A comparison of US oil and natural gas polices

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

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.

Conclusion

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.

Read the article online at: https://www.hydrocarbonengineering.com/refining/09072015/oil-gas-policy-comparison/