December 11, 2017



December 6, 2017

US Gulf of Mexico GOMSEA Areas. DOI

Offshore drilling is not a fit for Florida: Guestview

Francis Rooney, Guest columnist Published 9:00 a.m. CT Dec. 1, 2017

Offshore drilling and related activities, including seismic testing, have no place in the Eastern Gulf of Mexico. The moratorium on exploration in the Eastern Gulf established in 2006 will expire in 2022 unless Congress acts. It is imperative for the future of Florida and our tourism-based economy that this bi-partisan effort to extend the moratorium succeed. I believe that I have some credibility on this issue, having served on the board of one of the world’s leading land and offshore drilling firms for almost twenty years, Helmerich & Payne, Inc. (HP). In addition to its own offshore rigs, HP was the contractor on the Shell Oil’s huge MARS platform in the Gulf, and owned a major interest in Atwood Oceanics, a premier operator of drill ships. We have our own family working interests in oil and gas, and I served for many years on the board of Laredo Petroleum, Inc., and our private exploration and production company based in Bogota, Colombia.

The Eastern Gulf is of critical importance to our national security due to the flight training and testing that takes place from our numerous bases in the panhandle and around Tampa to Naval Air Station Key West. The Eastern Gulf is the largest training ground for the United States military in the world. For this reason, the Department of Defense (DoD) fully supports extending the moratorium on offshore drilling in the Eastern Gulf. In response to a letter to the Department of Defense, which 14 of my Florida colleagues and I sent in March, A.M. Kurta, the acting Under Secretary of Defense for Personnel and Readiness, responded that it is of “vital importance” to maintain the moratorium.

Aside from security concerns, offshore drilling in the Eastern Gulf will adversely impact our environment.
Francis Rooney is the U.S. Representative for Florida’s 19th congressional district. He is the vice-chairman of the House Foreign Affairs Committee and serves on the Committee on Education and the Workforce. He previously served as U.S. Ambassador to the Holy See under President George W. Bush from 2005 to 2008.
With all due respect to Congressman Rooney, he’s wrong about almost everything.

Congressman Rooney: “Aside from security concerns…”

There are no genuine security concerns.

Eastern Gulf of Mexico Oil and Gas Exploration and Military Readiness


For many years, senior DoD civilian and military officials consistently reported that their forces were having an increasingly difficult time carrying out realistic training and testing due to constraints caused by encroachment on military ranges and installations from a myriad of factors, including munitions restrictions, transient ships or aircraft, electronic spectrum limitations, critical habitats, and adjacent water or land use by civilian or commercial entities, including offshore oil and natural gas facilities. However, upon examining the issue closely, it becomes readily apparent that, at the time, they had no factual basis for making those claims. Despite direction from Congress, until last year DoD had failed to adequately collect and analyze data regarding training and testing constraints due to encroachment.


Therefore, after conducting extensive research on the issues and completing a thorough analysis of the data, it is our conclusion that opening further portions of the Gulf of Mexico east of the Military Mission Line to oil and gas field exploration and development will not come at the expense of feasibly, sufficiently, and adequately accomplishing military training and testing missions. We do not believe that expanding oil and gas exploration on the Outer Continental Shelf within the Gulf of Mexico and pursuing national security goals are mutually exclusive actions.


Eastern Gulf of Mexico Oil and Gas Exploration and Military Readiness, Securing America’s Future Energy 2010

Aside from the lack of genuine security concerns, there could be quite a bit of oil & gas to be recovered…


Eastern Gulf of Mexico Oil and Gas Exploration and Military Readiness

Congressman Rooney: “Seismic testing to evaluate conditions for oil exploration may harm fish and marine mammal populations.”

There is zero-point-zero evidence that marine seismic surveying has harmed marine life in the Gulf of Mexcio… And a helluva lot of seismic data have been shot in the Gulf.

Seismic data has even been acquired all over the West Florida Shelf.


Fugro 2d seismic data acquired in 2009-2010. GeoExpro Offshore Florida: Regional Perspective

IAGC Seismic Surveying 101

Marine airguns are no louder than many other naturally occurring and anthropogenic “sounds in the marine environment”…


IOGP Report 358 (out of print)

There are many natural sources of sound within the marine environment: wind, rain, waves, marine mammal vocalizations and the sounds made by other marine life all contribute to relatively high levels of ambient sounds. Other natural events such as volcanic eruptions, earthquakes and lightning strikes produce short-lived high intensity sounds underwater.

In addition, there are many man-made (anthropogenic) sources of sound in the ocean. Theseinclude shipping, fishing, sonar (used for navigation, fishing and defence), construction,dredging, military activities as well as seismic surveys. Each of these sources, whether naturalor anthropogenic, has different frequencies and intensities in the marine environment.

