, Energy Intelligence reported that Exxon had begun relinquishing those leases. Kudos to those in the Administration who refused to buckle under pressure from lobbyists seeking to convert the leases to authorize carbon disposal.

That said, this sad chapter in OCS program history may not be over. 94 of the disposal leases have yet to be relinquished. Here is the current status of the improperly acquired leases:

  • All 36 of the Repsol’s Sale 261 leases were relinquished effective 2/19/2026.
  • All 69 of Exxon’s Sale 259 leases were relinquished effective 6/11/2026.
  • None of Exxon’s 94 Sale 257 leases have been relinquished to date. Perhaps these leases are being held as a hedge in case there is another legislative end run or a policy decision that would facilitate conversion of the leases, or for tax/accounting purposes? As things stand, the leases expire in Oct. 2027.

Exxon and Repsol attempted to gain an unfair advantage by acquiring their preferred disposal leases without competition and before leasing and regulatory processes had been established. One could argue that they were fortunate to have avoided criminal penalty consideration given that they knowingly and willfully violated the terms of the sale notices.

The companies will lose their bonus payments which amounted to approximately $25 million for Exxon and $4 million for Repsol. They have also been paying rental fees of $10/acre/year for the Sale 259 and 261 leases, and $7/acre/year for the Sale 257 leases.

Lastly, one company was directly affected by the improper bidding.  Focus Exploration was a second bidder for one of the blocks acquired by Exxon in Sale 259 (red in map below). Presumably, Focus was interested in acquiring the tract for oil and gas exploration purposes, but their bid was a bit lower than Exxon’s. Should Focus be compensated in some manner?

History of the Exxon and Repsol CCS lease acquisitions.

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Lease Sale BBG1 bid evaluation update; 2 more lease sales upcoming

Posted in Alaska, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , on February 11, 2026| Leave a Comment »

Tracts receiving bids in Sale BBG1

To date,BOEM has deemed 96 of the 181 BBG1 high bids to be acceptable. No high bids have been rejected. Although the sale was “beautiful but not big,” the bids were relatively strong on a per acre basis. The number of rejected bids may thus be quite low.

No bids were accepted during BBG1’s Phase 1 review. This means that none of the tracts receiving bids were determined to be nonviable as was the case for the 199 tracts that were improperly acquired for carbon disposal purposes in Sales 257, 259, and 261. (Unsurprisingly, neither of the acquiring companies has submitted an exploration plan for any of these CCS leases. The leases will likely expire without activity. Much to the dismay of the large and diverse group of opponents, the carbon disposal industry is focusing on onshore locations along the Gulf Coast.)

Meanwhile, a Cook Inlet lease sale is scheduled for March 4, and another Gulf of America sale will be held on March 11. Despite attractive terms, don’t expect either to be a banner “red jacket” lease sale. (See the John Rankin recognition below.)

More information on BOEM’s bid evaluation process.

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The Gulf of America carbon disposal era may end before it begins

Posted in CCS, climate, energy policy, Gulf of Mexico, Regulation, tagged , , , , , , , on October 9, 2025| Leave a Comment »

Unsurprisingly, the carbon capture and sequestration (CCS) hype is fading fast. No other carbon strategy is so strongly opposed by both climate change activists and skeptics.

Support for CCS seems to be limited to those seeking to profit from subsidies, mandates, and disposal fees. In 2022, Exxon projected a $4 trillion CCS market by 2050. Pipe dream?

“Highlights” of the Gulf of America OCS carbon disposal era:

Gulf of America lease map: 199 oil and gas leases were wrongfully acquired for carbon disposal purposes. At Sale 261, Repsol acquired 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon had acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 (94) and 259 (69).

Even those of us who are supporters of responsible offshore oil and gas production find it a bit unsavory that some companies are looking to cash in on (and virtue signal about) carbon collection and disposal at the public’s expense. Perhaps companies that believe oil and gas consumption is harmful to society should be seeking to reduce production rather than engaging in enterprises intended to sustain it.

