Post by BabbForHeisman on Feb 2, 2021 5:19:26 GMT 14
Don't have a direct link to this because I don't have access to the WoodMac site, but thought this was a good perspective:
From WoodMac: What do Biden's Executive Actions actually mean?
Ryan Duman, 27 January 2021
President Biden signed a series of Executive Orders today to tackle what his administration is calling the climate crisis. The most important order related to US upstream pauses new oil and gas leases on public lands and offshore waters. It also launches a rigorous review of all existing leasing and permitting practices on DOI-controlled acreage.
Most importantly, the announcements emphasized the pause does not impact existing operations or permits. This will come as a massive relief for stakeholders worried about potential fracturing bans on New Mexico and Wyoming acreage. Still, watch for potential pushback from both states. Most of the major producers with federal land exposure have said they have a multiple-year backlog of permits limiting any near-term onshore supply impacts. GoM projects that are producing or FID’d appear safe too. Future offshore production seems to be on a track closest to the first scenario we modeled six months ago.
Today’s order didn’t mention anything beyond a “rigorous review” of past approvals. This was our expectation. Any legislation preventing companies from developing land already leased would almost certainly have been challenged through the Fifth Amendment’s Taking Clause. Federal leases can carry a primary term of up to ten years and so long after as the lease flows “paying quantities” of oil and gas. The first well can hold the unit for five years, after which a new well must be spud every six months to avoid unit reduction.
The 60-day pause on new permits that was implemented on President Biden’s first day (see table below) is still in place. But overall, today’s much-anticipated actions don’t negatively impact the industry as much as some may have expected, especially in the near term. However, it’s more important to keep in mind the pace at which regulatory changes have arrived. We may hear more, particularly around stricter air and water regulations.
The administration also made it very clear that job creation is central to its climate actions. One area the president highlighted several times during his afternoon briefing was regarding plugging all of the abandoned oil and gas wells throughout the US. Read our insight from last fall where we characterize the growing risks associated with P&A liabilities.
From WoodMac: What do Biden's Executive Actions actually mean?
Ryan Duman, 27 January 2021
President Biden signed a series of Executive Orders today to tackle what his administration is calling the climate crisis. The most important order related to US upstream pauses new oil and gas leases on public lands and offshore waters. It also launches a rigorous review of all existing leasing and permitting practices on DOI-controlled acreage.
Most importantly, the announcements emphasized the pause does not impact existing operations or permits. This will come as a massive relief for stakeholders worried about potential fracturing bans on New Mexico and Wyoming acreage. Still, watch for potential pushback from both states. Most of the major producers with federal land exposure have said they have a multiple-year backlog of permits limiting any near-term onshore supply impacts. GoM projects that are producing or FID’d appear safe too. Future offshore production seems to be on a track closest to the first scenario we modeled six months ago.
Today’s order didn’t mention anything beyond a “rigorous review” of past approvals. This was our expectation. Any legislation preventing companies from developing land already leased would almost certainly have been challenged through the Fifth Amendment’s Taking Clause. Federal leases can carry a primary term of up to ten years and so long after as the lease flows “paying quantities” of oil and gas. The first well can hold the unit for five years, after which a new well must be spud every six months to avoid unit reduction.
The 60-day pause on new permits that was implemented on President Biden’s first day (see table below) is still in place. But overall, today’s much-anticipated actions don’t negatively impact the industry as much as some may have expected, especially in the near term. However, it’s more important to keep in mind the pace at which regulatory changes have arrived. We may hear more, particularly around stricter air and water regulations.
The administration also made it very clear that job creation is central to its climate actions. One area the president highlighted several times during his afternoon briefing was regarding plugging all of the abandoned oil and gas wells throughout the US. Read our insight from last fall where we characterize the growing risks associated with P&A liabilities.
