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Posts Tagged ‘Shell’

Operating companies (listed alphabetically): Arena, Anadarko (Oxy), BHP, bp, Cantium, Chevron, Hess, Murphy, Shell, and Walter

Criteria:

  • Must average <0.3 incidents of compliance (INCs) per inspection. (This is less than half the GoM 2022 YTD average of 0.64 INCs/inspection.)
  • Must operate at least 3 production platforms.
  • Must have drilled at least one well.
  • Pacific and Alaska operations will be considered in a separate post.

Comments:

  • Impressive performance by Hess: 21 inspections and no INCs
  • Cantium and Walter averaged less than 0.1 INCs/inspection. The INC rates for Anadarko (Oxy), BHP, and BP were only slightly higher.
  • Among the Honor Roll companies, Shell (highest production, 9 deepwater platforms, and 13 well starts) and Arena (115 shelf platforms and 12 well starts) were the deepwater and shelf activity leaders.They thus had the highest INC exposure.
  • Although CSI and FSI INCs are typically more significant than W INCs, that is not always the case, so the INCs have not been weighted by type.
  • As has been previously noted, more inspection data should be readily available online. At a minimum, the specific INC (type) numbers (e.g. P-103, G-110, etc) should be posted so the public can better assess performance. Absent this information, interested parties are left to speculate about the significance of the violations.
  • Incident data should also be considered in performance assessments. Unfortunately, the inexplicable lag in the posting of BSEE incident tables, precludes the use of these data in our analysis.

Compliance vs. Safety

While compliance is not synonymous with safety, most experienced observers believe there is a strong correlation. In the 1990’s, John Shultz, a PhD candidate at Carnegie Mellon Univ., studied US offshore facilities and safety data and developed expert and regression models to predict the likelihood of accidents and spills. That was a data rich era in that there were ~4000 US offshore platforms (more than twice the current number) and ~100 well starts/month (>10 times the current rate). In John’s thesis, he found that INCs are a very good predictor of accidents and spills. The offshore world has changed and further study of the correlation between compliance and safety performance is highly recommended.

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Ballymore will be produced with 3 seafloor wells (6540′ water depth) that are expected to transport 75,000 bopd via a three-mile subsea tieback to Chevron’s Blind Faith floating production unit. Per BOEM, the Ballymore field was discovered in December, 2017. First production is expected to be in 2025.

Pre-production inspection, Shell Vito
Vito

Shell’s Vito floating production unit was inspected last week by BSEE personnel. Vito is expected to begin production later this year or early next year and produce up to 100,000 bopd. Per BOEM data, the Vito field was discovered in 2010.

As these projects demonstrate, deepwater development takes time and is often dependent on related projects on other leases. This is why future production is dependent on regular, predictable lease sales.

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BOE was troubled by this incident and the contractor’s statements that followed.

BSEE has posted a strong safety alert.

The BSEE investigation concluded that the operator and contractor representatives failed to promptly start the Temporary Abandonment (TA) procedures.

BSEE’s investigation report provides complete details on the incident.

Globetrotter II

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From Reuters article:

  • bp: Only 15% of shareholder votes backed a call for the company to accelerate its energy transition, compared with the 21% in favor in a similar vote last year.
  • Oxy: Only 17% of investors backed a call for emissions-reduction targets. (I wonder how Buffett voted 😀)
  • Marathon: 16% supported a measure calling for the company to report on how its transition plans affected workers and communities
  • ConocoPhillips: 42% supported an emissions-reductions targeting measure vs. 58% last year.

Exxon, Shell, and Chevron are on deck!

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  • Operating companies that produced >1 million bbls of oil or >1 BCF of gas in 2021 are listed in descending order based on oil production.
  • Both the total number of well starts and the number of exploratory wells are indicated
  • An INC is an Incident of Noncompliance (i.e. a violation). W=warning, CSI=component shut-in, and FSI=facility shut-in are the enforcement actions.
  • All of the below data are publicly available on the BSEE-BOEM websites.
2021
oil (MMbbls)
2021
gas (BCF)
2021/22
well starts

total-expl
2021/22
INCs
W-CSI-FSI
Shell149.8190.828-1211-14-4
bp114.082.75-26-3-4
Chevron83.742.28-81-1-3
Anadarko (Oxy)67.757.88-68-5-1
Hess27.561.72-27-4-0
Murphy25.150.07-74-8-1
LLOG20.429.03-01-1-1
Talos17.723.05-025-26-14
BHP14.55.93-22-3-0
Exxon13.22.31-1-1
Beacon10.515.71-00-0-0
Fieldwood10.424.7685-235-91
EnVen9.612.66-02-6-3
Kosmos9.48.41-11-0-0
Arena8.627.932-068-45-19
Walter8.136.22-23-1-2
Cox6.230.3237-169-3
Eni4.713.62-08-0-2
W&T5.027.21-065-40-7
Cantium4.55.518-023-15-2
QuarterNorth4.28.3no data
GoM Shelf2.34.852-5-2
ANKOR1.42.50-0-1
Byron1.04.45-8-2
Renaissance0.71.620-9-3
Sanare0.34.538-20-3
Helis0.21.21-0-2
Contango0.035.04-0-0
Samchully0.021.2no data

