Oil executives throw cold water on Trump’s ‘Drill, Baby, Drill’ agenda

[mystery-ak]

Oil executives throw cold water on Trump’s ‘Drill, Baby, Drill’ agenda
By
Callie Patteson
November 26, 2024 10:46 am
.

Swiftly increasing domestic oil and gas production may prove more difficult than anticipated for President-elect Donald Trump, as oil executives have cast doubt on his “Drill, Baby, Drill” agenda.

Throughout his campaign and transition into office, Trump has vowed to expand oil and gas drilling within the United States. It is a sharp shift away from renewable alternatives, such as solar and wind, that have been the focus of the Biden administration.

In order to put his plan in action, Trump is expected to issue a number of day one, or week one, orders to roll back climate rules and laws implemented by his predecessor, namely by undoing pollution rules for power plants, expediting liquid natural gas permit approvals, and cutting federal funding for offshore wind development.

While environmentalists and climate activists have expressed concerns over the emphasis and support on fossil fuels in Trump’s energy agenda, he may also be facing pushback from within the oil industry itself.

On Tuesday, Exxon Mobil’s Upstream Company President Liam Mallon said the global oil and gas giant is not expecting many producers to immediately fall in line with the incoming president’s goals for boosting output.

“We’re not going to see anybody in ‘drill, baby, drill’ mode,” Mallon said during the Energy Intelligence Forum in London, according to Reuters.

more
https://www.washingtonexaminer.com/policy/energy-and-environment/3242104/oil-executives-throw-cold-water-trump-drill-baby-drill-agenda/

[catfish1957]

Hmmmm....

I am a Big Oil annuitant, and I know what they are doing.  Profits/Stock price remains higher without tipping the supply/demand meter toward an oil glut.  But, I am more of a patriot, and am willing to sacrifice some income/equity if it means killing Green Energy, Russia and OPEC. 

[DB]

Kind of hard to invest billions into something that the next administration can kill on a whim. Long term stability is required for long term planning/investing. That isn't currently on the table. It would seem to be an opportunity for smaller producers who can respond to market changes quickly to profit on.

[catfish1957]

Kind of hard to invest billions into something that the next administration can kill on a whim. Long term stability is required for long term planning/investing. That isn't currently on the table. It would seem to be an opportunity for smaller producers who can respond to market changes quickly to profit on.

This whiplash like see saw is most dangerous to the smaller players.  Only the likes of Big Oil like Chevron and Exxonmobil can afford that variability and investment versatility.  Those suckers ....  say <$50B market cap are going start dropping like flies if this kneejerk energy policy continues. 

[DB]

Hmmmm....

I am a Big Oil annuitant, and I know what they are doing.  Profits/Stock price remains higher without tipping the supply/demand meter toward an oil glut.  But, I am more of a patriot, and am willing to sacrifice some income/equity if it means killing Green Energy, Russia and OPEC.

They have to plan based on all the investment and potential return has to occur within a four year period or they lose their investment. That's a very short window to operate from.

[DefiantMassRINO]

The oil companies want to maintain stable pricing to maintain profit levels.

Trump's energy agenda should focus more on pipelines to efficiently move energy from suppliers to consumers and upgrading refineries.

Also, invest to create a next-generation electricity infrastructure that is resilient, efficient, and reliable with power generation across many sources - coal, gas, nuclear, geo-thermal, hydro, wind, solar, tidal, etc.  Lower-cost, reliable, and secure electricity could provide the United States with a global competitive advantage in advanced computation (AI).

Because of Biden's Green New Screw Job, there has been significant under-investment in energy infrastructure, especially in the Northeast and California.

[catfish1957]

They have to plan based on all the investment and potential return has to occur within a four year period or they lose their investment. That's a very short window to operate from.

That's true for the very large projects, but the smaller ones, say $1M or less usually have a 12-18 month window.  And believe it or not, I'd venture that over half of the venture managment manpower and efforts or toward those projects, which typically have a heck of lot higher ROCE than the massive grass root, and expansions efforts.  And also realize that a lot of the big money goes off shore, due to permitting issues here. 

[catfish1957]

The oil companies want to maintain stable pricing to maintain profit levels.

That's true, but impossible in this political climate.  Pre-Obama our government understood that fact, and purposely didn't want to tip the boat.  At least not at the macro level.

[catfish1957]

That's true, but impossible in this political climate.  Pre-Obama our government understood that fact, and purposely didn't want to tip the boat.  At least not at the macro level.