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Florida legislation supports the use of natural gas and prohibits offshore wind projects. Is it time to renew the dialogue about Eastern Gulf of Mexico exploration and production?

Posted in energy policy, Florida, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on May 20, 2024| Leave a Comment »

Florida HB 1645 (attached) was signed by Gov. DeSantis on 5/15/2024. The bill boosts natural gas, prohibits offshore wind turbines, and deletes references to climate change and greenhouse gases in state law. Given the State’s support for traditional energy sources, is it time to renew the dialogue about exploration and production in the Eastern Gulf of Mexico (EGOM)?

HB 1645 prohibits offshore and coastal wind development (p. 30), acknowledges that natural gas is critical for power resiliency, prohibits zoning regulations that restrict gas storage facilities and gas appliances (p.8), and relaxes permitting requirements for pipelines <100 miles long.

Given Florida’s energy preferences as expressed in this legislation, the State could assist regional energy planners by better defining its position on oil and gas leasing in the EGOM. What limits, in terms of lease numbers and minimum distances from shore, would best improve Florida’s energy supply options while further minimizing environmental risks?

As illustrated on the map below, the petroleum geology of the EGOM and Florida’s preferences are likely aligned in that the best prospects for oil and gas production are in deep water and more than 100 miles from the State’s coast. Does Florida support a 100 mile buffer?

The 4/20/2010 Macondo blowout was a tragic failure that has been, and will continue to be, discussed at length on this blog. We should also acknowledge that prior to Macondo 25,000 wells were drilled on the US OCS over a 25 year period without a single well control fatality, an offshore safety record that was unprecedented in the U.S. and internationally. We should also applaud recent advances in well integrity and control, including the addition of capping stack capabilities that further reduce the risk of a sustained well blowout.

Florida’s independent thinking on energy policy is commendable. That independence is contingent on importing petroleum products and natural gas from elsewhere in the Gulf region. Securing that supply over the intermediate and longer term should be a priority for Florida. In that regard, EGOM production is an important consideration.

fl1645Download

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Wow! When is a 5 year leasing program not really a leasing program?

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on September 29, 2023| Leave a Comment »

The Proposed Final Program includes a maximum of three potential oil and gas lease sales – the fewest oil and gas lease sales in history – in the Gulf of Mexico Program Area scheduled in 2025, 2027 and 2029. 

DOI News Release

Tearing down what a lot of dedicated folks worked hard to build. 😢

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GoM exploration is insufficient to support sustained production at current levels

Posted in drilling, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , on July 26, 2022| Leave a Comment »

Foremost energy experts like Daniel Yergin understand that oil and gas will be critical to our economy and security for decades, and that offshore production is an important component of our energy supply chain. Unfortunately, our massive outer continental shelf has, from an oil and gas standpoint, been effectively reduced to the central and western GoM.

Opportunities in the GoM are being seriously constrained by the extended pause in leasing. A lease sale has not been held for 615 days, the longest US offshore leasing gap since the 1950’s.

Reserve replacement and sustained production are dependent on exploration. The charts below illustrate the decline in GoM exploratory drilling and the reduced activity by some of the more important operating companies.

Per BSEE data, the number of exploratory well starts averaged only 3/month for the last 18 months (chart 2). This level of activity is the lowest since the early days of deepwater operations (chart 1). There was even more drilling during the post-Macondo moratorium (2010-2011).

ConocoPhillips and Exxon have not drilled a GoM exploratory well since 2016 and 2018 respectively. Activity by other operators has also declined significantly (chart 3). BP has not spudded an exploratory well since Sept. 2021.

No one should be surprised by the sharp decline in reserves and the dearth of recent field discoveries. Hopefully, government and industry will engage in a more thorough discussion of these trends and measures that might improve the intermediate and longer term production outlook.

chart 1
chart 2
chart 3

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Opting for greater dependence on a less stable Middle East?

