Home » Posts tagged 'offshore drilling'

Tag Archives: offshore drilling

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

Oilfield Approval Off Newfoundland Coast Would Undercut Climate Commitments, Harm Biodiversity, Experts Warn

February 20, 2022

Oilfield Approval Off Newfoundland Coast Would Undercut Climate Commitments, Harm Biodiversity, Experts Warn

U.S. Orders Containment, Cleanup for 14-Year Gulf of Mexico Oil Spill

Berardo62/flickr

Anxiety is running high in Newfoundland and Labrador as the province waits on a federal decision about a proposed offshore oil project about 500 kilometres east of St. John’s.

Equinor’s Bay du Nord project would open a fifth oilfield for the cash-strapped province, whose oil sector was hit hard by the COVID-19 pandemic and crashing global prices, The Canadian Press reports. But there is mounting concern an approval from Ottawa would undermine federal climate commitments and send a message to other provinces that oil and gas is a viable industry on which they can hook their financial hopes.

“If we’re going to be serious about our net-zero commitment and our international commitments, then we cannot approve any new oil and gas projects,” said Debora VanNijnatten, a public policy expert and associate political science professor at Wilfrid Laurier University.

“And we have to have a plan to help those regions that we say ‘no’ to,” she added in a recent interview.

Oil accounted for nearly 21% of Newfoundland and Labrador’s GDP in 2019, according to its latest budget, which also forecasted a deficit of C$826 million and a net debt of $17.2 billion. With an estimated 800 million recoverable barrels of oil in the proposed Bay du Nord site, the project is “critical to the Newfoundland and Labrador economy,” said a statement Thursday from Energy Minister Andrew Parsons.

Meanwhile, Canada has committed to achieving net-zero emissions by 2050 and to doing its part to limit global warming to 1.5°C. Bay du Nord is also among the first oil and gas projects to be considered for approval by the federal government since the International Energy Agency declared in May there can be no investment in new fossil fuel supply projects if the world is going to hit net-zero targets by 2050.

…click on the above link to read the rest of the article…

Oil Producers May Ditch Old FPSO Offshore Projects In This Downturn

May 10, 2020

Oil Producers May Ditch Old FPSO Offshore Projects In This Downturn

FPSO

The swift oil price crash caused by the Covid-19 pandemic will reduce the combined free cash flow of FPSO fields, which have produced above three quarters of their original resources at just $2.20 per barrel this year. This is a jaw-dropping decline from 2019’s $11.10 per barrel, a Rystad Energy impact analysis reveals. We also estimate that 40% of the 96 assets which have produced more than 75% of their original resources will end 2020 with a negative cash flow. Given our base case oil price outlook, with prices recovering next year and into 2022, free cash flow will climb back to 2019 levels. However, as these mature fields see production stagnate, free cash flow will quickly return to a decline, ultimately threatening the profitability of many FPSO assets.

“A concern arising for operators is whether the profitability of producing fields will degrade to such an extent that prematurely shutting down ageing fields will prove to be the most rational decision,” says Aleksander Erstad, a Rystad Energy energy service analyst.

Field economics alone are causing headaches for many FPSO operators, but other challenges might also compound the problems.

Unplanned production shut-ins on FPSOs due to Covid-19 outbreaks have already occurred, and continue to be a risk that could seriously harm both the health of individuals and the field’s profitability. Some FPSOs are also the target of supply cuts, a factor which could add to other woes and result in several late producing FPSOs being shut down for good.

Fields utilizing leased FPSOs are in the worst position, with around 70% of late producing assets estimated to have net present values below zero. This puts not only operators in an uncomfortable position, but also FPSO suppliers, who are faced with two possible outcomes – none of which are favorable.

…click on the above link to read the rest of the article…

Note to EIA: Major shale operator sending cash elsewhere

February 10, 2020

Note to EIA: Major shale operator sending cash elsewhere

John Hess, CEO of Hess Corporation, a large U.S.-based independent oil producer, recently told a Houston audience where he’s putting the company’s money these days: Offshore drilling.

That should strike those who know of Hess Corporation’s heavy involvement in the Bakken shale play (in North Dakota) as a bit strange. Hess says the company will “use cash flow from the Bakken to invest in longer-term offshore investments.”

Hess told his audience that “key U.S. shale fields are starting to plateau, calling shale ‘important but not the next Saudi Arabia.'” Setting aside whether Hess is actually getting investable cash from the Bakken, the constant refrain from the U.S. oil industry has been precisely that shale plays ARE the next Saudi Arabia.

Someone should send a note to the U.S. Energy Information Administration (EIA) that maybe it’s not all going to work out. If Hess is right about a peak in U.S. shale oil production soon, that peak will come about a decade earlier than the peak forecast by the EIA.

