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
"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
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.