Analysts and industry groups have warned that oil services, including seismic services, will be badly by hit President Biden’s recently announced US moratorium on new oil and gas leases on federal lands.
Analysts and industry groups have warned that oil services, including seismic services, will be badly by hit President Biden’s recently announced US moratorium on new oil and gas leases on federal lands.
The biggest hits would come to services companies, especially seismic companies, according to Rystad.
IAGC’s Dustin Van Liew, vice-president of regulatory and governmental affairs at the International Association of Geophysical Contractors, criticised the Biden administration for the abrupt announcement with ‘little consultation of its impact on the industry’, including seismic service companies: ‘The geophysical and exploration industry rely on consistent and transparent policy decisions by governments. An arbitrary suspension of leasing disrupts business certainty: major investments have already been made by companies by companies with a reasonable expectation of activities and returns.’
Explorers still have ample inventories of undrilled well permits, but the industry is expected to shift its focus away from federally controlled regions such as New Mexico’s Delaware Basin, the Rockies and much of the deepwater Gulf of Mexico.
Parker Fawcett of S&P Global Platts Analytics, said. ‘An outright ban of new leasing will impact Gulf of Mexico production five to 10 years out, limiting operators’ ability to access nearby unleased acreage close to exploration discoveries.’
Artem Abramov, Rystad Energy’s head of shale research, said installing a federal lease ban would equate to the loss of 250,000 boe/d by the end of the decade. The effect would grow to 400,000 boe/d later in the 2030s.
As well as the executive order Biden has also initiated a review of existing fossil fuel leasing and permitting practices. ‘We’re going to review and reset the oil and gas leasing programme,’ Biden said, citing the need to preserve public lands, but clarifying that he is not going to ban fracking.
About 22% of US oil production and 12% of natural gas production takes place on federal lands and waters, but the planned moratorium would not undo existing leases and permits. However, the American Petroleum Institute warned that this moratorium may just be the “first step” toward a broader ban on all oil and gas activity on public lands.
‘They’re going to continue to look at the permitting process, and we’re very concerned about a slowdown in permitting for our operators in the field,’ said API CEO Mike Sommers.
According to the US Department of Interior, the oil and gas industry is ‘sitting on approximately 7700 unused, approved permits to drill’.
‘Onshore, of the more than 26 million acres under lease to the oil and gas industry, nearly 13.9 million (or 53%) of those acres are unused and non-producing,’ said a Department of Interior statement. ‘Offshore, of the more than 12 million acres of public waters are under lease, over 9.3 million (or 77%) of those acres are unused and non-producing.’
Auctions held under the Trump administration resulted in only 5 million offshore acres purchased from 78 million acres offered over the past four years, it added.
In response to the order, the Western Energy Alliance filed a lawsuit on 27 January claiming that Biden has exceeded his presidential authority.
