By Georgina McCartney
HOUSTON (Reuters) -U.S. energy executives expect faster permitting times for drilling on federal lands under President-elect Donald Trump, according to a Federal Reserve Bank of Dallas survey released on Thursday.
The overall outlook brightened and activity levels increased while uncertainty declined in the final quarter of 2024, according to a December survey of 134 energy firms in Texas, Louisiana and New Mexico.
Trump has vowed to lower gasoline prices and speed up permitting for energy projects under his “drill, baby drill” campaign mantra.
A third of executives polled said they think the permitting process will become significantly faster over the next four years.
“We are anticipating that regulatory compliance issues will decrease, primarily due to an incoming administration that is pro-business and pro-fossil-fuel production,” said one exploration and production (E&P) firm executive who was not identified by the Dallas Fed.
Trump’s transition team is set to quickly roll out a wide-ranging energy package that includes the approval of export permits for new liquefied (LNG) projects and increased federal land and sea oil drilling.
“The new administration will lift regulations, stop subsidizing green energy and seek LNG build-outs to place more demand on natural gas,” another E&P executive told pollsters.
The new administration could benefit hard-hit oilfield services firms, some executives said, citing a fresh bout of optimism for the first quarter of 2025.
The survey showed a wide gap between large and small producers in plans to tackle greenhouse gas emissions. Nearly two-thirds of larger firms indicated plans to cut methane and 86% to reduce the burning of unwanted gas. In comparison, just 29% of smaller firms have plans to reduce methane and only 14% plant to reduce flaring, the report showed.
POTENTIAL 2025 BOTTLENECKS
Weak natural gas prices continued to pressure some exploration and production firms in the fourth quarter, executives said.
Gas prices at the Waha Hub in West Texas fell into negative territory a record number of times in 2024. Negative gas prices force operators to pay for their gas to be taken away, reducing oil profit margins.
“The low price for natural gas is crushing current cash flow. For smaller independents, cash flow is what feeds future investment,” an executive reported.
Mergers and acquisitions have hurt services firms, muting growth compared with the previous three years as producers consolidated and either held flat or reduce capital spending budgets, they said.
Lower oil demand and efficiency gains in extraction technology have pressured services businesses, with greater efficiency boosting production but not activity levels.
“It appears supply and demand are in close balance while production is sufficient for market needs,” one executive said.
On average, respondents expect 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, survey participants anticipate a Henry Hub natural gas price of $3.19 per million British thermal units over the same period.
