[ROCKMAN]

Sub - Nothing secret about the NOC's and very Big Oil in the GOM. BP and Petrobras (essentially Brazil's NOC) are two of the largest lease holders in the GOM. And as a general rule no Big Oil would let a Little Oil operate in the Deep Water on their behalf. They typically don't care to have another Big Oil operating for them. If you were Shell Oil would you let BP operate their well if you didn't have to?

[wildbourgman]

Yeah Rock, I'm seeing LLOG and Anadarko bringing in some brand new deepwater rigs with LLOG being the surprise. Older rigs that have worked for BP, Shell, Exxon and Chevron are moving to other places or other customers.

[Subjectivist]

Sub - Nothing secret about the NOC's and very Big Oil in the GOM. BP and Petrobras (essentially Brazil's NOC) are two of the largest lease holders in the GOM. And as a general rule no Big Oil would let a Little Oil operate in the Deep Water on their behalf. They typically don't care to have another Big Oil operating for them. If you were Shell Oil would you let BP operate their well if you didn't have to?

Rock, I was regerring to his statement hatnobody knows where the small fry ar getting their funding from to do their exploration drilling. Itain't cheap to drill, especially in deep water in a new field. Somebody is paying for these rigs and labor, but who is it?

[ROCKMAN]

Rather interesting "logic" from these folks: EIA: Shale Oil, Gas Production to Offset Possible Gulf Shut-ins

"The prevalence of oil production in shale formations has reduced the likelihood that any cuts in production from offshore rig shut-ins in the Gulf of Mexico during the 2014 Atlantic hurricane season will be felt, according to the EIA this week. The Gulf of Mexico accounts for about 23 percent of the total U.S. crude oil production, the EIA said. However, an increasing percentage of total production is coming from unconventional formations. So, much of the lost production from shut-ins ahead of an approaching storm or hurricane will be offset by inland activity. In 2013, Tropical Storm Karen produced the only shut-in of Gulf production, the EIA said. Nearly two-thirds of oil output in the Gulf of Mexico was halted, according to Reuters."

So let's use their numbers. So 23% of US crude oil production comes form the GOM: 0.23 X 7.44 million nope = 1.71 million bopd. And 2/3 gets shut in, let's say, for one month: 1.71 X 2/3 X 30 days = 34 million bbls of oil. But thank goodness the shale players have been holding back tens of millions of bbls of oil just so they can help out US consumers when they find themselves in a pinch. Makes me wonder where the oil patch has that 30+ million bbls of oil stored they haven't been selling in case the county should need it in a matter of days?

See more at: http://www.rigzone.com/news/oil_gas/a/1 ... qOjig.dpuf

[ROCKMAN]

But things continue to look promising for the offshore exploration companies with continued support from President Obama even after he leaves office:

The BOEM initiated the first step in the planning of the 2017-2022 offshore oil and gas leasing program Friday. BOEM has published in the Federal Register a Request for Information (RFI), and will accept comments until July 30. This marks the first step in BOEM’s planning process, which will take up to three years to complete. The information will be used to prepare a Draft Proposed Program. “The development of the next Five Year Program will be a thorough process and uses the best available science to develop a proposed offshore oil and gas program that creates jobs and responsibly meets the energy needs of the nation,” said Secretary of the Interior Sally Jewell. She added: “Today marks the first step of engaging interested parties across the spectrum to balance the various uses and values inherent in managing the resources of federal offshore waters that belong to all Americans and future generations."

This will be addition to the support for offshore oil/NG exploration the POTUS has provided since he came into office: The current 2012-2017 program, which expires in August 2017, includes 15 potential lease sales in six planning areas with the greatest resource potential, including over 75 percent of the estimated undiscovered, technically recoverable oil and gas resources in federal offshore waters.

[hvacman]

including over 75 percent of the estimated undiscovered, technically recoverable oil and gas resources in federal offshore waters.

vocabulary question, Rock - I'm just a clueless HVAC engineer - I know the difference between R-22 and R-410a, but on geological and oil topics, I'm still a toddler. I think I've learned what "resources", "reserves", and "technically-recoverable" mean. I thought I knew what "discovered" means, but maybe not, as I'm certainly clueless on what "undiscovered" means. How does one estimate how much "undiscovered" TRR there is in a certain area? Is is just a statistical probability based on what typically has been discovered in geologically-similar areas? Or is it based on something like a little more concrete, like seismic profiles showing potential reservoirs and approximate sizes, but it isn't considered "discovered" until a few exploration wells have actually been drilled that give more definitive results?

