U.S. overall expresses concerns about potential changes to the regulations about new oil and gas leases on federal land and in federal waters. The sector is also anxious about proposed provisions in President Joe Biden’s infrastructure and tax plans.
Australia
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Diamond By Andy Ocean HoganApex Semi-Submersible MODU
“Regulatory uncertainty creates a clear challenge to continued investment in energy development of our assets,” an E&P executive said in the Dallas Fed survey’s special questions. “Rash and disruptive decisions do not help an industry that is already very volatile,” another executive noted. Changes to new oil permitting would likely be a positive for states like Texas, Oklahoma, Kansas, West Virginia, Ohio, and Pennsylvania, as more E&P companies would shift budgets to those states not impacted by the federal moratorium, one executive at an oilfield service firm said. The oil and gas industry is also concerned about President Biden’s tax and infrastructure plans, which aim to eliminate tax preferences for fossil fuels. Estimates from the US Treasury Department’s Office of Tax Analysis suggest that eliminating the subsidies for fossil fuel companies would increase government tax receipts by over $35 billion in the coming decade. The main impact would be on oil and gas company profits. “The tax plan would end long-entrenched subsidies to fossil fuels, promote nascent green technologies through targeted tax incentives, encourage the adoption of electric vehicles, and support the further deployment of alternative energy sources such as solar and wind power,” the Treasury said in its report on The Made in America Tax Plan. Commenting on the new infrastructure plan, Ed Longanecker, president of the Texas Independent Producers & Royalty Owners Association (TIPRO), said: “While ambitious and aimed in the right direction -- bolstering America’s infrastructure -- President Biden’s American Jobs Plan overlooks the backbone of America’s energy system: pipelines. Pipelines are the most reliable and efficient means to transport the oil and natural gas that powers families across America. Placing a high tax burden on the oil and gas industry, including pipelines, hinders Texas producers’ ability to deliver the energy the country needs.” The most powerful oil industry organisation, the American Petroleum Institute (API), said President Biden’s infrastructure proposal “misses an opportunity to take an across-the-board approach to address all our infrastructure needs – including on modern pipelines.” “Targeting specific industries with new taxes would only undermine the nation’s economic recovery and jeopardize good-paying jobs, including union jobs. It’s important to note that our industry receives no special tax treatment, and we will continue to advocate for a tax code that supports a level playing field for all economic sectors along with policies that sustain and grow the billions of dollars in government revenue that we help generate,” said Frank Macchiarola, Senior Vice President for Policy, Economic and Regulatory Affairs at API.
“The View from Down Under” The onset of Autumn and the end of cyclone season Down Under has been accompanied by preparation for increased activity on the rig front. The Diamond Ocean Apex Semi-Submersible MODU, having spent the last few months moored just off Rottnest Island near Perth over cyclone season, has now departed for the NW coast to prepare to start the 4 well campaign for Woodside. The Valaris MS-1 SS MODU, formerly known as the Atwood Osprey, has returned to Australian waters after three years of stacking at Labuan. It is off Dampier, about to commence an infill drilling campaign for Santos on the Van Gogh Field. The Valaris 107 Jackup MODU is also located off Dampier preparing to commence work for SapuraOMV and then Jadestone. The Noble Tom Prosser jackup is also located off Darwin preparing to start the 3 well / 9-month infill campaign for Santos on Bayu Undan in Timor Leste waters. Diamond’s Ocean Onyx and Maersk’s Deliverer continue to work for Beach and Inpex, respectively. It was recently announced that Cooper Energy have a contract in place with Helix Energy Services for the Q7000 intervention vessel for the abandonment of 7 wells on the BMG field in the Gippsland Basin, this is subject to FID and is currently expected to take place over Q2 2022.
NOPSEMA announced a five-year decommissioning plan on 19th April, this is likely to be fallout from the liquidation of NOGA in 2019 resulting in responsibility for the decommissioning of the Laminaria and Corallina Fields now vesting with the taxpayer. The strategy articulates how NOPSEMA will work with its stakeholders to reinforce and clarify decommissioning related requirements and undertake compliance activities in a risk-based way where there is a higher risk of non-compliance with the decommissioning obligations. In the coming year, NOPSEMA’s compliance approach will focus on implementation where titleholders’ planning and progress towards decommissioning and the execution of decommissioning is not being undertaken in a timely, safe, and environmentally responsible manner. This may result in NOPSEMA taking compliance actions such as issuing directions to some titleholders specific to decommissioning and end of life requirements. The goal is to ensure that by 2023 decommissioning plans are in place for all facilities and wells where equipment or property is not in use. By Andy Hogan
“The View from Down Under” is brought to you by: Networked Energy Consulting Pty Ltd, based in Perth, WA, Australia
