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A comparison of US oil and natural gas polices

Hydrocarbon Engineering,

Wood MacKenzie and the American Petroleum Institute recently released a report which put prodevelopment polices for US oil and natural gas head to head with proposed regulatory constraints. Here are the outcomes.

Supply implications

  • Prodevelopment policies have the potential to increase oil and natural gas production by 5.7 million bpd by 2035. Production loss from regulatory constraints is anticipated to peak at 2 million bpd.
  • In the future, gas production growth is expected to be continued to be driven by onshore lower 48 shale gas supplies.
  • Prodevelopment policies could increase natural gas liquids (NGL) production by 300 000 bpd in 2035. Regulatory constraints on oil and gas production could reduce NGL production by 400 000 bpd.
  • In order to bring projected production onstream in new areas, significant investment is most likely going to be required for exploration and development expenditure.

Midstream implications

  • New offshore development could require CAPEX of over US$500 billion by 2035. This will be for gathering, processing, trunk lines and storage.
  • Over 30 billion ft3/d of LNG exports have been proposed in the US. Of this, WoodMacKenzie has assumed that 16 billion ft3/d will come to fruition. This will most likely beat competing international projects to market.
  • Regulations impacting railcar transportation could dramatically increase the cost of railing inland crude production to coastal refining centres.
  • If prodevelopment policies are adopted, cumulative midstream CAPEX is expected to be US$118 billion higher through 2035. This will be US$171 billion lower under regulatory constraints.
  • Refining implications

    • If regulatory constraints are put in place, refineries are negatively impacted by lowered demand, increased compliance costs and narrower differentials.

    Impacts on taxes, GDP and employment

    • Prodevelopment policies could support an additional 2.3 million US jobs by 2035. Regulatory constraints could cost up to 900 000 US jobs.
    • Prodevelopment policies could contribute an additional US$440 billion/y to US GDP.
    • Prodevelopment policies could increase government tax revenues by US$122 billion/y. Regulatory constraints could reduce tax revenues by US$500 billion over the next 20 years.
    • Regulatory constraints are also expected to be felt most heavily in the Rockies and Gulf Coast.

    Impacts on household consumption

    • Policy decisions could result in a US$600/y difference in average household energy spending between prodevelopment and regulatory constraint policies.
    • There are also likely to be significant differences in labour income with post 2020 labour income ramp ups being seen with the adoption of prodevelopment policies.


    In a nutshell, prodevelopment policy impacts by 2035:

    • Increased US energy security.
    • 2.3 million US jobs.
    • US$443 billion/y in GDP.
    • Government revenues up by US$122 billion/y.
    • Government revenues up by US$1.1 trillion.

    In a nutshell, constraint policy impacts by 2035:

    • Decrease in US energy security.
    • Only 830 000 additional jobs.
    • Economy contributions down by US$133 billion/y.
    • Government revenue down by US$18 billion/y.

    Edited from report by Claira Lloyd

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