The Gulf of Mexico is on the clock.
Bracing from what could come after Democrat Joe Biden is officially sworn in as president on Jan. 20, operators are putting their affairs in order, stockpiling leases and pushing to accelerate the permitting process in the waning days of the industry friendly Trump administration. The incoming president has pledged to shut down new oil and gas lease offerings on federally controlled lands and waters, while getting drilling permits on lawfully acquired leases is likely to become much more burdensome.
Murphy Oil Corp., for one, is trying to fast-track completions approvals for its deepwater Khaleesi/Mormont and Samurai fields in Green Canyon. Murphy holds operating and non-operating interests in more than 100 blocks in the deepwater Gulf of Mexico. "We'd like to gain those approvals before January '21 and we’re working toward that," CEO Roger Jenkins said in a conference call on Nov. 5, two days after the presidential election. "We own these assets. We have a right to these assets."
Despite all the "yakking on the administration change," Jenkins said it remains uncertain exactly how things will shake out in a Biden administration. However, he reminded analysts of the former vice president's association with the Obama administration's six-month deepwater drilling moratorium following the 2010 Macondo disaster and subsequent well control rules that most operators had considered overly rigid that Trump promptly relaxed.
"These fields are already drilled, which is an advantage where the completion is different than a drilling permit," Jenkins said of the fields under development. "Keep in mind that what drilling is to be done is in known pressure regimes, which gets away from some of these issues put on us post-Macondo by the prior (Obama) administration."
Meanwhile, in the final regionwide lease sale of the Trump administration on Nov. 18, 23 independent and major operators shelled out just under $121 million in high bids for 93 tracks, according to the Bureau of Ocean Energy Management (BOEM). While far below the record high bids of nearly $3.7 billion in a March 2008 federal sale, the latest round was nonetheless significant as it came amid a demand and price wrecking pandemic and an intensified global reckoning over the future of fossil fuels.
While noting a Biden-roused "massive land grab may have ensued," Mfon Usoro, a senior research analyst for Wood Mackenzie, said the impact of any leasing ban would not be felt anytime soon. "The best blocks with the highest potential reserves are likely already leased. As a result, we do not expect a potential ban on leasing to materially impact production in the region until the end of the decade,” he said.