The devastating downturn in energy prices has resulted in troubled times for U.S. shale oil and gas drillers. While some have weathered the storm reasonably well thus far, others have succumbed to bankruptcy in the face of declining revenues and substantial debt burdens. As energy prices have rebounded in recent months, led by the price of oil, which has surged from below $30 a barrel to above $50, at least for a time, the prospects for shale companies have improved correspondingly. However, with a Presidential election cycle underway in the country, political considerations begin to play an increasing factor in any consideration of future prospects for the industry.
Donald Trump, the presumptive Republican nominee for President, is an unabashed supporter of drilling for fossil fuels. If he is elected, shale drillers are unlikely to face an increase in onerous regulations, at least from the federal government. Hillary Clinton, the presumptive Democratic nominee, on the other hand, has taken a strong stance against the use of fracking due to environmental concerns. While she has given no indication she intends to attempt to ban the practice outright, she has stated that she would take steps to impose restrictions on usage of the technique – in the worst case scenario this could make fracking in the U.S so expensive that it amounts to a de facto moratorium in all but the least expensive shale plays.
Given the uncertainty surrounding the election’ fallout, shale industry participants may find it harder to enjoy the recent recovery in energy prices than would otherwise be the case. The impact of fragile economic conditions on the energy industry, both in the U.S. and globally, is another cause for concern. To gain a clearer picture of the current and potential post-election state of U.S. shale, all of these factors must be examined closely.
The full article, by Mark Tygart, is available in Issue 4 of Shale Gas International Magazine and can be found on page 9.