Since sound is common in the marine environment, animals have evolved strategies to use sound and manage successfully in sound-filled environments. Potential impact, if any, of a specific sound depends on its characteristics, the species receiving the sound and other characteristics of the marine environment.

Sound characteristics (see inset overleaf) include how loud a sound is perceived, the duration and sound type, whether the sound is considered impulsive (transient) or continuous (ongoing) and the sound’s frequency (pitch).

A seismic acoustic source array emits a sound that lasts less than 0.1 second. It is typically repeated every 10 to 15 seconds as the seismic vessel moves along a straight ‘data acquisition’ line at a speed of about 5 knots for many kilometres. After which the vessel will move to another acquisition line and may return to the area many hours later.

IOGP/AAGC Seismic Surveys and Marine Mammals



When it comes to why whales beach themselves scientists haven’t been able to find a clear answer but have had many speculations and ideas as to why this may occur.

Whales beaching themselves have been recorded throughout history.

In fact historical records indicate that whales have been beaching themselves since at least 300 B.C., however scientists are discovering that whale stranding’s appear to be occurring more frequently and in larger numbers than previously known and while scientists are unclear as to whether this increase in numbers is simply due to more people reporting stranding’s or because the number of stranding’s has actually increased due to human factors it has raised some concerns in the eyes of marine biologists, activists and whale lovers.


While no definite answer can be given as to the cause of whale beaching’s and whether or not they are actually increasing in recent times we can assume that at least some of these concepts and ideas may be contributing to the cause of whale beaching’s.

Below you can find several possible causes that may contribute to the beaching of whales.


1) Injuries from collisions with boats, ships and other man-made aquatic machines.


2) Water pollution


3) Confusion due to man-made sonar

Some biologists and scientists speculate that whales may become disoriented, sick and confused by the use of man-made sonar which may interfere with a whales brainwaves or use of echolocation causing the whale to lose its sense of direction and beach itself.


4) Natural diseases


5) Attacks from sharks or other marine mammals


6) Poison from various aquatic species


7) Changes or abnormalities in the earths magnetic field


8) Pneumonia


9) Traumas caused by various aquatic elements in the environment


10) Changes in the weather and ocean caused by global warming


11) The whale has already died


12) Following the pack


Whale Facts

Conspicuously absent from the list are marine seismic surveys. Sonar is the closest match: “Some biologists and scientists speculate that whales may become disoriented, sick and confused by the use of man-made sonar.” I like how they differentiate biologists from scientists. Like sonar, some biologists speculate that marine airguns may cause whale beachings, despite a total lack of evidence.


Marine mammals close to underwater detonations of high explosive can be killed or severely injured, and the auditory organs are especially susceptible to injury (Ketten et al., 1993; Ketten, 1995). Airgun pulses are less energetic and their peak amplitudes have slower rise times. To date, there is no evidence that serious injury, death, or stranding by marine mammals can occur from exposure to airgun pulses, even in the case of large airgun arrays. Additionally, Hilcorp’s project will use low-intensity sonar equipment in shallow water. NMFS does not expect any marine mammals will incur injury or mortality in the shallow waters off Beaufort Sea or strand as a result of the proposed geohazard survey.

Federal Register

And despite this total lack of evidence, marine geophysical contractors take extreme precautions in order to avoid disturbing marine mammals.

In spite of a lack of evidence linking seismic surveys to strandings, geophysical contractors have implemented industry-wide mitigation practices to avoid impacts on marine species. Regulators and seismic surveyors establish a marine mammal exclusion zone before beginning operations, and they hire trained observers with the authority to stop operations if a sensitive species is spotted within the exclusion zone. Operators also gradually ramp up sound emissions and move their vessels slowly, in order to allow marine mammals to move away from the area before full operation begins.


Marine Environment

The geophysical industry is committed to conducting offshore activities in an environmentally responsible manner, including compliance with mitigation and monitoring guidelines and regulations. More than four decades of worldwide seismic surveying and various scientific research indicate that the risk of direct physical injury to marine mammals is extremely low. In addition, there is no scientific evidence that demonstrates biologically significant negative impacts on marine life populations. Nevertheless, the members of the International Association of Geophysical Contractors (IAGC) support measures that are proportionate to the potential risk and based on the best available science to minimize any potential impact of their operations.


Mitigation and monitoring must be proportionate to the potential risks identified by an environmental assessment and specific to the local environment and the operation being undertaken. Measures commonly used by the seismic industry include timing seismic surveys to avoid known areas of biological significance, such as whale foraging or breeding areas or avoiding seasonal marine life occurrences such as peak whale and dolphin activity seasons or migration.

Before a seismic operation begins, visual monitoring is undertaken to check for the presence of marine mammals and other marine species within a specified precautionary, or exclusion zone, often using dedicated marine mammal observers (MMOs) or protected species observers (PSOs).