[ROCKMAN]

H - "How does one estimate how much "undiscovered"..." I could run down a variety of evaluation/exploration techniques. But in summary you basically pull it out our ass. LOL. But seriously. Remember who you're asking: the geologist who was in charge of drilling low risk development wells in an offshore field where to exploration wells "discovered" 25 million bbls of oil and 125 bcf of NG. And then drilled the first 5 wells off the platform as dry holes reducing the "discovered reserves" to 1 million bbl of oil and 25 bcf. Discovered reserves my hairy white ass. LOL.

Remember anyone can put whatever number they want out there and classify it as they wish. There are no rules except what the SEC requires US public companies to follow. And even with those regs there still some wiggle room. I've probably reviewed in detail over 1,500 exploration well proposals. Less then half were commercial discoveries and even with those I'll guess less than 5% found the full amount of reserves postulated. Trust me after 4 decades of doing it this sh*t ain't easy. LOL. And despite what many believe it wasn't easy in the days of "cheap oil"... like when I drilled those 5 dry holes in 1975.

[hvacman]

LOL! So the petro-geo community estimates "undiscovered" resources using the same the same finely-tuned scientific technique (read:dartboard) that the HVAC trade frequently uses for estimating energy-savings for replacing old equipment with new. Unfortunately, the downside of a significant negative miss on these undiscovered O&G resource estimates can create much-more-costly wild-goose-chases and have a much larger global-scale energy-planning impact than blowing a 400-ton chiller kilowatt-hour-savings estimate.

[ROCKMAN]

Once again the oil patch's BFF, President Obama, is doing what he can to help us out:

"As part of President Obama’s all-of-the-above energy strategy to continue to expand safe and responsible domestic energy production, BOEM Acting Director Cruickshank announced Thursday that the bureau will offer more than 21 million acres offshore Texas for oil and gas exploration and development in a lease sale that will include all available unleased areas in the Western Gulf of Mexico Planning Area. “This lease sale underscores our commitment to make millions of acres of Federal waters available for safe and responsible exploration and development."

BP must be licking its lips. LOL.

[wildbourgman]

Texas has lagged behind Louisiana in the offshore work. I wonder how much interest there will be for anything but the deepwater acreage.

[Graeme]

New Offshore Oil Plan Could Be 'Game Over' for Climate

In a move that could rival the climate impacts of the Alberta tar sands and Keystone XL pipeline, and would release far more atmospheric carbon than that saved by the new EPA power plant and vehicle rules, the Obama administration just initiated its 2017-2022 process to expand oil and gas drilling on the nation's outer continental shelf (OCS) - including the Arctic, Pacific, Atlantic, and Gulf of Mexico. The initial public comment period on the plan closes July 31, 2014.

Despite the fact that many of the 2011 National Oil Spill Commission's recommendations to improve offshore drilling safety have yet to be implemented, and the certainty of more oil spills, this new leasing program would commit the nation to another 40 years of carbon-intensive energy that world climate cannot afford.

In addition to the proven offshore reserves already in production (currently providing 18% of domestic oil and 5% of domestic gas production), the government estimates that the U.S. OCS contains an additional 90 billion barrels of oil and 400 trillion cubic feet of natural gas yet to be discovered. Industry thinks there is more. History shows that once oil is discovered, it will be produced.

Burning this much oil and gas would release over 60 billion tons of CO2 to the atmosphere - a 'carbon bomb' almost as large as the entire Alberta tars sands. Just as with the tar sands (with 168 billion barrels of proven reserves), producing this U.S. offshore oil could be 'game over' for efforts to contain climate change. And this offshore carbon would dwarf the one or two billion tons of CO2 saved by the new power plant and vehicle rules by 2030.

