President Trump wants to take away the Gulf of Mexico Energy Security Act (GOMESA) payments from four coastal states in the Department of Interior’s (DOI) proposed US$11.7 billion budget for 2018.
Trump. Image from White House Flickr.
The Gulf of Mexico Energy Security Act of 2006 opened additional areas in the GoM for offshore oil and gas leasing, in which 37.5% of revenue from certain areas are distributed to four coastal states: Alabama, Louisiana, Mississippi, and Texas, in addition to their local governments.
According to Trump’s proposal, his administration wants to “repeal these revenue sharing payments, set to expand substantially starting in 2018, to ensure the sale of public resources from Federal waters owned by all Americans, benefit all Americans.”
The move is expected to save some $3.6 billion over the next 10 years.
Gulf Coast states currently receive significant economic benefits from activity in their States associated with offshore energy development and are further set to receive additional benefits from the payout of the $20.8 billion BP oil spill settlement agreement reached in 2015, according to the DOI.
“The GOMESA funding for LWCF (Land and Water Conservative Fund) State Grants would continue, but this legislative proposal would replace GOMESA’s complicated allocation formula with a fixed annual appropriation of a comparable dollar amount, starting at $90 million in 2018 and increasing to $125 million in 2022 and remaining at $125 million each year thereafter,” the proposed budget states.
“President Trump promised the American people he would cut wasteful spending and make the government work for the taxpayer again, and that's exactly what this budget does,” says Interior Secretary Ryan Zinke. “Working carefully with the President, we identified areas where we could reduce spending and also areas for investment, such as addressing the maintenance backlog in our National Parks and increasing domestic energy production on federal lands.”
“The President's budget saves taxpayers by focusing program spending, shrinking bureaucracy, and empowering the front lines," he says.
In Trump’s $791 million proposal to “power America’s future,” $343 million will be designated to the offshore sector, which includes a $10 million increase to update the Five-Year Outer Continental Shelf (OCS) oil and gas plan.
National Ocean Industries Association (NOIA) President Randall Luthi says Trump’s decision misses the mark.
“…Budget proposals regarding Gulf State revenue sharing and the Strategic Petroleum Reserve (SPR) appear to miss the mark on the Administration’s stated goal of energy dominance. Eliminating Gulf state revenue sharing for offshore energy production would punish coastal states that support and host the development of home-grown energy and jobs, and would be a serious step backward in the quest for energy reliability and independence. In addition, the proposed sale of one-half of the nation’s emergency oil supply in the Strategic Petroleum Reserve (SPR) could threaten domestic energy security by limiting our ability to counter any unforeseen supply interruptions. Any plan for depleting the SPR should be accompanied by a plan to refill it,” says Luthi.
Petroleo Brasileiro (Petrobras) sent a termination notice to Teekay Offshore for the Arendal Spirit charter contract last month, in which the company says it is disputing the grounds of the termination and is reviewing its legal options.
The Adrenal Spirit. Image from Teekay's Flickr.
Teekay revealed the termination in its Q1 2017 results, in which the company said that its results for the quarter continued to be impacted by the non-payment of charter hire on the Arendal Spirit unit for maintenance and safety (UMS).
“We were recently notified by the charterer, Petrobras, of its termination of the charter contract on this unit. We are disputing the termination and are reviewing our legal options, while at the same time actively marketing the unit for alternative employment,” Ingvild Sæther, president and CEO of Teekay Offshore Group said.
In late-April 2017, Logitel Offshore Norway, a subsidiary of the Teekay partnership, was notified by the charterer, Petrobras, of its termination of the charter contract for the Arendal Spirit UMS. The partnership said that it is not only disputing the termination, it is reviewing its legal options, including its ability to collect amounts under the contract.
In other company news, Sæther said that Teekay will continue to be focused on project execution and as it took the delivery of its largest current project, the jointly-owned Libra floating production and storage offloading unit (FPSO), which arrived last week in Brazil.
Sæther said the FPSO is scheduled to start its 12-year charter contract with an international consortium, led by Petrobras, in late-June or early-July 2017.
“Our Gina Krog FSO project has experienced some delays and additional costs, with start-up currently scheduled in Q3 2017. We are finalizing discussions with Statoil on a bridging solution whereby Teekay Offshore will provide shuttle tanker offloading services in the interim to ensure no delays to Statoil’s start-up of the Gina Krog field,” Sæther said. “Lastly, as mentioned previously, we have also experienced delays and additional costs on the Petrojarl I FPSO upgrade and we are currently engaged in discussions with the charterer, shipyard and our lenders to deliver this unit into operation as soon as possible. We currently expect the FPSO to achieve first oil in early-2018.”
Statoil has started drilling at the Blåmann well in the Barents Sea, the first of five wells in its exploration program, the Norwegian giant announced today (22 May).
Image of the Songa Enabler, from Statoil Facebook.
“At 01:45 last night we started drilling the important exploration wells in the Barents Sea. ‘Blåmann’ is the first of five wells that will give us an idea of the potential in the Barents Sea,” Statoil said via social media.
Blåmann is in production license 849, some 113km northwest of Hammerfest and 25km from Goliat, in 376m water depth.
In March, Statoil received consent from Norway Petroleum Safety Authority (PSA) to use the Songa Enabler semisubmersible drill at Blåmann (well 7121/8-1), with the possibility of a sidetrack well.
Drilling is scheduled to take 25 days, the PSA said in March. The possible sidetrack, 7171/8-1A, is expected to take 13 days.
Earlier this month, Statoil announced it was on the verge of beginning its Barents program with five to seven new opportunities to occur in the next six months.
Statoil said that its new program will test new targets, both in the relatively well known geology around in the Johan Castberg and Hoop/Wisting area, as well as some new frontier opportunities with greater geological uncertainty but also high impact potential.
The Bureau of Ocean Energy Management (BOEM) says it will offer about 1.09 million acres in the Cook Inlet, offshore Alaska’s south central coast in a lease sale scheduled for next month.
Map of the 224 areas included in the Cook Inlet Lease Sale 244. Map from BOEM.
The Cook Inlet Oil & Gas Lease Sale 244, scheduled for 21 June, will offer 224 blocks toward the northern part of the federal Cook Inlet Planning Area for leasing. The blocks stretch from Kalgin Island in the north to Augustine Island in the south.
“We conducted a robust environmental analysis and look forward to holding Alaska’s first OCS lease sale since 2008,” says Dr. Walter Cruickshank, BOEM’s acting director. “The areas offered for leasing represent a careful balance between jobs, energy development, and natural resource protection.”
The lease sale will be entirely broadcast live on the internet, with the live stream beginning at 9 a.m. Alaska time. Bid reading is scheduled to begin at 10 a.m.
The lease sale is the 13th and final OCS lease sale under the Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 (Five-Year Program). Together, these lease sales have netted more than US$3 billion for American taxpayers.
Last month, US President Donald Trump signed executive orders to increase domestic energy production in the Outer Continental Shelf (OCS) Planning area including the Chukchi Sea, Beaufort Sea, Cook Inlet, Mid-Atlantic, South Atlantic, and parts of the Gulf of Mexico. The executive order went against President Obama’s memorandum banning the areas from mineral extraction.