Further monitoring may be done using passive acoustic monitoring technology (PAM), which may detect vocalizing marine animals, especially during low visibility and nighttime conditions. In the event marine animals are detected in the exclusion zone, seismic operation will not begin for a certain time period until the marine animal moves away. Similarly, a seismic survey will shut down if the marine animal is observed entering the exclusion zone once operations have begun.

Soft-start or ramping-up procedures are undertaken by seismic vessels as a matter of general operational procedure. Soft starts involve activating a small section of the acoustic sound arrays over a period of time, gradually getting louder until the full acoustic array is operating. This measure also allows a marine animal to swim away before the acoustic source is activated at full strength.



Congressman Rooney: “There is no place in our shallow bays to locate … the numerous offshore supply vessels (OSV’s) and barges supplying the rigs and platforms.”


There is no place in our shallow bays, full of recreational vessels, to locate the tank farms, docks, steel mooring balls, and other equipment which are necessary to support the numerous offshore supply vessels (OSV’s) and barges supplying the rigs and platforms.  All of this would radically undermine Florida’s coastal ecosystems.

These environmental concerns directly impact Florida’s economy and residents. Our economies depend on tourism, which requires clean beaches and healthy ecosystems.


Pensacola News Journal

Mr. Rooney, Florida may not have adequate port facilities to support Eastern Gulf of Mexico exploration & production operations, but Mobile, Alabama does.

Most of the recognized oil & gas potential in the Eastern Gulf of Mexico is closer to Mobile than it is to Tampa.


EASTERN GULF OF MEXICO-1: A look at regional deposition under W. Florida shelf, slope 01/21/2002. Oil & Gas Journal.

The activity would focus on the Jurassic Norphlet and Smackover plays south of Mobile Bay and the Florida panhandle.   Support operations and shore bases would be located in the Mobile Bay area… because they are already there.

For further reference on the oil & gas plays of the Eastern Gulf of Mexico

Evolution of Standard Oil Company

November 27, 2017


Define Irony

November 6, 2017


This ad has been matched to your interests based on your browsing activity.
Rocket Fuel helped this advertiser determine that an ad like this might interest you.


From the “No schist, Sherlock” Department: LBNL confirms so-called greenhouse effect

November 6, 2017

First direct observation of carbon dioxide’s increasing greenhouse effect at the Earth’s surface

Berkeley Lab researchers link rising CO2 levels from fossil fuels to an upward trend in radiative forcing at two locations

Scientists have observed an increase in carbon dioxide’s greenhouse effect at the Earth’s surface for the first time. The researchers, led by scientists from the US Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab), measured atmospheric carbon dioxide’s increasing capacity to absorb thermal radiation emitted from the Earth’s surface over an eleven-year period at two locations in North America. They attributed this upward trend to rising CO2 levels from fossil fuel emissions.



What was observed? A ~20 ppmv increase in atmospheric CO2 correlated with a 0.2 W/m2 increase in radiative forcing at the Earth’s surface.

Total insolation at the Earth’s surface ranges from 40 to 340 W/m2 per year.

Assuming a linear relationship of .01 W/m2 per 1 ppmv CO2… A doubling of pre-industrial atmospheric CO2 from 280 to 560 ppmv will increase radiative forcing by 2.8 W/m2. This is about 2/3 of the IPCC’s estimate.

The total warming since 1850 has been about 0.7°C. Over the same period, CO2 increased by about 120 ppmv (~1.2 W/m2).

0.7°C ÷ 1.2 W/m2 = 0.6°C/W/m2
0.7°C ÷ 120 ppmv CO2 = 0.006°C/ppmv CO2

This means that a doubling of pre-industrial atmospheric CO2 can lead to a maximum warming of 1.68°C… less than half of the so-called consensus estimate.

Since my “back of the envelope” calculations assumed a linear, rather than logarithmic, relationship and that all of the warming since 1850 was GHG-driven, the actual climate sensitivity can be no more than half of my estimate… ~0.8°C per doubling of pre-industrial atmospheric CO2.

This essentially means that the human impact on climate change is insignificant.

October 20, 2017

The movie Deepwater Horizon is probably the only movie ever made that actually tried to realistically depict oil drilling operations.  While it didn’t get every detail right, it was compellingly realistic (too realistic for me watching it on IMAX) and told the story of how ordinary people, just doing their jobs, can become heroes when everything goes wrong.  I won’t go into detail about everything that went wrong leading up to the terrible disaster on April 20, 2010.  BP’s Deepwater Horizon Accident Investigation Report is fairly comprehensive.  Ultimately it boiled down to the normalization of deviance.  The 1986 Challenger space shuttle disaster has also been attributed to the normalization of deviance.  When dangerous jobs become routine, corners get cut, people become complacent and a sense of impunity sets in.  The safety director for my first employer, Enserch Exploration used to start almost every safety meeting with this question and answer:

What kills the most people in industrial accidents?  Impunity.