Without doubt, the combined carbon from offshore oil (in the U.S. and other nations), and tar sands oil, would be disastrous for climate. But industry sees billions of dollars lying in the seabed, and seems to care little about climate impacts.

huffingtonpost

[ROCKMAN]

And to add to those woes: the oil patch's BFF, President Obama, does it again:

AP - The Obama administration has approved the use of sonic cannons to explore for oil and gas off the Eastern Shore. The Bureau of Ocean Energy Management on Friday formally approved guidelines for using air cannons in the Atlantic Ocean from Florida to Delaware. Energy companies could buy new oil and gas leases and begin drilling in 2018 if they find profitable reserves. The guidelines are meant to protect endangered whales and other creatures from the loud noises and increased vessel traffic, but the government's environmental impact study estimates that more than 138,000 sea creatures could be harmed. The decision opens an area of the Eastern Seaboard larger than two Californias to exploration for the first time in decades.

And as far as this goes: I assumed that those 138,000 sea creatures would rather be "harmed" then killed and eaten like hundreds of millions of their kin even year.

[phaster]

Rock,

just thought I'd let ya know the posts ya give as an insider working on the line, are very helpful to understand the issues wrt PO

[ROCKMAN]

Phaster - You're welcome. It's not often that I'm the smartest person in the room. And I'm not here either. But after doing something for 40 years you pick up a bit of knowledge along the way. Even a "dirt person" as Sheldon calls us geologists.

[Graeme]

Has The Gulf Of Mexico Hit Peak Oil?

There are enough articles on the “myth of peak oil” floating around the Internet to fill a book; and there are enough books on the subject to fill a small library. One of the common threads throughout these publications is their lack of credible sources, because not only is peak oil real, but we’re rapidly approaching that threshold.

An example that is smacking the United States and the oil industry in the face right now is floating in the Gulf of Mexico.

According to a new government report, oil and natural gas production in the Gulf has been steadily declining for the last decade. The report looked at oil production in the Gulf of Mexico on federal lands only, not any privately-held lands where production is taking place. Since 2010, according to the report, the annual yield of oil from the Gulf has fallen by almost 140 million barrels.

While the Gulf region still accounts for 69% of U.S. oil produced on federal lands, the dramatic decline in production tells a story that the oil industry doesn’t want us to hear. Peak oil is clearly beginning to play a role in U.S. exploration.

desmogblog

[ROCKMAN]

Graeme - Good stats but a tad outdated. GOM oil production did peak around 2002 and had a significant decline. Until 2010 when more Deep Water fields came on line and brought production back up to the previous record level. And as more DW fields are developed production will remain high. But as we all know depletion, like rust, never sleeps. The DW GOM oil production will shine a bit longer but it's seeing it's last hurrah. After the DW is exploited there will be very little future potential.

But with a bit of luck the world will see some more oil production in the future thanks to New Zealand beginning to open up it's DW plays for development.

[Graeme]

ROCK, I think the prospects are better in the GOM.

Armed with new technology, oil drillers revisit Gulf of Mexico

Advances in drilling technology are reviving the prospects of oil companies in shallow parts of the Gulf of Mexico, helping to squeeze more from older fields while the U.S. shale bonanza lures others onshore.

Apache Corp and a handful of smaller independent companies are using seismic surveying and horizontal drilling - techniques perfected during the onshore fracking boom - to tap mature fields and find hidden reserves on the shelf.

The methods appeal to investors hungry for the quick profits that cannot be delivered by deepwater drilling, where a dozen years of planning and billions of dollars in investment can be required to get oil pumping.

The technology, already used successfully by Apache in the North Sea, has revealed oil and gas reserves that were previously hidden in water less than 500 feet (150 meters) deep.

"3D seismic has not only helped us in acquiring new leases with new reserves on them, but also in sharpening targets for development drilling in our existing fields," Andy Clifford, president of Saratoga Resources Inc, told Reuters.

Replacing reserves and increasing production has long been a challenge on the Gulf of Mexico shelf. The easy-to-find oil has already been drilled, resulting in a drastic fall in production.

