EnerKnol Research

The oil and gas industry will benefit from streamlined regulations and increased activity from pipeline approvals, due to both the energy policy executive order recently signed by President Trump and to pipeline approvals issued by federal agencies.

Among several directives, the order calls for a review of existing regulations that burden domestic energy development. It paves the way for a broad range of reforms and rescissions.

The prospects of additional oil and gas activity on federal land comes as a boon for the industry that has suffered from low oil prices in recent years. The order directs a review of federal regulations governing oil and gas sector emissions including the Bureau of Land Management’s (BLM) rule governing hydraulic fracturing operations and regulation governing the venting and flaring of natural gas.

Agency actions pursuant to the order could contribute to a significant uptick in the oil and natural gas activity on federal lands, benefiting states like Wyoming, Colorado, Utah, and Montana, which share in federal oil and gas royalties. Reducing the regulatory burden for the oil and gas industry could contribute to lower energy prices over the long term.

Recent approvals of long-pending pipeline projects will also augment industry activity. Continuing a fast pace of executive actions, March 24, the Department of State issued a Presidential permit to TransCanada authorizing the construction and operation of the proposed Keystone XL pipeline’s border facilities, finding that the project would serve the national interest. The Keystone XL, a proposed 1,179-mile pipeline connecting Canada to U.S. Gulf Coast refineries, was rejected by former President Barack Obama in 2015 as it would not serve the national interest. The approval follows the January 24 Presidential memorandum to expedite approvals for the Keystone XL and Dakota Access pipelines.

Subsequently, on February 8, the U.S. Army Corps of Engineers approved an easement allowing the Dakota Access Pipeline to cross Lake Oahe on the Missouri River, paving the way for the completion of the $3.8 billion, 1,172-mile pipeline that would connect the Bakken and Three Forks oil production areas in North Dakota to a crude oil terminal in Illinois. Department of the Army denied the approval of easements for the proposed pipeline based on the need to explore alternative routes that would be accomplished through an EIS with public input and analysis.

While Dakota Access now has all federal authorizations necessary for expeditious construction, the Keystone XL faces an eminent domain lawsuit in Nebraska. Keystone XL has been the most highly debated pipeline in U.S. history since its initial proposal in September 2008.

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