The Deepwater Horizon disaster caused the entire industry recommit itself to rigorous adherence to safety procedures… Because no one wants go to work and not come home.

Deepwater Horizon Myths

BP’s prospect was located in Mississippi Canyon Block 252 (MC 252).  It was called “Macondo.” At the time of the blowout and efforts to regain control of the well, a lot of myths were propagated.  People said things like, “The well encountered the highest pressures ever recorded”… “Macondo was the largest oil discovery in the world”… “BP was keeping the geological data secret – Not even revealing it to the government.”  In reality, there was nothing particularly anomalous about Macondo.


Figure 1. (Southeastern Geophysical Society) Left: Gamma ray log, sandstone deflects to the left of the shale baseline.  Right: Electrical resistivity log, oil/gas deflects to right of shale baseline, saltwater deflects to the left.  It’s a nice looking log; but not really very spectacular looking. The really interesting thing to me was the pore pressures. The main pay sands from 18,075′ to 18,155′ are not abnormally pressured. 12.5 to 12.6 pounds per gallon is actually kind of low for that depth range. It also appears that they may have encountered a pressure inversion. Geopressure generally increases with depth. The pressure at 17,730′ was 14.1 ppg and 13.0 ppg at 17,820′. They were drilling the well with 14.5 ppg mud and were having problems with losing mud into the formation.

Macondo was estimated by BP to be a 50 million barrel discovery.  Kind of small by major oil company standards… A “home run” by smaller independent oil company standards.

One blogger actually wrote this in June 2010:

“No one outside of BP knows the details of the geology under the well site because BP did the geological survey and refuses to release the information – classifying it as proprietary trade secrets.”

BP’s partners (Anadarko and Mitsui) knew exactly what BP did about the geology. The MMS has all of the data that BP has. Operators had to provide all data to the MMS (now BOEM) – even on “tite holes” and proprietary geophysical surveys. All of the companies that bid against BP in OCS 206 on March 19, 2008 knew at least as much about the geology as BP did. BP’s high bid barely beat out smaller independent oil company LLOG Exploration…

  1. BP Exploration & Production Inc. $34,003,428.00
  2. LLOG Exploration Offshore, Inc. $33,625,000.00
  3. Noble Energy, Inc. $17,225,650.00
  4. Red Willow Offshore, LLC $14,075,000.00
  5. Eni Petroleum US LLC $4,577,115.00
  6. Anadarko E&P Company LP $2,145,950.00

Only one of BP’s competitors for the lease, Eni, was a major oil company. The rest were small, mid-sized and large independents. All of those companies knew enough about the geology to bid on the lease. I don’t work that particular area, but I knew enough about the geology to know the approximate size of the reservoir, thickness of the sands and that the sands are Middle Miocene age and trapped against a Cretaceous unconformity. Any company that is a member of the Offshore Oil Scouts Association (OOSA) also knew a great deal about the drilling procedures and hole conditions.

From April through July 2010, the blowout spilled an estimate 4.9 million barrels of oil into the Gulf of Mexico.  By mid-July, the well was capped.  By August, most of the oil was gone… Either recovered by clean up procedures, evaporated, burned and/or consumed by microbes.

Deepwater Horizon Perspective

Just prior to the Macondo blowout, this was on the MMS (now BOEM) website:

Since 1980, OCS operators have produced 4.7 billion barrels (bbl) of oil and spilled only 0.001 percent of this oil, or 1 bbl for every 81,000 bbl produced. In the last 15 years, there have been no spills greater than 1,000 bbl from an OCS platform or drilling rig. The spill risk related to a diesel spill from drilling operations is even less. During the 10-year period (1976-1985) in which data were collected, there were 80 reported diesel spills greater than one barrel associated with drilling activities, compared with 11,944 wells drilled, or a 0.7 percent probability of occurrence. For diesel spills greater than 50 bbls, only 15 spills have occurred, or a 0.1 percent probability.

Natural seepage of oil in the Gulf of Mexico (unrelated to natural gas and oil industry operations) is far more extensive. Researchers have estimated a natural seepage rate of about 120,000 bbl per year from one area (23,000 square kilometers) offshore of Louisiana.

U.S. Minerals Management Service ca July 2010

This passage disappeared from the website shortly after the blowout.

Of the nearly 53,000 wells drilled in the Federal waters of the Gulf of Mexico since 1947, there has been one Macondo.

Relative to the number of wells drilled and volume of hydrocarbons produced, the volume of oil spilled in the history of oil & gas drilling operations in the Gulf of Mexico has been minuscule.


Figure 2. Gulf of Mexico Crude Oil Production 1981-2013 (US EIA), oil spills 1963-2013 (US BSEE), natural oil seeps (NAP).

