Consolidation likely as US oil and gas operators grapple with new regulationNews // May 8, 2013
US oil and gas professionals are losing their appetite for risk and are worried about rising operating costs, as they grapple with the consequences of a tougher, post-Macondo regulatory regime, according to new research published by GL Noble Denton.
Despite the new regulations, the vast majority believe that the US will continue to be a leading investment destination, and that the changes are necessary to improve the safety and reputation of the industry, according to the report.
The findings come from a study, Reinventing Regulation: The impact of US reform on the oil and gas industry, which was undertaken on behalf of GL Noble Denton, the independent technical advisor to the oil and gas industry.
The research provides a snapshot of industry sentiment towards the issue of new regulation being introduced in the US. It is based on a survey of more than 100 senior oil and gas professionals with operations in the US, and in-depth interviews with 10 industry executives, analysts and academics.
•More than eight in 10 (85 per cent) expect the US regulatory regime to get a lot tougher over the next two years, but only 17 per cent disagree that the US will remain a leading investment destination
•More than six in 10 (61 per cent) believe the changing regime will have ‘somewhat’ negative or ‘highly’ negative effects on their business over the next two years
•Almost eight in 10 (78 per cent) believe regulatory changes will lead to greater administrative workload
•More than eight in 10 (82 per cent) believe compliance costs will increase and nearly six in 10 (57 per cent) believe the changes will affect their appetite for risk taking
•Almost half (47 per cent) believe the new regime will increase safety in the industry
•Only one in 10 believe the US authorities are doing a good job of preparing the industry for the new measures
•Almost eight in 10 (76 per cent) said they favoured a performance or goal-orientated approach to compliance, where safety and environmental targets are clearly defined, over a more prescriptive stance. The latter is more typical in the US regulatory environment.