First Oil: A new energy day has dawned in Washington

KURT S. ABRAHAM, EDITOR-IN-CHIEF 

As this is being written, the new administration of President Donald J. Trump has been in office roughly a week. And to say that his start has been at a record-setting pace with unmatched action for a first week would be an understatement.  

A week-long whirlwind. President Trump, in his first executive action, rescinded 78 executive actions implemented by the Biden administration. In all, on his first day in office (Jan. 20, after 12:00 pm), Trump issued 26 executive orders (EOs) among 46 total executive actions, Fig. 1.  

Fig. 1. U.S. President Donald J. Trump wasted no time in signing executive orders. Here, he can be seen on the afternoon of Jan. 20, signing eight EOs while onstage at his post-inauguration celebration at Capital One Arena. Image: Official Facebook page of Vice President J. D Vance.

Trump has already set in motion a number of changes to support the oil and gas industry—more on that in a minute. He’s also made some outstanding choices in Chris Wright for Secretary of Energy and Doug Burgum for Secretary of the Interior. As of Jan. 28, both of these nominees had been voted out of committees favorably, but their final confirmation votes had not yet been set. Based on the committee votes with all Republicans and some Democrats voting favorably, both of these gentlemen were expected to be confirmed without any significant trouble. 

So, back to Trump’s executive actions. Five of these—all EOs—affect either oil and gas directly or energy overall, and all were signed on his first day in office, Jan. 20. The first of these is “Unleashing American Energy.” It encourages “energy exploration and production on Federal lands and waters,” including offshore areas like the Gulf of Mexico (or, per another Trump proclamation, now known as the Gulf of America). Of particular note is the fact this EO includes rescinding Joe Biden’s ban on new LNG export license applications, better known as “the pause.” 

In addition to fossil fuels, it promotes critical minerals. This order also prescribes a policy to create “true consumer choice” by removing electric vehicle-friendly regulations, including the so-called “EV mandate.” It also protects the “freedom to choose” when it comes to household appliance selections. Trump has been particularly critical of efficiency requirements that the Biden team had imposed. In addition, a number of Biden’s environmental orders are reversed in this EO, including a freeze on disbursing some congressionally allocated funds while the new administration determines whether these expenditures mesh with Trump policy attitudes. 

The second EO that affects oil and gas is “Declaring a National Energy Emergency.” This order declares that inadequate energy production is an “unusual and extraordinary threat” to the U.S. This EO directs federal agencies to determine “emergency authorities” (expansions of Executive Branch powers available during crises) that might facilitate energy projects. Examples would be leasing lands for oil and gas production or building pipelines. It should be noted that wind and solar power are not included in the definition of “energy.” 

A third EO from Jan. 20 that affects the upstream industry is “Putting America First in International Environmental Agreements.” Harkening back to Trump’s first term, the President is withdrawing the U.S. from the Paris climate accord and the Biden administration’s U.S. International Climate Finance plan. Affected agencies have 30 days to report on their actions. 

The fourth EO is entitled, “Unleashing Alaska’s Extraordinary Resource Potential.” Fitting with Trump’s desire to expand U.S. drilling, this order prescribes that it is U.S. policy for the nation to “fully avail itself of Alaska’s vast land and resources” and specifically to make it a priority to develop the states natural gas reserves. The latter item would help to facilitate potential LNG exports from that state. The EO also rolls back restrictions on drilling, mining and road building that were imposed by the Biden administration. 

Last, but not least, the fifth EO is “Temporary Withdrawal of all Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects.” That’s a mouthful to say, but this EO is significant, as it temporarily halts all new wind energy projects on federal lands and waters nationwide. Projects that have already received federal approval will be able to continue development for now. However, there is concern among some states and companies that the review process could lead to some projects getting canceled at a later date.  

Readers will notice that I have not mentioned Trump’s desire to revoke Biden’s recent ban on various new offshore oil and gas leases. That’s because the ban cannot be undone merely by issuing an EO. Removing this ban entirely will require some congressional action. But not to fret—moves are underway by Republicans in Congress to craft legislation to solve the problem. Indeed, Senator Ted Cruz (R-Texas) has already introduced the “Overturn Biden’s Offshore Energy Ban Act.” We will keep you apprised of the progress of this bill and others in Congress. 

A prudent move in the North Sea. One of the smarter decisions that this editor has seen oil and gas companies make lately is last month’s deal between Equinor and Shell to combine their UK offshore oil & gas assets and expertise to form a new company. The new entity will be the UK North Sea’s biggest independent producer. 

