Donald Trump’s victory in the US presidential election could give a significant boost to production in the oil and gas industry, according to GlobalData analysts.
Policies set out by Trump during the campaign on domestic issues and foreign affairs could impact on regulation, tax and investment opportunities in the oil and gas sector.
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The Republican Party has a majority in the Senate and House of Representatives, which in turn will facilitate legislation process of the new government.
However, Trump’s lack of experience in public office also casts uncertainty over the policies that are achievable and their consequences. Nonetheless, the tone of election campaign indicates that domestic energy policy will be a priority.
GlobalData senior oil and gas analyst covering upstream fiscal and regulatory regimes Will Scargill said: “Domestic energy policy statements during the election campaign suggest a positive outlook for the oil and gas sector. This is supported by reports that his adviser Harold Hamm, CEO of Continental Resources, is in the running for energy secretary.
“Trump’s energy plan sets out support for the shale industry and open leasing of federal lands and offshore areas for upstream operations. During the campaign, he also noted opposition to environmental regulation including the Paris climate agreement adopted at the COP21 summit, suggesting that the industry will face a reduced regulatory burden under his presidency.”
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By GlobalDataOffshore lease sales would likely get expanded with the support of Republican-controlled Congress. Alaska’s Outer Continental Shelf (OCS) and also the frontier Atlantic OCS may receive approval, which were previously rejected by the Obama administration due to environmental concerns.
Scargill also stated: “On wider energy markets, Trump has indicated that he would give the go-ahead to the Keystone XL pipeline, which was vetoed in 2015 by President Obama, if the operator reapplies for approval.
“This could improve supply side economics on heavy crude for US refiners by increasing supply capacity from Alberta, where production is expected to increase by approximately 500,000 barrels per day by 2020.
“This also suggests strong prospects for the North Dakota Access pipeline, which provides additional lower-cost takeaway capacity from the Bakken, for which federal agencies have requested a construction pause.”
While the prospect of infrastructure projects moving forward is positive for the oil and gas sector, the contradictions between Trump's support for business and his protectionist trade position could cause friction as policy materialises.
Scargill added: "A focus on US energy independence and opposition to broader trade deals could create direct or indirect hurdles for the industry in the US and abroad."
