Energy Executives Optimistic About Faster Permitting Times Under Trump Administration
By Georgina McCartney
HOUSTON – A recent survey conducted by the Federal Reserve Bank of Dallas has revealed that U.S. energy executives are expecting faster permitting times for drilling on federal lands under President-elect Donald Trump’s administration. The survey, which was released in December 2024 and polled 134 energy firms in Texas, Louisiana, and New Mexico, showed a significant improvement in the overall outlook, with activity levels increasing while uncertainty declined.
Trump’s Energy Agenda: A Shift Towards Fossil Fuel Production
The survey’s findings are consistent with Trump’s campaign promises to lower gasoline prices and speed up permitting for energy projects. The "drill, baby drill" mantra has become synonymous with Trump’s energy agenda, which aims to increase domestic oil production and reduce regulatory hurdles for energy companies.
According to the survey, a third of executives polled believe that the permitting process will become significantly faster over the next four years. One E&P firm executive noted that the incoming administration is "pro-business" and "pro-fossil-fuel production," suggesting that regulatory compliance issues will decrease as a result of Trump’s policies.
Energy Package to Be Rolled Out by Transition Team
The transition team is set to quickly roll out a wide-ranging energy package, which includes the approval of export permits for new liquefied natural gas (LNG) projects and increased federal land and sea oil drilling. This move is expected to boost demand for natural gas and provide a much-needed boost to the industry.
Another E&P executive noted that the new administration will "lift regulations, stop subsidizing green energy, and seek LNG build-outs to place more demand on natural gas." This shift in policy is likely to benefit hard-hit oilfield services firms, which have been struggling due to low oil prices and decreased activity levels.
A Fresh Bout of Optimism for 2025
The survey showed a significant improvement in sentiment among energy executives, with many expressing optimism about the outlook for 2025. Some executives noted that the new administration’s policies could lead to a fresh bout of investment in the industry, particularly in the oilfield services sector.
However, not all firms are confident about the future. Weak natural gas prices continued to pressure some exploration and production firms in the fourth quarter, forcing operators to pay for their gas to be taken away, reducing oil profit margins.
Bottlenecks Ahead: Challenges for Energy Firms
Despite the optimistic outlook, there are several challenges that energy firms may face in 2025. Negative gas prices at the Waha Hub in West Texas fell into negative territory a record number of times in 2024, forcing operators to pay for their gas to be taken away.
Mergers and acquisitions have also hurt services firms, muting growth compared with the previous three years as producers consolidated and either held flat or reduce capital spending budgets. This has led to reduced activity levels and decreased demand for oilfield services.
Supply and Demand: A Balance of Forces
The survey participants anticipate a West Texas Intermediate (WTI) oil price of $71 per barrel by the end of 2025, with responses ranging from $53 to $100 per barrel. Meanwhile, they expect a Henry Hub natural gas price of $3.19 per million British thermal units over the same period.
One executive noted that supply and demand are "in close balance" while production is sufficient for market needs. This suggests that the industry may be experiencing a brief period of stability before new challenges emerge in 2025.
Greenhouse Gas Emissions: A Divided Industry
The survey also highlighted a significant gap between large and small producers when it comes to plans to tackle greenhouse gas emissions. Nearly two-thirds of larger firms indicated plans to cut methane, while 86% plan to reduce the burning of unwanted gas.
In contrast, just 29% of smaller firms have plans to reduce methane, and only 14% plan to reduce flaring. This divide suggests that there may be difficulties in implementing policies aimed at reducing greenhouse gas emissions across the industry as a whole.
Conclusion
The survey’s findings suggest that energy executives are increasingly optimistic about the outlook for 2025, driven by expectations of faster permitting times under Trump’s administration and increased demand for natural gas. However, several challenges remain, including weak natural gas prices, mergers and acquisitions, and reduced activity levels in oilfield services.
As the industry navigates these challenges, it will be interesting to see how energy firms adapt to the changing landscape and whether they are able to capitalize on the opportunities presented by Trump’s policies.