Americas News
Hamm Wants Trump to Slash Oil Regulations as Oklahoma Now Faces "Regular" Fracking Related Earthquakes
While the surprise election of Donald Trump as the 45th president of the United States may be promising for energy producers burdened by onerous environmental regulations, Trump's vow to slash regulations is causing worry that the global glut will increase and drive prices down even further than their current level.
Harold Hamm, Trump's campaign advisor and CEO of Continental Resources, told CNBC's Power Lunch the day after the U.S. elections, "there's so many of these overreaching regulations that's gone on, my goodness, we called it death by a thousand cuts, and that's exactly what it was intended to do – and these need to be drawn back."
When asked to give an example of a regulation he finds particularly troublesome, Hamm cited permitting on federal land, which he called "almost nonexistent."
But while the idea of a reinvigorated US production industry is attractive in many quarters, that combined with the Organization of the Petroleum Exporting Countries (OPEC) reporting it forecasts an even bigger global surplus in 2017 caused analysts to worry that new levels of oversupply will cause market chaos.
With regards to the cartel's upcoming meeting to ratify its deal to reduce production, David Hufton, analyst for PVM Oil Associates, remarked, "OPEC are facing insurmountable problems to which the election of Donald Trump has added."
But Gary Ross, executive chairman at PIRA Energy Group, thinks Trump's election will put even more pressure on OPEC to make the cutback deal happen: "OPEC has to reach a deal to become relevant again; our view is that they will cut, and I think when push comes to shove, they will collectively agree on November 30."
Meanwhile, trouble of another kind may presumably worsen if Trump succeeds in encouraging increased U.S. drilling: earthquakes related to fracking are said to be now happening almost daily throughout Oklahoma.
Reportedly, 46 quakes have occurred since the beginning of November, and the disposing of wastewater in deep wells is said to be responsible for the activity because it puts pressure on the state's fault lines.
In a bid to solve the problem, the Oklahoma Corporation Commission (OCC) ordered the shutdown of 58 disposal wells in the hotbed of seismic activity; and A.J. Ferate, vice president of regulatory affairs for the Oklahoma Independent Petroleum Association, says more research needs to be done before other preventative measures can be taken: "This is not something we can solve overnight, in part because we still need to understand it."
In September, both OPEC and the International Energy Agency predicted that demand for oil in 2017 would be lower than expected, the latter forecasting that momentum will ease to 1.2 million barrels per day (bpd) compared to 1.3 million bpd for 2016 – which itself was a downgrade of 0.1 million bpd on the IEA's previous forecast due to "a more pronounced 3Q16 slowdown."