I can remember telling my plant manager that his project with a 45% ROCE drops to 10% because the build would trigger NSPS standards in our non-attainment area. 

Can you imagine how popular I was?

[Smokin Joe]

The oil companies want to maintain stable pricing to maintain profit levels.

Trump's energy agenda should focus more on pipelines to efficiently move energy from suppliers to consumers and upgrading refineries.

Also, invest to create a next-generation electricity infrastructure that is resilient, efficient, and reliable with power generation across many sources - coal, gas, nuclear, geo-thermal, hydro, wind, solar, tidal, etc.  Lower-cost, reliable, and secure electricity could provide the United States with a global competitive advantage in advanced computation (AI).

Because of Biden's Green New Screw Job, there has been significant under-investment in energy infrastructure, especially in the Northeast and California.

I believe you are on to something, there. Build the infrastructure, not just pipelines, but the means to handle production, not only for here, but for export as well.
While doing that the electric grid could use a bit of updating too.

These are things that, once done, will provide a legacy of benefit, and once the takeaway capacity is there, the upstream end can produce for export without glutting our own supply. Europe is going to be in need of oil and gas, and the alternatives are to return to Russian hegemony or to send their money to the Middle East and Africa. In the meantime, China and India will be competing for those resources in the marketplace, and for the rights to drill and produce them.
Venezuela could be a game changer, but it has to get rid of its socialist government first, once and for all, or no 'free' country's oil industry is about to invest much there.

[IsailedawayfromFR]

After decades as a worldwide o&g reserves auditor and economist, here's my thoughts:

1. Larger oil and Gas companies can make profit no matter what the oil and gas price is.  Their strategies change with prices going up or down, but they will make money as they plan accordingly on where to place their projects based upon pricing.

When I started work for a major in the early 70s, the price of oil was only $3 per barrel, less than a twentieth as today's prices.  Yet we still made money, lots of money.

Their chief concern is a confidence that prices do not fluctuate wildly, and government policies in effect now are not going to change significantly in the near term.  The best oil producing countries act in a way not to disturb oil companies.

2. Integrated companies like Exxon and Chevron can make lots of money on downstream operations when prices are down as their raw feedstock is cheaper.  That's the reason they are called integrated companies.

3. The bigger companies have increased their footprint in projects outside of their historical competency in oil and gas projects.  Some have went toward renewables or lithium/uranium extraction via leeching underground waters to take advantage of both federal and state incentives, while others have charged headlong into the environmental area such as carbon capture, once again not because they believe like climate alarmists, but due to governmental incentives.  Occidental comes to mind with their +$1 billion direct carbon capture project, justified greatly by the government handouts.

These attitudes on renewables and environmental are partially also based on having perceived credibility to the authorities that they are indeed moving to reduce or to diversify their fossil fuel impact, but also to certain shareholders which unfortunately have at times gained access to oil company boardrooms, as Exxon had happen to it.

Finally, large oil companies have both short-term and long-term projects in their portfolios.  The short term projects are simply moving in additional rigs to take advantage of improved crude/natural gas pricing, and these rigs can be laid down fairly quickly.

The long term projects can be quite extraordinarily long such as exploratory drilling in a new basin(10 years minimum to first production to maybe +20 years for first production in a basin like the arctic.)  When commercial economics on these occur, they undergo many risk assessments on both costs and crude/ng pricing to ascertain the underlying features of making money in the end and decisions to invest are always at risk, similar to investing in a penny stock hoping it goes up exponentially.

The bottom line is oil companies have changed their business model due to conditioning to expect increased governmental scrutiny toward environmental and non-fossil fuel activities, and they have been willing to embrace such projects due to governmental incentives.  Remember until recently ESG was a method of ranking for institutional investors.

This is a situation not likely to be remedied by a single 4 year tenure of a pro-industry administration, and any directional change toward doing so will be a slow creep for them to take.

Small independents are a complete other story as their life span is short, and know they can make money at current prices and go out of business if prices crash.

I think the independents are the ones who will ramp up and the comments of the article are more tied to actions planned by  the larger companies

[jafo2010]

The insanity has to end.  Subsidizing the EV industry must end.  Either we have a free market, or we don't.

It is time for the federal government to not only balance the budget, but to approach reducing debt like it is the greatest national concern this nation has ever had.  Congress has been criminally negligent.  It must end.  I am not holding my breath for it to happen under Trump, but he would do well to begin heading that direction.

