The Great Energy Transition

The Great Energy Transition

In years past, the term ESG meant environmental and safety performance grounded in the management systems (governance) of the company. More recently, it has been defined to mean “decarbonize”. The world has seemingly embraced the seriousness of the climate crisis, albeit with the prodding of the world governments and their scientists. They tell us that transitioning to low-carbon energy is necessary to avert all the bad things that we see on the Weather Channel.

It would be fruitless to re-litigate the overwhelming sentiment that the climate crisis is a thing to be feared and reckoned with, even given the fact the this writer experienced dozens of significant hurricanes dating back to 1965 when Cat 4 Hurricane Betsy came barreling in parallel to the Mississippi River and flooded areas surrounding New Orleans and the 1969 Cat 5 Hurricane Camille which hit just east of New Orleans and literally destroyed the Mississippi Gulf Coast. And there have been many others, including Katrina in 2005 which put the city of New Orleans underwater. This writer sees no significant trend in the severity of hurricanes due to atmospheric warming or any other cause. The other big concern in the climate crisis is sea level rise which can exacerbate the damage of storms and hurricanes. Rising temperature arguably causes the sea to rise; however, the U.S. government’s own data show that sea level has been rising a steady 2 mm per year for the last 200 years – long before industry greenhouse gas emissions were a thing. What we are not told is that the expensive coastal developments were build on ground that is subsiding at an average rate of 5-7 mm per year. So you see, the real problem is not sea level rise but “relative” sea level rise.

All this to say that our leaders, rightly or wrongly, have placed a stake in the ground to combat the crisis. The problem is that we have another even bigger crisis on our hands, called the energy crisis, that threatens to dwarf the climate crisis. Our leaders have put in place new regulations and policies to avert the first crisis and are flat footed on this new, impending crisis. We call this global effort the Energy Transition. Most of us knew there would be an energy transition. In fact, the transition started back in the 1800’s when we stopped using whale oil. Fortunately for the whales, the oil men discovered petroleum and the energy transition enabled us to have electricity, automobiles, and airplanes. Living in the Deep South, this writer is especially grateful for the cheap natural gas that enables us to cool our homes and offices in the summer when the sweltering heat and humidity descend like a big, evil monster.

Transitioning back to sea level for a moment, geologists explain that the reason why we have oil and natural gas is due to sea level changes. In years past, millions of years, the sea level went up and down by as much as 400 feet. As the marine organisms (plants, algae, bacteria) died and were deposited and subsequently covered, they produced a store of energy for us who discovered it years later. Petroleum is a store of the sun’s energy (through the photosynthesis of the marine organisms). Today, through technological advancements, we have found a way to harvest the sun’s energy through wind, wave, and solar power. Unlike petroleum energy, these new forms of “renewable” energy must be used when they are harvested. There is little ability to harvest and store this energy.

The “Great Energy Transition” is now in full swing. It is a good thing because ever since we realized that killing whales for energy was not sustainable, we understand that our current energy mix is not sustainable and must transition. The problem is that the nervous nellies want us to transition, like, yesterday. They fear what they see on the Weather Channel will become more and more intense and wide spread. Don’t misunderstand – the Weather Channel serves an important purpose, but they should stick to what they know and not create fear and uncertainty about the future which they don’t know.

So the big questions are: how should the transition occur and when? The markets have always been a good tutor when not manipulated. They don’t lie. The markets are telling us that energy is becoming very expensive with crude oil and natural gas prices doubling in the last year. Prices are rising because the post-COVID economy is heating up, and energy supplies can’t keep up. However, underlying this recent development is a relatively long stretch of underinvestment in hydrocarbons and coal and a much bigger investment in green or renewable energy. Have the markets tutored the world’s companies to do this? Yes, to some extent, but more to the point, they have also been tutored by activist government leaders and investors who feel good about becoming more sustainable. However, their constituents and clients are now feeling rather sick to their stomachs when they go to the pump to fill up their cars and trucks and pay their utility bills.