Having trouble seeing the spills?  Here’s a plot of just the spills and natural seepage estimate:


Figure 3. Oil spills and natural seeps (note y-axis is logarithmic).

Putting this disaster into perspective is in no way meant to diminish this terrible tragedy.  Eleven men died in this disaster.  However, our government’s reaction to it was, in itself, a disaster.  Thirty three rigs that were drilling in deepwater were forced to shut down and temporarily abandon the wells they were drilling.  This created an even greater accident risk than allowing them to complete the wells they were drilling.  The Obama administration’s unlawful drilling moratorium and subsequent “permitorium,” led to the loss of over 200,000 bbl/day of oil production from 2010-2015:


Figure 4. Federal offshore Gulf of Mexico oil production. Hurricane damage vs. Obama damage.

Deepwater Horizon EpiLOGG

Did you ever wonder if anyone ever went back in and re-drilled Macondo?

10/12: LLOG Exploration is making waves in the Gulf


When the Obama administration announced a moratorium on deepwater drilling in the Gulf of Mexico in 2010, politicians and industry spokespeople howled. The explosion on the Deepwater Horizon rig at the Macondo well was tragic, some said, but there was no reason to shut down an entire industry sector that otherwise was following the rules and operating safely.

Conspiracy theories that President Barack Obama would try to kill the industry with onerous new regulations proliferated in some circles. Even if the moratorium eventually was lifted, the naysayers said, companies might take their rigs, jobs and tax money to new locales and not come back for many years.

But at LLOG Exploration, it was no time to panic.



LLOG was founded in 1977, primarily to develop prospects in south Louisiana. As the company grew, its focus expanded to include the depths of the Gulf of Mexico.

In 2004, LLOG purchased seismic data covering a portion of the Gulf known to the offshore industry as the Mississippi Canyon.


LLOG Exploration at a glance

  • Founded: 1977 in Metairie
  • President and CEO: Scott Gutterman, who joined the company in 1993 and became CEO in 2007
  • Headquartered in Covington, with offices in Scott and Houston
  • 170 employees
  • Ranked in 2014 as the top privately owned liquid producer in the United States
  • One of the top 20 exploration and production companies in the Gulf of Mexico, public or private
  • Has drilled more than 350 wells in the Gulf of Mexico and the Texas/Louisiana Gulf Coast since 2001
  • 2014 net production: 26,000 BOE (barrels of oil equivalent) per day
    Source: LLOG

This article was originally published in the Spring 2015 issue of 10/12 Industry Report.

Greater Baton Rouge Business Report

LLOG Exploration was the second-highest bidder on MC 252.  In the wake of Macondo, LLOG was able to purchase the lease from BP and put together a strong lease position in the area.

Drilling To Start at Macondo Reservoir

by The Associated Press|Cain Burdeau|Wednesday, May 13, 2015

NEW ORLEANS (AP) — Deep-water drilling is set to resume near the site of the catastrophic BP PLC well blowout that killed 11 workers and caused the largest U.S. offshore oil spill five years ago off the coast of Louisiana.

A Louisiana-based oil company, LLOG Exploration Offshore LLC, plans to drill into the Macondo reservoir, according to federal records reviewed by The Associated Press.


Richard Charter, a senior fellow with the Ocean Foundation and a longtime industry watchdog, said drilling into that reservoir has proved very dangerous and highly technical, and it raises questions about whether a small company like LLOG has the financial means to respond to a blowout similar to BP’s.

Eric Smith, associate director of the Tulane University Energy Institute in New Orleans, dismissed those concerns. He called LLOG “an extremely well-financed and well-organized” company.

“If I were to pick anyone to go into that field after so many problems, I would pick LLOG,” Smith said. “They have demonstrated their ability to drill in the area.”

Since 2010, LLOG has drilled eight wells in the area in “analogous reservoirs at similar depths and pressures,” Fowler said. The company has drilled more than 50 wells in the Gulf since 2002, he said.

He said the company has studied the investigations into the Macondo disaster and “ensured the lessons from those reports are accounted for in our design and well procedures.”



LLOG Exploration renamed the prospect “Niedermeyer”… part of an Animal House theme (we named our deepwater prospects after Caddyshack characters).  Niiedermeyer was a nice discovery.

  • Four wells on MC 208, 209, 252 and 253.  Feb. 2015 through July 2017.
  • 21.7 million barrels of oil (mmbo) and 57.5 billion cubic feet (bcf) of natural gas.
  • MC 252 SS-1 Well:  6.1 mmbo & 15.6 bcf.  Oct. 2015 through July 2017.  Avg. 9,600 barrels of oil per day (BOPD) and 24 million cubic feet of natural gas per day (mmcf/d).

