What You Should Know About Oil and Gas Today
The Big Story
Oil and gas operators are doing a little pre-planning ahead of the November elections, stocking up on federal drilling permits as a contingency against a Biden/Harris win over incumbent President Donald Trump. While Biden has attempted to walk back his numerous promises to ban hydraulic fracturing and end the use of oil and gas altogether in recent weeks, his pledge to cease all leasing and permitting of oil and gas activities on federal lands and the Gulf of Mexico remains a big part of the Democrat Party’s platform.
So, as Paul Takahashi reports in the Houston Chronicle, large holders of federal leases like Devon Energy and EOG Resources have been working hard to build up large stockpiles of federal drilling permits so that they can continue to develop their leases during a Biden administration. Devon says it has accumulated more than 550 approvals, which would allow it to conduct most of its current drilling plans for the duration of a first Biden term in office.
EOG has been even more aggressive, putting together an impressive portfolio of roughly 2,500 federal drilling permits that are approved or in progress, which should accommodate more than four years of drilling activity on federal lands. “Our government provides an important system of checks and balances, which provides for due process before any regulatory changes, and these changes have to consider the interest of all stakeholders,” Billy Helms, EOG’s chief operating officer, told analysts earlier this month. “Ultimately, regulatory and legislative changes that deny access to current property rights could amount to a government taking. So there’ll certainly be some legal consequences of going through the process.”
Biden’s proscriptive plan towards the oil and gas business could severely hamper his hopes to carry Texas in November. As Takahashi reports, A recent Morning Consult poll of 798 registered voters in Texas commissioned by the oil and gas trade group found that 69 percent of Texas voters would be more likely to vote for a candidate who supports access to oil and gas produced in the U.S.
Dear Texas voters: Your choice could not be more crystal clear. Vote accordingly.
Meanwhile, in other news…
Pipeline giant Kinder Morgan scored a big win on Wednesday as the Hays County commissioners court voted to restore its permits to proceed with its crucial Permian Highway natural gas pipeline project within the county’s limits. Those permits had been suspended last month.
It didn’t get much media attention, but the oil minister for Saudi Arabia, Prince Abdulaziz, told reporters on Wednesday that his country believes global demand for crude oil could recover dramatically, as high as 97% of pre-COVID pandemic levels by the end of this year. This prediction stands in stark contrast to projections from several international agencies earlier this week claiming that demand would recover much more slowly. As I pointed out on Tuesday, those agencies have a long and consistent history of underestimating global demand for oil. Saudi Arabia, by contrast, does not.
Struggling Occidental announced yesterday that it would sell its Wyoming land grant holdings to Orion Mine Finance for $1.3 billion. The sale is part of Oxy’s aggressive efforts to sell a wide array of assets in order to finance the huge amount of debt it incurred in its buyout of Anadarko Petroleum last year.
That’s all for today.