Government leaders must be held accountable by the people they govern at the privilege of the governed – those that cast their vote. Don’t kill the goose that laid the golden egg. Be smart about the transition. Allow the energy professionals and workers who found the goose and cared for her all these years continue to give us golden eggs and at the same time prudently transition us to new and better forms of energy that run our mechanized economy and give us what we need to live on this wonderful planet.

One very smart approach is to take the roughly 1600 offshore oil and gas platforms, many of which are reaching end of life, and repurpose them to offshore renewable energy, carbon storage, and other marine-related uses that will build a new, “Blue Economy”.

Could Offshore Oil Rigs Provide a New Platform for Aquaculture in the United States?

Could Offshore Oil Rigs Provide a New Platform for Aquaculture in the United States?

The Gulf of Mexico is littered with hundreds of oil platforms that have gone quiet over the last decade. The federal government refers to these defunct derricks and retired rigs as “idle iron.”

Station Padre sits 25 miles from the Texas coast in 150 feet of clear water.

But they’re not supposed to stay idle for long. Under United States law, oil rigs and all their associated infrastructure – above the surface and below – need to be dismantled and removed within one year of ceasing production.

Decommissioning an oil platform is a major undertaking, and many in the oil and gas industry view it as an expensive headache. In 2015 the Government Accountability Office estimated it will eventually cost $38 billion to remove the 1,800 or so platforms from the Gulf of Mexico.

Kent Satterlee, however, sees the abandoned rigs as an opportunity.

An engineer who spent 35 years with Shell Oil, Satterlee is executive director of the Gulf Offshore Research Institute, a group looking to repurpose two platforms in the Gulf of Mexico for aquaculture and other endeavors.

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GORI, along with 80 other U.S. organizations, signed a letter to the U.S. Senate in support of offshore aquaculture

GORI, along with 80 other U.S. organizations, signed a letter to the U.S. Senate in support of offshore aquaculture

GORI, along with 80 other U.S. organizations, signed a letter to the U.S. Senate in support of offshore aquaculture. More than half of all seafood consumed today is farmed. While commercial fishing and wild harvest are and always will be an important part of the seafood supply chain, aquaculture is the fastest growing food production sector in the world and is responsible for nearly all global supply growth since the 1990s. But, at present, the US lags far behind the rest of the world in farmed seafood production. The single biggest reason for that is the lack of a clear regulatory pathway for permitting new projects, a challenging reality that has forced many American businesses to invest in other countries.

GORI is hoping that our Gulf of Mexico offshore platforms, which are no longer producing oil and gas, will prove to be perfect infrastructure hubs for offshore aquaculture.

Quantifying the ecological value of a standing platform compared with a platform moved to a reef site

Quantifying the ecological value of a standing platform compared with a platform moved to a reef site

In collaboration with the Center for Sportfish Science and Conservation of the Harte Research Institute for Gulf of Mexico Studies (Texas A&M), GORI is conducting research to quantify the ecological value of a standing platform compared with a platform moved to a reef site. This collaboration will evaluate how oil and gas platform habitats function to support marine life in the Gulf of Mexico. The Phase I report has been completed and can be found here.

The Gulf Offshore Research Institute (GORI) has entered into an agreement with Peregrine Oil & Gas for the two platforms in the North Padre Island

The Gulf Offshore Research Institute (GORI) has entered into an agreement with Peregrine Oil & Gas for the two platforms in the North Padre Island

The Gulf Offshore Research Institute (GORI) has entered into an agreement with Peregrine Oil & Gas to gain regulatory approval and work towards the conversion of two platforms in the North Padre Island OCS Areas PN 975 and PN 969 to Marine Monitoring, Energy and Environmental Research, Science Education, and Training (MMEERSET) stations and Offshore Renewable Energy (ORE) Platforms. Regulatory approval will be sought through the Bureau of Ocean Energy Management (BOEM) under 30 CFR 585 Subpart J – Rights of Use and Easement for Energy and Marine-Related Activities Using Existing Facilities. GORI will partner with Excipio Energy Inc. to develop ORE.