But the use of seismic data, much more precise than previous mapping techniques, is tempting geologists to take a second look for new fields and re-evaluate older deposits to see what might be left behind.

reuters

[ROCKMAN]

Graeme - More PR fluff from the companies. We've been using 3d seismic for more than 30 years to pinpoint those small traps in the shallow GOM. In fact I doubt a single well has been drilled out there in the last 20 that wasn't based on 3d. Seriously. And horizontally drilling in old fields out there is new??? LOL. I drilled my first hz NG wells in the GOM in 1994 in reservoirs that had been producing since before 1975. Water depth: 50'. Others were drilling hundreds of hz wells in old oil fields in the 90's. There's been a surge in new hz drilling out there in old fields but that's a result of higher prices...not "new technology". One of the lead companies is Energy XXI. Check out their website for more details if you like. Just yesterday met with one of their former reservoir engineers involved in those projects. He was a tad shocked when he realized he was sitting across the table from the author of a tech paper (that he had actually studied) dealing with hz drilling in the same area he had been working. A paper I wrote two decades ago.

We're pretty good at convincing the public that we're constantly inventing "new tech" that will save them, eh? It's not our first rodeo, bubba. And you should know better then to believe anything we lying bastards ever say. LOL.

[Graeme]

Hey ROCK, Thanks for the history lesson but the article says more about Fieldwood Energy rather than the tech or any other company. They said they're going to "re-shoot" their fields. This seems to me to be a smarter option than exploring the more risky and more expensive deep-water prospects. On the other hand, you've seen the front page this morning about fracking in deep water. Was your fracking in GOM in 1978 (or later) in deep water?

[wildbourgman]

http://www.wwltv.com/story/news/local/i ... /18194175/

Anti-offshore fracking story in New Orleans news story.

GULF OF MEXICO – Fracking, the drilling technique that's driven a boom in land-based shale gas production, has sparked environmental concerns and public outcry, from Pennsylvania to St. Tammany Parish, La.

But fracking is also expanding offshore, in the Gulf of Mexico, with hardly anyone noticing.

A year after California imposed new regulations requiring oil and gas companies to notify state regulators and the public whenever they perform hydraulic fracturing, environmental groups and policy experts are suddenly and belatedly learning about offshore fracking in the Gulf and expressing frustration with a lack of information from regulators.

"People don't know this is happening," said Jonathan Henderson of the environmental advocacy group Gulf Restoration Network. "Nobody I talk to has any idea, much less the process that's used to get at those reserves."

"There's very little public information on the practice, and to date, we just simply don't know a great deal about where and when it's taking place," said Jayni Hein, policy director at New York University's Institute for Policy Integrity.

Fracking refers to the shooting of chemicals, water and sand into the bottom of a well to stimulate the flow of oil and gas from the surrounding formation, so it can be sucked up more quickly and easily. The process has been around for about 70 years on land and in commercial use offshore for about 20 years.

The most common type of fracking offshore is less about breaking up bedrock -- as is the practice on land -- and more about clearing out sand and mud that can gum up the path of precious hydrocarbons. Tools are used deep in the well to shoot gravel or pellets, along with seawater, acid and other chemicals to break up and filter out impediments.

Industry representatives and others who have studied fracking closely say environmentalists are blowing the dangers – both on land and offshore -- out of proportion. They say the process is very well understood by those who have been doing it for decades.

"The people that are doing it understand it pretty well, and in all likelihood, the regulators that have been tracking it understand what's going on," said Eric Smith, a professor at Tulane University's A.B. Freeman School of Business and associate director of the Tulane Energy Institute. "But it hasn't been widely publicized because nobody ever asked."

Lack of public information

There are questions, however, about how well the procedures are being tracked by regulators.


Environmental nonprofits complain that they can't find out when and where acids and other fracking chemicals are being shot down into the bottom of Gulf wells. That's important because those chemicals come back up to the rig, mixed in with drilling mud, rock shavings and the processed seawater from the well, and they must be disposed of properly.

Environmental Protection Agency water discharge permits allow operators to dump a certain amount of oil and chemicals overboard into the Gulf along with their processed water. But those permits and lists of the chemicals used for individual frac jobs are only available publicly for land-based operations, not the offshore ones.

Both the EPA and an industry-backed website called FracFocus offer searchable online databases of permits for fracking on shore, but not for the Gulf of Mexico.