None of this will come as a surprise to geologist David Hughes whose most recent update on U.S. shale oil and natural gas production suggests that not only will Hess be proven generally correct, but that production will fall much farther than the EIA believes in the coming decades. Hughes continues to rate EIA estimates of ultimate recovery from America’s shale oil and natural gas fields as “extremely optimistic, and highly unlikely to be realized.”

U.S. shale oil production has been a major driver in the growth of world oil supplies. Last year the United States accounted for 98 percent of global growth in oil production. Since 2008 the number is 73 percent. It’s not hard to imagine that a slowdown in U.S. oil production growth or worse yet a decline in overall U.S. production would mean trouble for the entire world.

…click on the above link to read the rest of the article…

Flirting With Disaster: the Return of Offshore Drilling

March 7, 2019

Flirting With Disaster: the Return of Offshore Drilling

Photograph by TheConduqtor

It’s been decades since a fisherman out of Montauk on Long Island told me about seeing a ship in the Atlantic Ocean east of Long Island similar to those he had seen searching for oil in the Gulf of Mexico when he was a shrimper there. I telephoned oil company after company and each gave a firm denial about having any interest in looking for petroleum off Long Island.

That was until a PR man from Gulf called back and said, yes, his company was looking for oil and gas off Long Island—and was involved in a consortium of 32 oil companies (many of which earlier issued denials).

It was my first experience in oil industry honesty—an oxymoron.

Then, after breaking the story as an investigative reporter for the daily Long Island Press about the oil industry seeking to drill in the offshore Atlantic, there were years of staying on the story. I traveled the Atlantic Coast including in 1971 getting onto the first off-shore drilling rig set up in the Atlantic, off Nova Scotia. The riskiness of offshore drilling was obvious on that rig. There were spherical capsules to eject workers in emergencies. And a rescue boat went round-and-round 24-hours-a-day. The man from Shell Canada said: “We treat every foot of hole like a potential disaster.”

You might recall seeing movies from years ago about oil drilling in the west and the drill hitting a “gusher” and it raining oil on happy workers. But on an offshore rig that “gusher” would be raining oil on the sea and life in it and then the oil would move to shore.

The Shell Canada executive gestured to the Nova Scotia shore and said peat moss was being stockpiled to try to absorb spilled oil. On Long Island, he said, “you’d use straw.”

 …click on the above link to read the rest of the article…

Trump’s Offshore Drilling Plan Is A Slippery Slope

January 23, 2018

Trump’s Offshore Drilling Plan Is A Slippery Slope

Trump

The Trump Administration has offered to open more than 90 percent of the federal Outer Continental Shelf (OCS) for consideration of future exploration and development. The proposal is in stark contrast to the current lease sale program that puts 94 percent of the shelf off limits.

“The important thing is we strike the right balance to protect our coasts and people while still powering America and achieving American Energy Dominance,” U.S. Secretary of the Interior Ryan Zinke said upon announcing the plan.

The OCS is thought to contain billions of barrels of technically recoverable oil and trillions of cubic feet of natural gas that could potentially enhance U.S. energy security. The Bureau of Ocean Energy Management’s (BOEM) latest estimates from 2016 show a mean of 89.87 billion barrels of undiscovered technically recoverable oil and a mean of 327.49 trillion cubic feet of undiscovered technically recoverable natural gas in the federal OCS.

The question is, how much new offshore drilling can realistically happen? And how much would this help to boost the American energy dominance?

While the world and the U.S. will continue to increase their demand for oil, the finalization of the new offshore lease sale plan is probably two years away, and drilling in new lease areas is even further down the road. It’s hard enough to predict where oil prices will be five months from now, let alone five years from now, in order to gauge how much interest there will be in half a decade.

As it stands, almost every east and west coastal state is against the new plan, and objections in the comment periods are looming. So are lawsuits. Opposing states may refuse to issue infrastructure authorizations, because states control the first three miles of shallow waters, and only after that does federal jurisdiction begin.

…click on the above link to read the rest of the article…

Coastal States Protest Trump’s Offshore Drilling Plan

January 12, 2018

Coastal States Protest Trump’s Offshore Drilling Plan

Offshore

Less than a week after the Trump Administration proposed to open almost the entire U.S. coast to oil and gas drilling, Secretary of the Interior Ryan Zinke backtracked and took Florida off the table for offshore oil and gas exploration. Now many are wondering why just Florida was given a pass.

Opposition by coastal states, both East and West, had already been strong, even before Secretary Zinke said on Tuesday that he supports Florida Republican Governor Rick Scott’s position that “Florida is unique and its coasts are heavily reliant on tourism as an economic driver.”

