With Donald Trump’s 100th day in office coming up on April 29, Serkan Sahin, a senior oil analyst at Thomson Reuters, takes a look at what has happened in the oil industry since he took office and what the future may hold for the industry.
“Leading up to and during the election it was suggested energy policy would be more supportive of the Hydrocarbon industry under a Trump administration.
“We have seen some early indications of this but the President’s energy policy has still yet to be formalized.
“With the exception of US airstrikes against Syrian government air bases in mid-April, direct action from the White House has not significantly impacted the oil market, which remains primarily driven by fundamentals.
“As expected after President Trump’s inauguration in January, the federal government has been more accommodating of hydrocarbon producers, particularly oil and gas operators, in energy policy.
“The Dakota Access Pipeline (DAP), one of the most controversial subjects during President Obama’s term, was quickly approved after President Trump signed an executive order to complete the final stage of the pipeline – in one of his first acts in government.
“The pipeline, with an operating capacity to carry about half of Bakken oil output from North Dakota to Illinois, has been granted permission to commence operations following approval in February.
“Oil operations in Bakken have been impacted significantly from the crude oil price decline of 2014-15, largely because of high transportation costs to ship crude out to major demand locations.
“Crude-by-rail transportation was the primary mechanism to transport Bakken crude to the East Coast, which in turn was raising wellhead breakevens to levels that impacted Bakken crude’s competitiveness against foreign imported grades.
“Thomson Reuters Oil Research estimates that the commissioning of DAP pipeline would assist Bakken output in experiencing a marginal recovery during 2017.
“We are expecting crude oil output in the Bakken shale play to stop declining from April 2017 at a level of around 964,000 bpd.
“We expect output to increase by 11% to around 1.07 million bpd by the end of the year. DAP is expected to carry half of production volumes which would support drilling activities mainly in McKenzie and Williams counties in North Dakota.
“However, we do not expect a major recovery in Bakken output as production activities are likely to be limited by the capacity of the DAP and logistics limitations in completion operations, as experienced in Eagle Ford.
“Assuming a recovery in output from major shale oil basins, we expect total US output to reach 9.14 million bpd by December 2017, up 9% year-on-year.”