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Winners and losers from Trump's energy order

As soon as President Donald Trump signed an executive order directing federal agencies to review any regulations that could burden the development or use of domestically produced energy resources, the battle lines were drawn.

The order, signed March 28, directs any regulations deemed unduly burdensome beyond the degree necessary to protect the public interest to be suspended, revised or rescinded, a group that likely will include Obama-era policies on oil and gas methane emissions.

The Environmental Defense Fund railed against Trump's decision to pull back on methane emissions controls, noting that an estimated 10 million tonnes of domestic natural gas are wasted annually through leaks, venting and flaring.

"By taking that step, the administration is undercutting common-sense remedies to a serious problem," Fred Krupp, the Environmental Defense Fund's president, said in a March 28 statement. "Along with this waste of resources and taxpayer revenue comes toxic, smog-forming air pollution that threatens the health of hundreds of thousands of Americans living near oil and gas wells, compressors, and other gathering, production, and transportation sites. By asking the agencies to dismantle these basic public health safeguards, the administration is ensuring that the natural gas industry will not be able live up to its reputation for providing a cleaner fuel."

The Western Energy Alliance, representing producers, applauded the executive order, contending that the exploration and production industry already has ample incentive to prevent methane waste since natural gas is a product to sell. The group also noted that market forces have helped the nation drive down greenhouse gas emissions overall, largely thanks to economically motivated coal-to-gas switching for power generation.

"American oil and natural gas producers have decreased methane emissions 21% even while delivering a 52% increase in natural gas production," Kathleen Sgamma, the alliance's president, said in a March 28 statement. "We very much appreciate that President Trump recognizes such rules are a broad overreach of federal authority that need to be reined in. We're very pleased that the Trump administration will be reorienting the agencies back to actually following the law and cooperating with states rather than constantly trying to usurp their authority."

All regulations put in place by the Obama administration's Department of the Interior, including those involving methane emissions from oil and gas wells, are "on the table" for review, said new Interior Secretary Ryan Zinke.

During a conference call March 29, Zinke used terminology former President Ronald Reagan once used during negotiations with the Soviet Union. "We're going to trust but verify that the rules are appropriate, that they are within our regulatory authority," he said. "It's going to be a big effort, but I'm confident that with the department's expertise, we can handle it."

Zinke said Trump requested that he create a task force for the review of the previous administration's regulations to see if they are unnecessary. That process, the secretary said, is underway. "Everything's on the table," he said. Zinke said also that the 2017-2022 Offshore Lease Plan, set in place by the Obama administration, would be reviewed.

When asked about whether the administration would roll back emissions regulations that led power plants to switch from burning coal to natural gas, Zinke said he would prefer for market forces to be the decisive factor. "We're not in the business of picking winners. The market should dictate it," he said. "Costs in the natural gas sector have gone down, primarily because of fracking and new technologies. We have an abundance of natural gas. The Marcellus, the Bakken and the Permian are all contributing to that."

For FERC, the order will likely have little effect on the agency's reviews of natural gas pipelines and export terminals.

Gas industry groups and environmental groups agreed that FERC would still have to comply with existing requirements in the National Environmental Policy Act, or NEPA, which ask federal agencies to consider the climate ramifications of their decisions. The White House under President Barack Obama had issued final guidance in August 2016 that asked agencies to do more on climate analysis, but Trump officially put an end to that March 28 when he issued the executive order, which began the process of pulling down Obama's environmental regulations, the largest of which is the U.S. EPA's Clean Power Plan.

Dena Wiggins, president and CEO of the Natural Gas Supply Association, contended that the FERC environmental review is sufficient without the climate guidance. "The existing NEPA project review process is already stringent, extensive and thorough," Wiggins said in a statement. The Obama administration, she said, had attempted to include "unquantifiable and speculative upstream impacts in an expanded guidance [and] risked hindering development of the very infrastructure that has enabled natural gas to reduce emissions."

Conversely, Anne Havemann, general counsel for the Chesapeake Climate Action Network, panned Trump's executive order, saying it put the interest of the fossil fuel industry ahead of the well-being of the rest of the world and future generations. She called it "reckless, cynical, and arrogant."

But the order did not change the fact that FERC must still look at climate impacts, Havemann said. She pointed out that the Obama guidance itself said it was issued to "facilitate compliance with existing NEPA requirements."

Another Trump order, though, may present challenges to the industry. Also on March 28, Trump doubled down on his commitment to require pipeline builders and operators to use domestically produced steel despite industry concerns.

"We will transport American energy through American pipelines made with American steel," Trump said. "If you're going to build pipelines in this country, you're going to buy your steel and you're going to have it fabricated here. ... We believe in those really magnificent words: Made in the USA."

Some industry observers and participants have expressed concerns about the vagueness of the memorandum and the broad nature of the request for comment. Others have raised the issue of whether the U.S. has the appropriate manufacturing capabilities to produce the specific material and pipe that oil and gas transporters need.

"Our industry has found a few challenges with obtaining some pipeline materials and equipment that are American made," American Gas Association spokesman Jake Rubin said in a March 28 email. "Safety is the top priority for America's natural gas utilities. Our customers are our family, friends and neighbors and they rely on us to deliver natural gas safely and reliably. Our operations and ongoing maintenance of the natural gas delivery system can be severely impacted if the required materials are not readily available."