Less than a month after President Donald Trump issued his executive order to speed up the process for approval of infrastructure projects, the energy industry appears resigned to receiving little help from Washington.
“The struggle that I have with the executive order is that in the end, the devil is in the details,” Regina Mayor, KPMG’s global head of energy and natural resources, told Hart Energy. “You’ve seen a lot of these executive orders signed with the flourish of a pen but not necessarily translated into real action.”
Among the issues with this order is that its momentum only lasted as long as the president’s announcement. Trump’s Q&A with reporters on Aug. 15 was dominated by his views of the violence in Charlottesville, Va. The fallout from that press conference led to the disbandment of the Presidential Advisory Council on Infrastructure two days later.
Since that time, the White House has been preoccupied with hurricanes Harvey and Irma, hostile actions from North Korea, immigration policy and its own internal personnel shakeup with a new chief of staff. But for an energy industry focused on recovering from Harvey’s assault on the Gulf Coast, infrastructure remains a priority and the spirit of streamlining still carries value, even if nothing is likely to come of it soon.
“The pipeline permitting process is so complex that it would actually take quite a bit of time, if one were to officially re-engineer it, for there to be a positive impact on the energy companies involved,” Mayor said. “I don’t think we’ll see anything in the short term.”
The president’s executive order is only part of the administration’s infrastructure ambitions, which were to a large extent echoed by Democratic candidate Hillary Clinton during the 2016 presidential campaign.
“If there’s one issue that Democrats and Republicans seem to agree on, it’s that America’s infrastructure is in need of an upgrade,” Andrew Flowers wrote inNovember 2016 on FiveThirtyEight.com.
In May, the White House issued a six-page outline stating that $200 billion would be requested for fiscal year 2018 to spend on infrastructure.
The plan is going nowhere.
“I am very doubtful that major infrastructure spending legislation will get through Congress this year—especially because President Trump will not have sufficient votes in the Senate, as he will lose the backing of the some of the Republican members,” John Kneiss, Washington-based energy analyst, told Hart Energy.
In its outline, the administration said its $1 trillion target for infrastructure investment is divided into:
- New federal funding;
- Incentivized non-federal funding; and
- Newly prioritized and expedited projects.
The non-federal funding will come from savings and additional revenue from privatization of the air traffic control system, increased flexibility in the Veterans Administration’s control over its facilities, sale of the Power Marketing Administration’s transmission assets and increasing fees for users of inland waterways.
Federal funding would total $200 billion between fiscal years 2018 and 2027, with $5 billion set for fiscal year 2018.
But that is just the outline, with details as yet unannounced.
“Obviously, let’s first see what the details are to Trump’s infrastructure plan—it takes much more than ordering that permitting procedures and reviews get streamlined, and federal policies should be consolidated. Which ones, with all the turf protections by bureaucracies?” said Kneiss. “Another point to remember is that if the GOP leadership decides to try to couple infrastructure spending programs with tax reform, then the entire package must be ‘revenue-neutral’ to use budget reconciliation to avoid filibuster in the Senate.”
From Mayor’s point of view, the federal funding doesn’t really matter that much.
“In our industry, the challenge is not the lack of capital,” she said. “It’s the country having the intestinal fortitude to really develop and construct the pipelines that we need to move the hydrocarbons around our vast geography.”
That’s because opposition to fossil fuel projects, particularly pipelines, has become increasingly sophisticated and effective, not only in the U.S. but in Canada.
“You saw what happened with the Dakota Access Pipeline development when every part of the process was followed and all of the proper approvals were completed, but one or two particular stakeholder groups ... were able to disrupt the entire process that the companies had diligently followed,” Mayor said.
The uncertainty that stems from the disruption of the process puts major projects at risk, even when companies have poured considerable time and capital into the work and have diligently complied with all regulatory demands.
“I would hope that the administration would be able to streamline some of that part of the process,” she said. “I think that uncertainty and the ability for stakeholder groups to disrupt almost any time along the path is the biggest challenge for our midstream clients.”
BP and partners have sanctioned the Azeri Central East (ACE) project, the next stage of development of the giant Azeri-Chirag-Deepwater Gunashli (ACG) oilfield complex in the Azerbaijan sector of the Caspian Sea.
Exxon Mobil Corp. and offshore Guyana partners continue their success with their 13th discovery on the Stabroek Block and fifth discovery in the Turbot area.
The rig count fell for the past four months and production growth in the Permian Basin and other key shale basins have slowed as oil prices fell and many independent shale companies cut spending.