The Niedermeyer, Marmalarde and Son of Bluto 2 fields were completed as subsea tiebacks to LLOG’s “Delta House” floating production system (FPS) on MC 254.


Figure 5. Delta House schematic diagram and map.

LLOG began drilling the Delta House prospects in 2011 and by 2015 had the Delta House FPS completed and commenced production.

LLOG eyes 2015 Delta House startup


Strategic partnership lets Louisiana operator ramp up deepwater E&P

Russell McCulley
Senior Technical Editor

Louisiana independent LLOG Exploration Co. is gearing up for an ambitious deepwater Gulf of Mexico drilling campaign at the Delta House project, scheduled for first oil in 2015. As of April 2013, the company had drilled two successful wells: one at the Son of Bluto 2 prospect, in Mississippi Canyon 387, and another at Marmalard, in MC 300, and had the Ensco 8502 semisubmersible drilling a third Delta House well at the Marmalard prospect. The three wells will supply initial production to the Delta House platform, to be moored in 4,500 ft (1,372 m) of water in MC 254.

Early this year, LLOG lined up two newbuild DP drilling rigs to carry out work at Delta House and the company’s other central Gulf prospects. A cylindrical Sevan Drilling rig under construction at Cosco Quidong shipyard in China, to be dubbed Sevan Louisiana, will start a three-year, $550-million charter with LLOG in January, 2014. In 3Q 2014, Seadrill’s West Neptune is scheduled to arrive at the Delta House complex to begin an initial three-year, $662-million term. The dual BOP drillship is under construction at Samsung Heavy Industries in South Korea.


Offshore Magazine


Figure 6. Delta House FPS and subsea tiebacks.

In less than five years, the Delta House development went from spudding the first well to 80,000 bbl/d of oil production.

LLOG Exploration is just one of many, efficient and highly competent independent oil companies, that most people have never heard of, developing deepwater prospects in the Gulf of Mexico and around the world.

Oil’s well that end’s well!

DOE/FERC to Enact “Resiliency Pricing Rule” for Coal-fired and Nuclear Power Plants

October 19, 2017

DOE = United States Department of Energy

FERC = Federal Energy Regulatory Commission

OCT 2, 2017

Rick Perry Directs FERC To Complete Final Action On Resiliency Pricing Rule In 60 Days


One of the most sweeping changes to the U.S. electricity supply market in the past two decades may be implemented before the coming winter heating season. The brief bottom line of the change is that eligible power sources will be able to participate in a details-to-be-determined rate structure that allows the owner to recover its “fully allocated costs” plus a “fair return on equity.”

Eligible grid reliability and resiliency resource is any resource that:

  1. is an electric generation resource physically located within a Commission-approved independent system operator or regional transmission organization;
  2. is able to provide essential energy and ancillary reliability services, including but not limited to voltage support, frequency services, operating reserves, and reactive power;
  3. has a 90-day fuel supply on site enabling it to operate during an emergency, extreme weather conditions, or a natural or man-made disaster;
  4. is compliant with all applicable federal, state, and local environmental laws, rules, and regulations; and
  5. is not subject to cost of service rate regulation by any state or local regulatory authority

All licensed nuclear power plants and a significant portion of existing coal plants can meet those requirements today.


Along with his letter, Secretary Perry enclosed a Notice of Proposed Rulemaking (NOPR) that directs the Commission to either take final action within 60 days after publication of the NOPR in the Federal Register (which has not yet occurred) or to issue the proposed rule as an interim final rule. Any rules included in the final action will go into effect within 30 days after publication.

The Summary section of the NOPR includes statements with legal justification for the FERC’s authority to issue the proposed rule without an Environmental Assessment or an Environmental Impact Statement.

It also provides an analysis concluding that the proposed rule does not have any significant economic impact on small entities and thus does not need to meet certain description and analysis requirements of the Regulatory Flexibility Act of 1980 (RFA).


My Conclusion

Free market purists like R Street may have complained a bit about the hand on the scale in favor of renewable energy resources, but their expressed faith in the market decision making process really triggered by the idea that coal and nuclear plants might not be forced to retire.

As a lifelong fan of reliable electricity who has visited places where brownouts and rolling blackouts are an accepted fact of life, I do not support the Enron-conceived notion that electricity is just another tradable commodity with opportunities for fabulous rates of return in certain conditions.

Blackouts and brownouts impose a far greater cost on the overall economy that most people realize. Electricity is too important to be left to the vagaries of short term markets, especially since the markets have already been tipped heavily in favor of unreliables and natural gas.

Wind and solar power advocates are either confused or disingenuous when claiming that their power sources, which – by definition – cannot be well protected from the weather, are reliable and provide resilience.

The American Petroleum Institute and its partners in the natural gas industry are mad because their long running price war against coal and nuclear may be interrupted before it achieves its desired objective of driving out enough of its competitors to give it scarcity pricing power.

