The Trump Effect: What does it mean for Natural Gas Production?

by Matthew Mattingly

Love him or hate him, Donald Trump is officially the President of the United States and he is not taking long to put his campaign promises into action. Immigration, border walls, trans-pacific partnership and transgender bathrooms are just a few of the items that have been discussed or placed in executive orders. It’s been a whirlwind start to the presidency and I haven’t even brought up the words Russia or Putin; that topic can get a little ‘Spicey.’

One campaign promise that didn’t take long to put into action is Trump’s energy policy. His energy policy included many items such as lifting drilling restrictions, drilling more (federal and offshore), creating more energy jobs and becoming less dependent on foreign oil (the latter being a promise seemingly made by every presidential candidate of the last 50 years). However, his first move on energy was an executive action to advance the approval of two recently stalled pipelines. Both the Dakota Access (which would transport oil from the Bakken Shale) and the Keystone XL (which would transport oil from Alberta oil sands to the refineries on the Gulf Coast) are now back on the table after heavy scrutiny from environmental organizations.

The Dakota Access and Keystone XL pipeline projects are big news for oil producers, but will Trump have the same impact on natural gas production? That question is tough to answer because there are many variables that affect the natural gas industry. In regards to natural gas drilling itself, there is not much red tape that needs to be cut. Many know former President Obama for the “War on Coal” and automatically assume his policies were a “War on ALL Fossil Fuels” altogether. However, President Obama was actually a strong advocate for natural gas and the fracking industry. His administration viewed the resource as a “bridge” (don’t use that term in front of an environmentalist), moving away from coal generation to more renewable resources. Therefore, there are not many natural gas regulations in place for Trump to supersede, and the ones that are in place, should not have much impact on current operations. For example, the Regulation of Hydraulic Fracturing on Federal and Land primarily only affects the land in seven western states, where 98% of hydraulic fracturing operations take place on federal lands. The majority of natural gas fracking is taking place in Ohio, Pennsylvania and Texas and these states would hardly be impacted by the federal land regulation.

While there are not many regulations directed toward the natural gas industry, changes to Obama’s other regulations against the coal industry could indirectly affect natural gas. These regulations include:

  • Clean Power Plan
  • Cross-State Air Pollution Rule (CSAPR)
  • Mercury and Air Toxics Standards (MATS)

These regulations all could be on the chopping block. If so, it could delay or even prevent the closure of many coal generation plants that are expected to retire in the coming years. The majority of the coal generators that are earmarked for retirement are expected to be replaced by mainly natural gas generation. As a result, the life of coal generation has a significant impact for natural gas demand in the coming years.

***The “Trump Effect,” in regards to natural gas, is discussed in further detail in the latest Bulls & Bears Report provided by Choice Energy Services. The Bulls & Bears is where you can find the latest data and information effecting the NYMEX natural gas market.***