Comments:

  • “Energy transition” companies Shell and bp still love the Gulf of Mexico, which is a good thing for them and us. Together they accounted for 42.4% of the 2021 oil production.
  • The top 4 producers, Shell, bp, Chevron (includes Unocal), and Anadarko accounted for 2/3 of GoM oil production, nearly all of which was from deepwater leases.
  • Those are impressive production numbers for Anadarko (Oxy). No wonder Warren Buffett likes Oxy stock.
  • The relative number of deepwater exploratory wells is mildly encouraging given our concerns about sustaining production.
  • Exploratory well determinations are rather subjective and may not be entirely consistent.
  • Understandably, no exploratory wells were drilled by Arena or Cantium, the companies responsible for most well operations on shelf (shallow water) leases.
  • Overall, the INC numbers are impressively low for the deepwater operators, with Chevron and LLOG standing out. BSEE does not post the specific violation information (more on this in an upcoming post), so it’s difficult to properly assess a company’s compliance record.
  • Unfortunately, incident data could not be included on the scoreboard. BSEE’s incident tables are badly out of date, and no 2021/2022 summaries have been posted.
  • Fieldwood’s disturbing INC numbers were discussed earlier this year. High INC rates for 3 other operators have also were noted last month.
  • Exxon production is limited to the Hoover Diana spar, which was installed 22 years ago. The largest US oil company has only drilled one GoM exploratory well (2018) in the past 5 years. Currently, their main GoM interest seems to be the sequestration (disposal) of onshore emissions. (More on this topic in an upcoming post.)

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This is what major oil companies are up against. Meanwhile China expands coal production and consumption without having to worry about groups like this.

ClientEarth, a Shell shareholder, notified the energy major on Monday that it would commence legal proceedings against the company’s 13 executive and non-executive directors for what it said was the board’s failure to adopt a strategy that “truly aligns” with the 2015 Paris climate agreement. The not-for-profit group, which has a strong record of winning climate-related cases, wrote to Shell in advance of petitioning the High Court of England and Wales for permission to bring the claim.

Financial Times

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The Board of Shell plc (“Shell”) today announced its intention to exit its joint ventures with Gazprom and related entities, including its 27.5 percent stake in the Sakhalin-II liquefied natural gas facility, its 50 percent stake in the Salym Petroleum Development and the Gydan energy venture. Shell also intends to end its involvement in the Nord Stream 2 pipeline project.

Shell.com

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While the Fieldwood Energy violations drove up the number of Incidents of Non-Compliance (INCs) in the Gulf of Mexico in 2021, most operating companies appear to have had good compliance records. Among companies that were subjected to at least 10 facility inspection and drilled at least one well, BHP Billiton, Eni US, and Murphy (listed alphabetically) had the most impressive compliance records. These three operators were cited for 7 or fewer INCs, none of which required a facility to be shut-in. Other operators that exceeded those activity thresholds and had excellent compliance records were (listed alphabetically) Anadarko, ANKOR Energy, Chevron, EnVen, Shell, and Walter Oil and Gas.

In the Pacific Region, Beta Operating Co., Chevron (now overseeing the former Signal Hill properties), and Exxon had excellent compliance records, although none of these facilities produced for the full year. In Alaska, Hillcorp had an excellent record at the Northstar Unit. (This is a gravel island facility in the State waters of the Beaufort Sea, but some of the wells produce from portions of the reservoir that are in the Federal sector).

Unfortunately, only summary inspection data are posted online. Without knowing the specific violations and circumstances, it’s not possible to fully assess the risk exposure. These oil and gas operations are conducted on public lands and are monitored by Federal employees. Inspection data and reports should be publicly accessible without having to submit Freedom of Information Act requests.

As has previously been discussed, incident updates should also be posted in a timely manner. Reference is made to this important recommendation in the 2016 National Academies report entitled Strengthening the Safety Culture of the Offshore Oil and Gas Industry:

Recommendation 4.2.2: Because accident, incident, and inspection data all are needed to identify and understand safety risks and corrective actions, the committee recommends full transparency such that regulators make all these data readily available to the public in a timely way, taking into consideration applicable confidentiality requirements.

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Per Shell, production at Mars and Ursa has restarted. Olympus was restarted on 10/1. The December production figures should give us a pretty good indication of stabilized GoM production post Ida.

210902 Shell Go M Asset Map

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Maersk Drilling awarded contract extension to drill world record well in Angola

The Ondjaba-1 well will be drilled at a new world record water depth of 3,628 m. The current world record is 3,400 m, set by Maersk Voyager’s sister drillship Maersk Venturer when it drilled the Raya-1 well for TotalEnergies offshore Uruguay in 2016.

Maersk

The record US water depth well (3051m/10,011′) was drilled in 2003 by Transocean for Chevron in Alaminos Canyon Block 951 the Gulf of Mexico. The deepest well drilled in US GoM in 2021 YTD was for Shell in 9352′ of water in Alalminos Canyon Block 815.

While brief celebrity space flights are major news stories, these economically important and technical challenging accomplishments by the offshore industry receive very little attention even as oil prices pierce the $82/bbl mark.

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