The rule makes sense. The urgency is justified. I fully expect that there will be numerous interests that will seek delays because those will help them achieve their objective of forcing permanent plant closures.

It is too bad the rule wasn’t implemented in time to save valuable, emission-free, fuel-secure assets like Vermont Yankee, Kewaunee, and Ft. Calhoun. Fortunately, it looks like it might have been issued in time to save a couple of dozen other nuclear plants that are at risk of prematurely closing in the next five years.


If enacted, this resiliency plan would lead to lower electricity rates than would occur if nuclear and coal-fired plants continue to shut down. The loss of base load capacity would lead to greater dependence on inefficient and expensive “peaker” power plants.

In a purely laissez-faire world, natural gas combined cycle (NGCC) would be the only type of power plant being built. No other type of new power plant has an honestly positive NPV (net present value) using a realistic discount rate. This would be great for my industry (oil & gas), but eventually bad for electricity consumers, because it would drive up natural gas prices. Unlike Australia, we have more than enough natural gas production to meet domestic demand and become a world leader in LNG exports. However, we can’t bet the farm on fracking and shale plays. All shale plays eventually peak. The Marcellus is huge… but it will eventually peak. As natural gas prices gradually creep up from $3/mcf to $5-8/mcf over the next ten years, existing coal and nuclear power plants will become very competitive with NGCC… But, only if those power plants are still existing.

Given a choice between subsidizing reliable base load power plants or unreliable non-dispatchable power plants, it would be foolish to choose the latter.

This isn’t a random pattern:

Electricity costs as a function of per capita installed renewable capacity. Wind and solar only, excludes hydropower. [Updated to add Australia and correct the units] – Source: Willis Eschenbach

Part of Australia already has the most expensive electricity in the world…

Although the causes of Australia’s high electricity prices are a bit more complicated than Germany’s or Denmark’s. The costs are skyrocketing due to a lack of investment in fossil fuel infrastructure and the inability of wind & solar to actually replace coal…

What caused the power price spike?

There are two main causes of the sudden jump in electricity prices. And despite the frothing anger from the shock jocks, it has nothing to do with the rise of renewables.

The main cause is a lack of investment. And the second is the soaring price of gas.

As old coal-fired plants have been retired, there has been insufficient investment to replace them because power companies have been left in policy limbo over carbon pricing.


How does gas affect electricity prices?

The second contributor to soaring electricity prices has been the sudden spike in gas prices.

In the absence of any political leadership, the power industry correctly figured renewables such as wind and solar eventually would be cheaper and more efficient than coal. That is because the fuel — wind and sun — is free and the maintenance costs of the plants is low.

The problem with renewables is their unreliability. Given Australia’s gas abundance, the idea was that gas would cut in whenever there was an energy shortfall.

Unlike coal plants that take weeks to fire up or shut down, gas turbines can be turned on and off at short notice, making them ideal to fill the breech when renewables are offline.

As the last player to enter the market, during power shortages, gas becomes the overall price setter. In case you have not noticed, gas prices have quadrupled because the exporters — many of which are the electricity generators — have sold more gas to offshore customers than their reserves. So, they pillaged local supplies, sending domestic gas prices through the roof.


ABC (Aus)

This sentence is 100% disingenuous:

And despite the frothing anger from the shock jocks, it has nothing to do with the rise of renewables.

The “rise of renewables” may not be the direct cause of Australia’s high electricity prices. However the transition from coal to [fill in the blank] is the direct cause.

Unlike the US, Australia doesn’t produce enough natural gas to export large volumes of LNG without driving up domestic prices.   Australian LNG landed in Japan is actually 40% cheaper than natural gas produced and sold in Australia.

Australia’s coal-fired plants are shutting down and being replaced by unreliable wind & solar and expensive natural gas plants. Claims that wind & solar are now less expensive than coal per MWh are wholly irrelevant. Solar and wind have to be 1/4 to 1/2 the price of coal per MWh to compete. And, even then, they can’t actually provide base load, because they are non-dispatchable.

Even if we assume this is accurate, neither storage nor back-up is factored into the cost of new power generation.

Let’s assume that they can purchase battery backup for $140/kWh and the Li-ion cells last 10 years. Over ten years, $140/kWh works out to about $38.50 (US) per MWh of generation.

Over the twenty year lifespan of the wind and solar power plants, the batteries would have to be replaced once.  That brings the storage cost up to $77 (US) per MWh of generation.  Convert to AUD and it’s $99/MWh.  Tack that on to the LCOE:

Energy supply Cost of energy w/Storage  (AUD/MWh)
Solar $177 $239
Wind $160 $217
Ultra supercritical coal (so-called “clean coal”) $134 $203

Wind & solar only appear to be affordable…

Until you add in the cost of storage…

(OCGT = open cycle gas technology, a common type of “peaker” generator.)

