Dallas Fed: US oil executives will expect quicker permits under Trump
According to a Federal Reserve Bank of Dallas study released on Thursday, U.S. Energy executives expect quicker permitting times for drilling federal lands in the Trump administration.
According to a survey conducted in December of 134 energy companies in Texas, Louisiana, and New Mexico, the overall outlook improved, activity levels increased, and uncertainty decreased in the fourth quarter of 2024.
Trump's "drill baby drill" slogan has led him to promise lower gas prices and faster approvals for energy projects.
According to a third of the executives polled, they believe that the process for obtaining permits will be significantly faster in the next four-years.
Dallas Fed: "We anticipate that regulatory compliance issues are going to decrease, in part due to a new administration that is pro business and pro fossil fuel production." This was the statement of an executive from a firm that specializes in exploration and production.
Trump's team of transition officials is prepared to roll out its plan quickly.
Wide-ranging Energy Package
This includes approval of export permits to new LNG projects, and an increase in federal land and ocean oil drilling.
Another E&P executive said to pollsters that the new administration would lift regulations, stop subsidizing green energy, and pursue LNG build-outs in order to increase demand for natural gas.
Some executives said that the new administration would benefit oilfield service firms who have been hard hit by the recession. They expressed optimism about the first quarter 2025.
The survey revealed a large gap between the plans of small and large producers to reduce greenhouse gas emissions. Nearly two thirds of large firms have plans to reduce methane, and 86% plan to reduce the combustion of unwanted gases. The report shows that only 29% of smaller companies have plans to reduce their methane emissions and only 14% plan to reduce flaring.
POTENTIAL BOTTLENECKS 2025
Executives said that the low natural gas prices in the fourth quarter continued to put pressure on some exploration and production companies.
Prices of gas at the Waha Hub, in West Texas, fell to negative territory.
Record Number
By 2024, the number of times will increase. Gas prices that are negative force operators to pay to have their gas taken away. This reduces oil profits.
The low price of natural gas is destroying current cash flow. Cash flow is the fuel for future investment in smaller independents," a senior executive stated.
They said that mergers and acquisitions had hurt service firms. Growth was muted compared to the three previous years, as producers consolidated and either kept capital budgets flat or reduced them.
The lower oil demand, coupled with the efficiency gains of extraction technology has put pressure on services businesses. However, greater efficiency does not increase activity levels.
One executive stated, "It seems that supply and demand is in a close balance with production being sufficient to meet market demands."
The average expectation of respondents is that the West Texas Intermediate (WTI), oil price will be $71 per barrel at the end of 2025. Responses ranged from $53 per barrel to $100 per barrel.
Survey participants expect a Henry Hub Natural Gas price of $3.19 for every million British Thermal Units over the same time period. (Reporting and editing by David Gregorio; Georgina McCartney)
(source: Reuters)