Posted in energy policy, Offshore Energy - General, Uncategorized, tagged , , on August 19, 2021| Leave a Comment »

The Department of the Interior (Interior) confirmed today that the Department of Justice (DOJ) has appealed the preliminary injunction entered by the district court in Louisiana v. Biden, which enjoined Interior from implementing the pause in new federal oil and gas leasing …

DOI statement 8/16/21

The day after the fall of Kabul and 5 days after the White House urged OPEC to increase production, DOI reiterated the Administration’s support for a pause in oil and gas leasing on Federal lands (including the OCS). Given the increased risk of long-term oil supply uncertainty, rigid support for a blanket leasing pause would not seem to be a prudent policy position at this time.

DOI argues that greenhouse gas (GHG) emissions must be curtailed, but reductions in domestic production would increase the demand for imports with higher GHG intensity. Reductions in deepwater Gulf of Mexico production, which has low GHG intensity and other environmental advantages (few dispersed facilities distant from shore), would be particularly detrimental. Of course, any public policies that discourage natural gas production would also have distinct air emissions costs.

If supply restrictions increase the price of oil, net reductions in oil consumption and GHGs could be achieved. However, as evidenced by the recent appeal for increased OPEC production, higher oil prices are not consistent with Administration policy.

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The Atlantic is a big ocean……

Posted in offshore, Offshore Energy - General, tagged , , on April 22, 2011| Leave a Comment »

…but the only Atlantic area included in the present 5-year oil and gas leasing program  is the cross-hatched wedge in the map below.  This area was to have been considered for leasing  in Sale 220, but the sale was cancelled following the blowout. The House Natural Resources Committee has passed legislation that would require that sale to be held.

No matter what happens, Sale 220 isn’t much to get excited about, especially if the Department of Defense has its way. In light of world events and the fuel demands of our military, one would assume that DOD would be a leading advocate for offshore energy exploration and development. However, rightly or wrongly, preventing disruptions to military training and operations has always been a higher DOD priority than domestic energy production.

With regard to Sale 220, DOD wants 72% of this already small area (magenta) removed from consideration. So even if this lease sale is held, the maximum offering would likely be the cross-hatched blue micro-sliver. That would be the extent of Atlantic leasing for the foreseeable future.

Oil is where you find it, not where you wish it was, where it is most convenient, or where you legislate it to be. Ditto for natural gas. We need an offshore oil and gas program that identifies the most prospective targets, provides for exploratory drilling to evaluate these targets, facilitates production, and effectively manages the safety and environmental risks. We can’t just explore the small slivers that remain after political and administrative reviews have eliminated the rest.

Like it or not, our Outer Continental Shelf lands belong to the entire nation. We need to manage these lands and the associated resources in a manner that is in the best interest of all Americans.

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President Obama’s Announcement – Very Encouraging

Posted in drilling, energy, gas, Offshore Energy - General, oil, tagged , , , on March 31, 2010| Leave a Comment »

Offshore Energy Awakening?

When you wake up after a long nap (in this case 25 years), you don’t just leap out of bed.  You first squint at the light, yawn, flex an arm, stretch your legs, and prepare to rise and actually do something.  The President’s decision to open a small slice of the Atlantic to  exploration and consider new areas in the Atlantic and Eastern Gulf of Mexico in the new 5- Year Program may seem modest, but it demonstrates that the nation is waking up to the importance of our offshore energy resources.  After 25 years of neglect, almost everyone agrees that US energy policy has been an economic and national security disaster.  More and more Americans are also recognizing that denying access to offshore resources is not in the best interest of the environment – regionally, nationally, and globally.

Some political leaders remain in dreamland as evidenced by the large blue areas in the map below.  When you have cried “wolf” about offshore drilling for your entire political career, you either believe what you have been preaching or are concerned about the political implications of changing your position.  However, demonizing offshore energy development is no longer a smart political strategy, and the views of these anti-energy stalwarts may finally be challenged, even in their own states and districts.

We operations, safety, pollution prevention, and regulatory professionals have to hold up our end.  Safety disasters or pollution spectaculars are not acceptable.  We need to examine our programs, operations, and incidents openly and honestly, and anticipate what might go wrong.  When an accident occurs, we need to learn what happened and why, and make sure it doesn’t happen again – anywhere in the world.

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