“As a result of discussion with Governor Scott’s and his leadership, I am removing Florida from consideration for any new oil and gas platforms,” Secretary Zinke said in a statement posted on Twitter.

But taking Florida off the table sparked even more backlash from nearly all other coastal states along the Pacific and the Atlantic, with governors and representatives demanding the states they represent be exempt, too.

Analysts see the administration’s move as opening a wider legal crack in the offshore drilling plan, with states and environmentalists waiting in the wings to start suing.

Potential lawsuits could further derail the timeline of the process that would turn this initial draft plan into a proposed final program. Mounting uncertainties over the timeline and legislation could deter oil companies from planning to spend big on exploration, while drilling along the coastal areas could be challenged by states and could increase risks for oil firms’ budget planning and possible legal expenses. Then there is the price of oil in a few years’ time to consider, as well as the fact that companies in the U.S. are increasingly earmarking investments into onshore shale at the expense of conventional offshore.

…click on the above link to read the rest of the article…

Shell ends exploration in Arctic near Alaska ‘for the foreseeable future’

September 28, 2015

Shell ends exploration in Arctic near Alaska ‘for the foreseeable future’

Shell spent upward of $7 billion US on offshore development in Chukchi, Beaufort seas

Royal Dutch Shell will cease exploration in Arctic waters off Alaska’s coast following disappointing results from an exploratory well it just completed.

Shell found indications of oil and gas in the well in the Chukchi Sea about 120 kilometres off Alaska’s northwest coast, the company said Monday in a release from The Hague, Netherlands. However, the petroleum was not in quantities sufficient to warrant additional exploration in that portion of the basin, the company said.

“Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the U.S.,” said Marvin Odum, president of Shell USA, in the announcement. “However, this is a clearly disappointing exploration outcome for this part of the basin.”

Shell will end exploration off Alaska “for the foreseeable future,” the company said.

The decision reflects the results of the exploratory well in the Burger J lease, the high costs associated with Alaska offshore drilling and the challenging and unpredictable federal regulatory environment in offshore Alaska, the company said.

Marvin Odum

Shell Oil Co. President Marvin Odum, seen on Sept. 2 in Anchorage, said it was “a clearly disappointing exploration outcome for this part of the basin.” (Mark Thiessen/The Associated Press)

Shell has spent upward of $7 billion US on Arctic offshore development in the Chukchi and Beaufort seas.

Monday was Shell’s final day to drill this year in petroleum-bearing rock under its federal permit. Regulators required Shell to stop a month before sea ice is expected to re-form in the lease area.

The company reached a depth of nearly 2,075 metres with the exploratory well drilling in about 45 metres of water.

Environmental groups oppose Arctic offshore drilling and say industrial activity and more greenhouse gases will harm polar bears, walrus and ice seals.

…click on the above link to read the rest of the article…

Greenwash: Shell May Remove “Oil” From Name as it Moves to Tap Arctic, Gulf of Mexico

July 12, 2015

Greenwash: Shell May Remove “Oil” From Name as it Moves to Tap Arctic, Gulf of Mexico

Shell Oil has announced it may take a page out of the BP “Beyond Petroleum” greenwashing book, rebranding itself as something other than an oil company for its United States-based unit.

Marvin Odum, director of Shell Oil’s upstream subsidiary companies in the Americas, told Bloomberg the name Shell Oil “is a little old-fashioned, I’d say, and at one point we’ll probably do something about that” during a luncheon interview with Bloomberg News co-founder Matt Winkler (beginning at 8:22) at the recently-completed Shell-sponsored Toronto Global Forum.

“Oil,” said Odum, could at some point in the near future be removed from the name.

Odum’s comments come as Shell has moved aggressively to drill for offshore oil in the Arctic and deep offshore in the Gulf of Mexico, while also maintaining a heavy footprint in Alberta’s tar sands oil patch.

Shell Oil Greenwashing
Image Credit: Bloomberg News Screenshot

Shell also recently acquired BG (British Gas) Group, a company that owns numerous assets in the global liquefied natural gas (LNG) industry, transforming the company into what Forbes hailed as a “world LNG giant.”

Winkler quipped in Toronto that due to this major asset purchase, it might be more accurate to call Shell Oil, “Shell Gas.”

In October 2011, BG Group signed a major contract with the U.S.-based LNG giant Cheniere to ship its gas product obtained via hydraulic fracturing (“fracking”) to the global market. That LNG will begin to flow by the end of the year.

Just a week before Odum told Winkler that Shell may take “oil” out its company name, he appeared on Bloomberg News on the sidelines of the Aspen Ideas Festival to boast about his company’s big plans — plans to drill for oil in the deep offshore Gulf of Mexico Appomattox field. At Aspen, Odum called Appomattox a “world class oil and gas project.”

 

…click on the above link to read the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress