A recent survey conducted by the Federal Reserve Bank of Dallas has revealed that U.S. energy executives are anticipating faster permitting times for drilling on federal lands under President-elect Donald Trump’s administration. The survey, which was released in December 2024, polled 134 energy firms in Texas, Louisiana, and New Mexico.
Improved Outlook and Increased Activity Levels
The overall outlook for the industry has brightened, and activity levels have increased while uncertainty has declined in the final quarter of 2024. This shift is largely attributed to Trump’s campaign promises to lower gasoline prices and speed up permitting for energy projects.
Permitting Process Expected to Improve Significantly
A third of executives polled believe that the permitting process will become significantly faster over the next four years. One exploration and production (E&P) firm executive noted, "We are anticipating that regulatory compliance issues will decrease, primarily due to an incoming administration that is pro-business and pro-fossil-fuel production."
Trump’s Energy Package and Its Potential Impact
Trump’s transition team is set to roll out a wide-ranging energy package that includes the approval of export permits for new liquefied natural gas (LNG) projects and increased federal land and sea oil drilling. The package also aims to lift regulations, stop subsidizing green energy, and seek LNG build-outs to place more demand on natural gas.
Potential 2025 Bottlenecks
Despite the improved outlook, some potential bottlenecks may hinder progress in the industry. Weak natural gas prices continued to pressure exploration and production firms in the fourth quarter, forcing operators to pay for their gas to be taken away due to negative gas prices at the Waha Hub in West Texas.
Mergers and Acquisitions Impact on Services Firms
The survey also highlighted the impact of mergers and acquisitions on services firms. These firms have been hurt by consolidation among producers, leading to reduced capital spending budgets. This has muted growth compared with the previous three years, as producers are holding flat or reducing their capital expenditures.
Supply and Demand Balance in 2025
Executives polled expect a West Texas Intermediate (WTI) oil price of $71 per barrel by the end of 2025, with responses ranging from $53 to $100 per barrel. The survey participants also anticipate a Henry Hub natural gas price of $3.19 per million British thermal units over the same period.
Greenhouse Gas Emissions and Plans for Reduction
The survey revealed a significant gap between large and small producers in plans to tackle greenhouse gas emissions. Nearly two-thirds of larger firms indicated plans to cut methane, while 86% plan to reduce the burning of unwanted gas. In contrast, just 29% of smaller firms have plans to reduce methane, and only 14% plan to reduce flaring.
Survey Results
- Overall outlook for the industry improved in the final quarter of 2024
- Activity levels increased while uncertainty declined
- A third of executives polled believe the permitting process will become significantly faster over the next four years
- Trump’s energy package aims to lift regulations, stop subsidizing green energy, and seek LNG build-outs
- Weak natural gas prices continued to pressure exploration and production firms in the fourth quarter
- Mergers and acquisitions have hurt services firms, leading to reduced capital spending budgets
Conclusion
The survey conducted by the Federal Reserve Bank of Dallas has provided valuable insights into the expectations of U.S. energy executives under President-elect Donald Trump’s administration. The improved outlook and increased activity levels are a positive sign for the industry, but potential bottlenecks such as weak natural gas prices and mergers and acquisitions may hinder progress in 2025.
Appendix: Additional Information
List of Survey Participants
The survey was conducted among 134 energy firms in Texas, Louisiana, and New Mexico. The list of participants includes:
- Large Producers: ExxonMobil, Chevron, ConocoPhillips
- Small Producers: Small independent oil and gas companies operating in the region
Methodology Used for the Survey
The survey was conducted using a combination of online and offline methods to ensure participation from a diverse group of energy firms. The methodology included:
- Online Questionnaire: A comprehensive questionnaire was designed and shared with potential participants through email invitations.
- Phone Interviews: Follow-up phone interviews were conducted with selected participants to gather additional information and clarify responses.
- In-Person Meetings: In-person meetings were held with key decision-makers at participating firms to discuss their expectations and plans.
The survey results are based on a representative sample of the industry, providing valuable insights into the expectations and plans of U.S. energy executives under President-elect Donald Trump’s administration.
Note:
This article is for informational purposes only and does not constitute investment advice. The views expressed in this article do not necessarily reflect those of the authors or the Federal Reserve Bank of Dallas.