Even with Australia’s high natural gas prices, combined cycle natural gas and coal are much cheaper than wind & solar, if you factor in the storage costs.

Australia’s electricity rates have skyrocketed because they didn’t maintain their base load capacity (mostly coal-fired generation). Perry’s resiliency pricing plan would prevent this from happening here.  While allowing natural gas to kill coal & nuclear would be very good for my industry, in the long run, it wouldn’t be good for grid resiliency, electricity consumers or our nation’s energy security.

“Depths, Times, and Velocities – Facts or Opinions?”

October 17, 2017


  • Wells are drilled in depth -truth
  • Seismic data is a function of two-way travel time – truth
  • Velocity in a highly complex earth – opinion
  • Consequences
  • Four major challenges


Stupid Poll

October 3, 2017


Seventy-two percent of Americans believe climate change is happening, including 85 percent of Democrats and 61 percent of Republicans. Nineteen percent remain unsure.

What was the percentage of respondents who could define the word “climate” and the phrase “climate change”?

Political party and belief in climate change are the main determinants of whether people are willing to pay a modest fee to combat climate change, as opposed to education, income, or geographic location. Democrats are consistently willing to pay more than Republicans.

That’s because Democrats never spend their own money.

Fifty-seven percent support actions taken by some mayors and governors to honor the goals of the Paris climate agreement despite U.S. withdrawal, and 55 percent think their state and local government should do more to address climate change. A third say they should stick to the status quo.

55% of respondents would also probably say that they think think their state and local government should do more to address plate tectonics and entropy too.

Climate change and energy policy are very or extremely important to 48 percent and 54 percent of Americans, respectively, while at least two-thirds say health care, the economy, and terrorism are important policy priorities.

But, what do they fear the most?



Thirty-five percent oppose the direction of energy policy in the United States, while 45 percent lack an opinion and only 17 percent support the direction. Republicans are more likely than Democrats to favor the direction of energy policy, but they are most likely to lack an opinion.

45% of respondents were smart enough to know that they don’t have a fracking clue about energy.

Roughly equal shares of Americans favor, oppose, and neither favor nor oppose the construction of the Keystone and Dakota Access pipelines.

Who cares?

Forty percent of Americans oppose the repeal of the Clean Power Plan, which the Trump administration is reviewing. Thirty-seven percent lack an opinion, while just 20 percent favor its repeal.

How many of the 77% who oppose or have no opinion on the CPP are in favor of their lights actually coming on when they flip a switch and would prefer not to have skyrocketing electricity rates?

More Americans lack an opinion on the use of fracking in the United States than support it: 37 percent neither favor nor oppose fracking, 17 percent favor it, and 41 percent oppose it.

Are 41% of Americans really that stupid?

An equal number of Americans either support or lack an opinion on the withdrawal from the Paris Agreement, while the largest number opposes withdrawal: 42 percent oppose it, 28 percent support it, and 28 percent neither support nor oppose withdrawal. Half of those who support withdrawal say the agreement was too costly for the United States.

Ratification of a treaty requires a two-thirds majority in the Senate.  42% support for a treaty falls a bit short.  I wonder how much overlap there was between the 41% who oppose fracking and the 42% who opposed 86’ing the Paris deal?


October 3, 2017
Social Cost of CO2, 2015-2050 a (in 2007 dollars per metric ton CO2)
Discount Rate and Statistic
High Impact US per capita
Year 5% Average 3% Average 2.5% Average (95th pct at 3%) MtCO2/yr
2015 $11 $36 $56 $105 16
2020 $12 $42 $62 $123 16
2025 $14 $46 $68 $138 16
2030 $16 $50 $73 $152 16
2035 $18 $55 $78 $168 16
2040 $21 $60 $84 $183 16
2045 $23 $64 $89 $197 16
2050 $26 $69 $95 $212 16

Per capita cost per month:

Social Cost of CO2, 2015-2050 a (in 2007 dollars per metric ton CO2)
Discount Rate and Statistic
Per capita $/month High Impact
Year 5% Average 3% Average 2.5% Average (95th pct at 3%)
2015  $               15  $                48  $          75  $                      140
2020  $               16  $                56  $          83  $                       164
2025  $               19  $                61  $          91  $                       184
2030  $               21  $                67  $          97  $                       203
2035  $               24  $                73  $        104  $                       224
2040  $               28  $                80  $        112  $                       244
2045  $               31  $                85  $        119  $                       263
2050  $               35  $                92  $        127  $                       283

Monthly cost to family of four:

Monthly cost to a family of 4 (5% discount rate)
2015  $       58.67
2020  $       64.00
2025  $       74.67
2030  $       85.33
2035  $       96.00
2040  $    112.00
2045  $    122.67
2050  $    138.67