Oil and gas development in North America, in particular the potential resurrection of the Keystone XL Pipeline, could see big changes after Donald Trump’s surprise U.S. presidential win.
According to S&P Global Platts, Trump's most significant anticipated impacts on oil and gas will be letting markets decide what lands to drill, dismantling the U.S. Environmental Protection Agency for over-regulating industry and adopting an "America-first" approach to trade policy.
"While Trump has given few concrete details about his energy plans, his statements during the campaign indicate he would likely adopt policies that attempt to expand fossil fuel production, ease regulations on industry and roll back President Barack Obama's clean air policies," Platts says.
But for Canada's industry, it's the Keystone XL file that likely holds the most weight.
"[Trump] has said that, if elected, he would urge TransCanada to renew its Keystone XL permit application, which the Obama administration rejected in late 2015 after years of debate," says Platts.
Trump has also said that while he would approve Keystone XL oil pipeline, he wants a “better deal.”
“I want the Keystone pipeline, but the people of the United States should be given a piece, a significant piece of the profits," Trump said at a press conference in North Dakota in May.
Here are some highlights of what to expect from the Republican president-elect, from S&P Global Platts:
On supply
"Trump has said he supports all forms of energy and wants the market to decide which ones succeed. He has promised to open all federal lands and waters to fossil fuel production, in contrast to [Hillary] Clinton, who had called for new, stricter limits on oil and gas production on public lands and indicated she wanted US offshore production confined to only the Gulf of Mexico.
"Trump, widely seen as a far bigger supporter of the oil and natural gas industry, will likely rebuff any environmentalist attempts to curb domestic fossil fuel production and will likely give US producers access to far more on and offshore plays than Clinton would have."
On demand
"Trump has said he will pursue a policy path to open up more US lands and waters to drilling and, in turn, boost consumption of even cheaper domestic oil and other fossil fuels. Analysts say his broad plans to boost US production and eliminate many of President Obama's regulatory efforts to combat climate change may result in less demand reduction than if Clinton were elected.
"Trump would likely quash efforts to institute new greenhouse gas performance standards for petroleum refineries and may push to weaken future fuel economy standards for light-duty vehicles, but those possible moves would not necessarily correspond with an increase in demand, particularly since efficiency gains already in place in the US vehicle fleet are already forecast to cut gasoline demand as much as 500,000 b/d by 2020."
On regulation
"Trump has promised to either dismantle or overhaul the Environmental Protection Agency and roll back Obama administration regulations to curb coal industry pollution. Cramer said Trump believes EPA needs to return to its core mission of protecting clean water and clean air, and that Congress has granted it too much leeway in interpreting legislation.
"Trump is expected to try to scrap the Clean Power Plan. He questions the widely held scientific consensus that human activity is causing climate change.
"Trump is expected to abandon, or at least weaken, efforts by EPA and the Department of the Interior to regulate methane emissions from oil and gas operations and also could weaken future car and truck fuel-economy standards."
On renewables
"Trump's possible efforts to end incentives for alternative energy development would boost near-term demand for fossil fuels. For example, a potential cut in the Investment Tax Credit to 10% from the current 30% would slash solar installation demand by 60%, according to S&P Global Market Intelligence."
-- Read more at JWN Energy.
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