I heard yesterday that California is importing 1/3 of the electric they are using from other states.  This cannot be sustained.  As the population continues to grow, use of EVs continues to grow in California, the electric they will need will go through the roof.  This is not practical.  Eventually, they will ultimately encounter reality, that their goals are unrealistic, and compromising the rest of the nation.

I understand the desire to get to zero emissions in California.  Last time I was there and attempted to go jogging, which was 1995, I quit after half a mile because my lungs were literally burning from the pollution.   California WAS a beautiful state at some point many decades ago.  Now, it is a sh*t hole, pun intended.  And it will get worse with mediocre leaders like Gov Newsom.  And if these fools decide to elect a dummy like Kamala Harris, which I see as her only option for any political future, it will only get worse yet.

The USA is the richest nation in the world with oil reserves, and the Biden Admin could not have done more damage.

The time has come that people need to know there is a huge cost with outrageous policies like what Biden brought to the table.  The damage he has done is permanent.  Cost for everything will not return to pre 2021 numbers.  Interest rates might come down further, but the cost for everything will remain close to what it is. 

By destabilizing the oil industry, which is what Biden did successfully achieve, our cost is high and will remain high.  As indicated above, Trump cannot force that to change quickly.  Again, the permanent damage from the Obama/Biden Admins is not going away.  Both these traitors should answer for what they have done. 

And the betrayal of the blue and white collar American citizen population will continue.  Americans are being displaced by legal and illegal foreign labor that is low cost, and Trump will not change that.  He has promised to increase the H1-b Visa recipients.  So many more, I suspect hundreds of thousands of white collar Americans will be displaced from the workforce.

Fact is, Americans' incomes are not keeping up with inflation.  Purchasing power has taken a huge hit.  It will continue to get worse not better.  This avalanche is halfway down the mountain, and I do not see it stopping.

[Weird Tolkienish Figure]

Kind of hard to invest billions into something that the next administration can kill on a whim. Long term stability is required for long term planning/investing. That isn't currently on the table. It would seem to be an opportunity for smaller producers who can respond to market changes quickly to profit on.

With the filibuster in place we're stuck in "rule by EO" mode no?

[Bigun]

The oil companies want to maintain stable pricing to maintain profit levels.

Trump's energy agenda should focus more on pipelines to efficiently move energy from suppliers to consumers and upgrading refineries.

Also, invest to create a next-generation electricity infrastructure that is resilient, efficient, and reliable with power generation across many sources - coal, gas, nuclear, geo-thermal, hydro, wind, solar, tidal, etc.  Lower-cost, reliable, and secure electricity could provide the United States with a global competitive advantage in advanced computation (AI).

Because of Biden's Green New Screw Job, there has been significant under-investment in energy infrastructure, especially in the Northeast and California.

Big Oil wants to limit competition. In public they complain constantly about needless regulation while privately, through their paid lobby operatives, working to get more and more enacted. They prefer a field on which only they can play.

[Smokin Joe]

Big Oil wants to limit competition. In public they complain constantly about needless regulation while privately, through their paid lobby operatives, working to get more and more enacted. They prefer a field on which only they can play.

Well, small contractors don't have convenient offices with sales staff to pick up the green fees...

[libertybele]

With the filibuster in place we're stuck in "rule by EO" mode no?

Unfortunately, quite possible with RINO leadership in the Senate and a thin majority in the House.

Though at this point, Trump hasn't even been sworn in.  He has stated that what he needs to accomplish needs to happen in his first 100 days, so I'm willing to give him the benefit of the doubt.

I'm sure he's taken a few steps back and has planned accordingly and I wouldn't underestimate him.

[Smokin Joe]

Unfortunately, quite possible with RINO leadership in the Senate and a thin majority in the House.

Though at this point, Trump hasn't even been sworn in.  He has stated that what he needs to accomplish needs to happen in his first 100 days, so I'm willing to give him the benefit of the doubt.

I'm sure he's taken a few steps back and has planned accordingly and I wouldn't underestimate him.

At least he has a plan and is moving on it. So often it seems like "We what? We won? Now what do we do?" with the bunch on the Hill.

[Fishrrman]

Weird opined:
"With the filibuster in place we're stuck in "rule by EO" mode no?"

Posted by me, on November 23rd, here:
https://www.gopbriefingroom.com/index.php/topic,547185.msg3106763.html#msg3106763