Fracking exploded on land because new developments in horizontal and directional drilling made it more cost-effective for oil and gas operators.

The process offshore doesn't involve horizontal drilling and there's no drinking water sources to worry about under the sea. The offshore version usually employs a far less destructive fracturing technique in much more permeable sand formations, causing breaks that extend less than 100 feet from the well bore.

The Environmental Impact Statement for offshore drilling in the central Gulf of Mexico calls fracking "small scale by comparison" with the onshore version.

But the basics of both are the same, and some environmentalists are alarmed that it's expanding, without any specific disclosure, into the deep water – a region where extreme hydrocarbon volatility contributed to the infamous BP well blowout and massive Gulf oil spill in April 2010. And that was an operation that did not include fracking.

The drilling work at BP's Macondo well was approved with something called a Categorical Exclusion from specific review under the National Environmental Protection Act, something regulators promised to fix.

But a report last year by the nonprofit law firm Environmental Defense Center complained that fracking work offshore is again being approved under Categorical Exclusion from NEPA review. The report, titled "Dirty Water," also alleges that discharge and drilling permits were being rubber stamped in California's Santa Barbara Channel using generic, outdated environmental reviews and without stringent enough testing of overboard water.

Brian Segee, the report's author, called for a moratorium on new offshore frac jobs until regulators got environmental impact statements and a list of the chemicals used for each well. Henderson echoed that call, saying that generic environmental impact statements covering the whole central Gulf were not good enough.

But Rock Zierman, executive director of the California Independent Petroleum Association, said the regulators are already on top of the environmental issues.

"Some have suggested that the discharges of fluids from offshore platforms are poorly characterized and impose an undue risk to the marine environment, and we simply feel that this is not true," Zierman said during a recent online seminar. "The EPA development documents themselves are more than 500 pages long. … The chemicals and chemical families used for hydraulic fracturing are considered in these documents."

He went on to say that EPA increased the frequency of overboard water testing last year, to keep a closer eye on the process. But, as WWL-TV exposed in a separate investigation last year, testing of overboard water is done by the operators and some have been caught doctoring the water samples to falsify the amount of pollutants they were dumping into the Gulf.


In response to a request from the station, the Interior Department's Bureau of Safety and Environmental Enforcement, the federal offshore safety agency, reported that 115 Gulf oil or gas wells, or 15 percent of the 785 that were completed and prepared for production in 2013, employed a hydraulic fracturing technique known as a frac pack -- the less-destructive of two fracking methods used offshore.

BSEE spokeswoman Eileen Angelico said frac packs account for the vast majority of the offshore fracking work, but the agency could not provide any data for other types of fracking or well-stimulation. In the summary of drilling permits the agency makes available to the public, it does not note whether fracking is involved. Angelico said she could not give WWL-TV drilling permits detailing fracking operations because the information is proprietary.

She did provide the station with the location of five wells near the southeast Louisiana coast that used frac packs in 2013 and are no longer kept secret because the wells are already in production. One of the fracked wells was drilled for Chevron by the Hercules 173 jack-up rig last year, near Port Fourchon. A WWL-TV crew that went offshore this week found that same rig a few miles away, drilling another well with a Superior Energy Services completions vessel alongside – a vessel that at times provides rigs with fracking chemicals and equipment.

Hercules Vice President Jim Noe did not say if that specific job involved fracking, but did say his company uses some type of hydraulic fracturing in more than half of the wells it drills on the Outer Continental Shelf. Smith, an energy economist with close ties to offshore operators, also said he believes that around half of the new wells drilled in the Gulf involve some sort of fracking.

Superior Energy Services, along with Schlumberger, Baker Hughes and Halliburton, are leading suppliers of fracking gear offshore. According to a Bloomberg story in August, a Baker Hughes executive expected offshore fracking to increase in the Gulf by more than 10 percent in the Gulf from 2013 to 2015.

And given that growth and the controversy surrounding the practice on land, even industry representatives agree that the public deserves clearer information about offshore fracking.

"I describe offshore hydraulic fracturing as a well-understood, well-regulated practice, but I do think it benefits us all to have better information and better transparency," Zierman said.