The incorporated joint venture (IJV) will be set up to sustain domestic oil and gas production and security of energy supply in the UK. Once the deal is completed, the new independent producer will be jointly owned by Equinor (50%) and Shell (50%), both of which have decades of experience operating in the UK North Sea. With the once-prolific basin now maturing and production naturally declining, the combination of portfolios and expertise will allow continued economic recovery of UK resources. 

The new company will invest to provide a long-term future for the individual oil and gas fields and platforms. Based in Aberdeen, the joint venture will include Equinor’s equity interests in Mariner, Rosebank and Buzzard fields, and Shell’s equity interests in Shearwater (Fig. 2), Penguins, Gannet, Nelson, Pierce, Jackdaw, Victory, Clair and Schiehallion fields. A variety of exploration licenses will also be part of the transaction. 

Fig. 2. Shell’s Shearwater platform in the UK North Sea. Image: Shell.

Congratulations to Equinor and Shell for their prudent plan to continue operating in an arguably difficult and sometimes hostile operating environment. For more comments on this deal, see the “What’s new in exploration” column authored by our veteran columnist, Bill Head. 

Hydrocarbons to the rescue. The massive fires that ravaged significant parts of the Los Angeles area and related portions of Southern California have produced so many gut-wrenching scenes and massive logistical problems. In an area that is used to occasional wildfires, the string of blazes that started on Jan. 7—and were still being mopped up on Jan. 27 —have occurred on a scale that is unparalleled. Accordingly, the effort required of the thousands of firefighters and all their equipment has been on a scale not seen before. It is incredible and impressive. 

And this brings up a subject that this editor has seen very little, if anything, said about it, and that is the role of hydrocarbons in keeping the army of vehicles and aircraft operating to stem the fires. The ability of firefighting entities to battle the fires successfully was supported by the ready access to plentiful supplies of diesel fuel, gasoline and/or aviation fuel, which is no small thing. 

At the height of the firefighting effort on Jan 9, mid-day, the various firefighting agencies in Los Angeles County were battling the Palisades fire by employing 297 engines (pumpers and ladder trucks), nine water tenders, 1,947 other vehicles (including rescue trucks, district chief’s vehicles, brush trucks, ambulances, etc.), 12 dozers and nine helicopters, not counting additional fire retardant-laying aircraft. Similarly, the Eaton fire near Altadena and Pasadena required 391 fire engines, 112 water tenders and 32 dozers, among other vehicles. 

Now, just imagine what could have happened with these fleets of ground vehicles being EV equivalents. How long would electric vehicles have had to be pulled from fighting these fires to go back and “charge up?” And given how the fires resulted in many power lines being toppled or burned up—thus resulting in a power shortage—how might it have affected the overall supply to power this many vehicles? It’s a question well worth asking and one that makes this editor shake his head. Ironically, given all the anti-hydrocarbon extremist viewpoints in California, it nevertheless was vehicles and aircraft running on hydrocarbons that answered the call to effectively fight these fires. Hence, the phrase, “Hydrocarbons to the Rescue.” 

IN THIS ISSUE 

Special focus: Hydraulic Fracturing. One of three articles in this month’s lead theme from QuantumPro discusses cluster-level flow mapping and production diagnostics using ultrahigh-resolution nanoparticle tracers. This case study outlines a novel flow monitoring technique and modified perforating system, which maintains similar performance to conventional systems without tracers, while also eliminating additional handling and regulatory burdens. A second article from Packers Plus examines how the StackFRAC slimhole system significantly increases stage count and speeds up refrac well operations. The specially designed refrac system enables operators to re-enter vertical or horizontal wells by enabling exact placement of stimulation treatments in one continuous pumping operation, saving operators time and money. Finally, a third article from authors at the University of Utah looks at optimizing hydraulic fracturing in the Paradox formation via a geomechanical study of the Cane Creek play. This play has unconventional tight oil potential but presents drilling challenges. 

Managed pressure drilling.  In one article, an Oil States author describes advancing MPD operations with integrated riser joint technology. Meeting global operational requirements demands the technological advancement and safety benefits that MPD technology provides, enabling safer drilling in complex geological formations. In a second article, Nabors Drilling Solutions authors detail how an integrated MPD system improves insights for enhanced performance. A holistic solution combines fit-for-purpose hardware and sophisticated rig controls data to deliver safer, faster, more efficient operations  

Offshore technology. Safer by technology: An ABS vice president says that proven remote inspection technologies are pioneering how oil and gas operators can achieve greater efficiencies and insights with new data and information on how an asset performs. Whether relying on existing or new infrastructure, the integrity of an operation above or below the water line, or onshore, will increasingly become a central link in the global energy supply chain.