Oil, gas firms hoping for more after order to revive pipelines

A worker walks past oil pipes at a refinery in Wuhan, Hubei province on Mar 23, 2012.
A worker walks past oil pipes at a refinery in Wuhan, Hubei province on Mar 23, 2012.PHOTO: REUTERS

WASHINGTON • As the oil and gas industry digests US President Donald Trump's push to get two stalled pipeline projects moving again - with some caveats - oil and natural gas producers are preparing for even more quick policy turns from the administration.

High on the wish list is expanded access to drilling on federal lands and offshore areas.

At the same time, environmental groups that have argued against new infrastructure for fossil fuels are gearing up to fight the moves.

With the stroke of a pen on Tuesday, Mr Trump breathed new life into the Dakota Access and Keystone XL projects, and, in the process, the nation's energy pipeline complex. He invited TransCanada to reapply for its Keystone XL project, which former president Barack Obama rejected in 2015.

Mr Trump also issued a memorandum supporting completion of Energy Transfer Partners' Dakota Access pipeline, which has been stalled since the Obama administration intervened in September.

The latest steps to dismantle policies of the Obama administration underscore how energy, perhaps more than any other American industry, is poised to benefit under the new President.

While Mr Trump has taken the opportunity to berate and threaten individual companies, energy executives have long viewed him as a powerful ally who will roll back regulation, particularly regarding the environment. That relationship has grown tighter after his decisions to nominate the head of ExxonMobil, as well as industry supporters, Mr Rick Perry and Mr Greg Pruitt, for Cabinet-level positions.

Mr Trump did, however, vow to extract concessions from the pipeline backers. Keeping to his "America First" inaugural address, the White House issued a memorandum seeking a plan for all pipeline projects, whether new, retrofitted, repaired or expanded ones, to "use materials and equipment produced in the United States".

It was unclear if that means the existing parts of Keystone or Dakota Access, which is more than 90 per cent complete, would have to be rebuilt with American-made pipe.

The US Chamber of Commerce on Monday cautioned Mr Trump about his plans to walk away from trade agreements, but welcomed Tuesday's developments.

The chamber has urged the new US President to strengthen the economy via tax cuts, infrastructure spending and deregulation.

"For too long, private infrastructure investment has been held hostage by government interference driven by fringe interests," Ms Karen Harbert, head of the US Chamber's energy unit, said in an e-mailed statement.

Mr Trump also signed an executive order to expedite environmental reviews of other infrastructure projects. Under the order, a determination on whether a project is "high priority" should be made within 30 days. Those projects should receive "expedited procedures and deadlines" for approvals.

Environmental groups, however, vowed to fight the pipelines.

"We will use every tool available to help ensure that they are not built," Ms Rhea Suh, president of the Natural Resources Defence Council, said in a statement.

Demonstrations like the women's march after Mr Trump's inauguration show that citizens are willing to speak out against this administration, said Mr Doug Hayes, an attorney for The Sierra Club.

In fact, Mr Trump's moves may help opponents raise money, according to Ms Christine Tezak, managing director of research at ClearView Energy Partners in Washington.

"The adversarial environment can be good for the opponents, and the opponents are getting better at delaying and posing legal challenges," said Ms Tezak, noting that being the underdog is a good way to raise money.

"This isn't something where the President can wave a magic wand."


A version of this article appeared in the print edition of The Straits Times on January 26, 2017, with the headline 'Oil, gas firms hoping for more after order to revive pipelines'. Print Edition | Subscribe