Page 5 - NorthAmOil Week 02 2023

NorthAmOil COMMENTARY NorthAmOil

The report noted that several US midstream capture and sequestration (CCS) and hydrogen.
companies have already announced projects US-based majors and some midstream compa-
that will supply gas to LNG facilities, including nies will accelerate their investment in these
DT Midstream’s LEAP expansion, Williams’ areas, Moody’s predicted.
Louisiana Energy Gateway, Energy Transfer’s Permitting reform will remove obstacles and
Gulf Run, Kinder Morgan’s Permian Highway shorten the permitting processes for new energy
expansion and WhiteWater Midstream’s Mat- infrastructure projects, accelerating the devel-
terhorn pipeline project. opment of oil and gas ventures that would need
more infrastructure to become viable.
What next? A permitting reform measure failed to pass
According to an accompanying Moody’s note, US Congress in late 2022, including assurances
the energy transition will remain the central for the completion of the Mountain Valley Pipe-
business challenge for oil and gas producers this line project, and the issue of permitting is likely
decade and beyond. Recent policy responses to come up again in 2023. Permitting is a vital
such as the Inflation Reduction Act (IRA) in the issue for oil and gas pipelines.
US and the EU’s “Fit for 55” represent important On the issue of industry sentiment, Moody’s
energy transition landmarks, but will not be predicted that the US rig count, an indicator of
enough by themselves on the policy front to put drilling activity and oilfield services demand, New LNG projects
the transition on track. would increase in 2023 as disciplined US explo-
While policy risk will remain high for ration and production companies modestly anticipated to
the LNG industry in 2023, energy security expand their capital budgets. enter service in
concerns will be on an equal footing with The international markets will offer a larger
energy transition efforts. A large majority of source of profit expansion than the US as the 2025-26 and
spending will be directed toward traditional international rig count – excluding Canada –is
oil and gas operations with a still small but now at about 80% of pre-pandemic levels and beyond must
growing share directed toward new energy forecast to keep increasing in 2023.
businesses. The global rig count rebounded by more demonstrate
Europe’s emergent need for LNG amid the than 20% during 2022, though still not to the access to
displacement of Russian gas will drive consid- pre-pandemic levels of late 2019. By contrast,
erable investment over the next several years, the US rig count by December 2022 had recov- long-term gas
including a push to install more multi-dec- ered almost fully to 2019 levels, but rig additions
ade-lived assets and further supporting gas’ in the second half of 2022 slowed from earlier supplies.
incumbency. in the year.
Disparate transition strategies among the US oil production in 2023 is forecast by the
largest integrated oil companies are forecast to US Energy Information Administration (EIA)
further diverge in 2023. to expand by 0.9mn barrels per day, up 4% year
In the US, the IRA did provide “potential on year, and global oil production by 1.1mn
benefits” for the oil and gas sector in the form of bpd, up 1%, according to the agency’s December
expanded tax credits for investments in carbon 2022 Short-Term Energy Outlook.™

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