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Environmental rules to spark oil, gas consolidation: report

Keywords: Tags  oil, gas, consolidation, energy, GL Noble Denton, Thorsten Schier


NEW YORK — The oil and gas industry will likely consolidate as tougher environmental regulations take hold, according to an industry survey conducted by oil and gas technical services provider GL Noble Denton.

"Industry consolidation is a likely consequence of the spiraling compliance costs and administrative workloads resulting from reforms," according to a report from the London-based company, which noted that companies will likely require more employees to help them comply with regulatory agency requests, a development that would favor larger corporations.

Increased regulation in the wake of the 2010 Deepwater Horizon disaster has been "somewhat" or "highly" negative for the oil and gas industry, six out of 10 survey respondents said. The problem is "especially" acute for "larger, publicly listed companies that are typically more in the spotlight."

As a result, larger companies are more pessimistic about their domestic investment levels. While only 25 percent of survey respondents thought that investment in the industry would drop due to increased regulation, 50 percent of respondents from companies where annual revenue exceeds $10 billion thought it was likely.

Describing the negative impact of regulations, respondents pointed to uncertainty about whether key drilling and pipeline projects would be approved. Calgary, Alberta-based TransCanada Corp.’s Keystone XL pipeline, for example, has faced ongoing delays (amm.com, April 26).

More than 80 percent of respondents expect regulations to get even tougher in the coming years, according to the report.


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