Romney Plan is Positive for Oil Service2012-08-27
Republican Presidential nominee Mitt Romney's proposed energy plan could be positive for the oil services and drilling industry, with its goals of streamlining and improving the permitting process, opening up new areas for drilling and boosting overall drilling activity, according to a recent research note from Barclays Capital.
Barclays views as favorable Romney's plan for approving permits for seismic surveys to "immediately update decades-old information", as well Romney's call for collaboration with Canada and Mexico on geological data and requiring onshore domestic geological and geophysical data to be shared with the Interior Department.
"We view recently enacted and forthcoming regulations as supportive for stimulating offshore activity in light of the heightened safety conscious post-Macondo world, and see little scope for these to be overtuned regardless of the election outcome," said West, referencing an Aug. 21 research note.
The final drilling largely cleans up the interim rule through minor edits, with minimal additions or material changes, noted West. The rule also removes language stating operators "must" adhere to certain American Petroleum Institute (API) suggestions, providing greater flexibility for interpretation and limiting adverse unintended operational consequences.
Romney's plan to empower states to oversee energy production on federal lands – and including language for all-around increased state control – could elevate the fracking debate in the general election and, if Romney won the presidential election, would help quell questions surrounding hydraulic fracturing being regulated by the U.S. Environmental Protection Agency, West said.
Two energy industry groups, the American Petroleum Institute (API) and the Western Gas Alliance (WEA) on Thursday applauded the plan.
"The proposals released [Thursday] by the governor will assist in encouraging that public conservation on how more North American made energy can be an economic game changer," Gerard said in a statement.
Denver-based WEA applauded the plan, saying that Gov. Romney's plan "recognizes that empowering states, rather than imposing a one-size-fits-all government approach, is the right way to increase American energy, create jobs, and grow the economy" said Kathleen Sgamma, vice president of government & public affairs for WEA.
"By empowering states and modernizing bureaucratic processes, our nation can unlock energy resources on non-park, non-wilderness federal lands while achieving a better balance between economic growth and environmental protection," said Sgamma.
While Romney's proposed energy plan mimics efforts in Congress, the fact that Romney has tried to set tangible goals by specific dates sets it apart from other initiatives. However, it may very well be more talk than anything else, a trend also seen in Congress, said Andrew Schrage, co-owner of the financial website Money Crashers.
The proposed plan can only succeed when combined with some serious energy conservation on the part of Americans, something Romney has not yet discussed.
"And of course, his chance of success in implementing his energy policy also highly depends on who controls the House of Representatives and the Senate," Schrage noted.