First Oil: U.S. upstream industry relieved by Trump’s win

KURT S. ABRAHAM, EDITOR-IN-CHIEF 

Fig. 1. Shown at a rally just before Election Day, former and future President Donald Trump won a decisive victory, with an oil-and-gas-friendly energy policy as one of his campaign pillars. Image: Official photo, Trump campaign.

Well, folks, Nov. 5 has come and gone, and so has another U.S. presidential election. To put it mildly, a vast chunk of the U.S. population is worn out from this last election round and happy to see it go. To the surprise of some folks in the country, including many overrated political pundits on television, former President Trump (Fig. 1) defeated Vice President Kamala Harris convincingly, picking up 312 of 538 electoral votes, and posting a 2.5-million-vote advantage out of roughly 155 million votes, for a 50.0% share, compared to 48.4% for Harris and 1.6% for four other, minor candidates.  

Trump’s performance helped the Republicans take control of the Senate from the Democrats, finishing with a 53-47 advantage among the next group of Senators that will take office on Jan. 3. The Republicans retained control of the House, albeit by a thin majority. Their final count is at least 219 (one more than needed for a majority), and they may wind up with 220. 

Mind-numbing spending. And if you folks in the U.S. thought the presidential television commercials were excessive and would never end, you’re right. President-elect Trump was outspent by Harris by a wide margin, yet he triumphed in the end. One has to conclude that Trump simply had the better message and remedies on a wide range of issues that Americans actually care about. Remarkably, while Trump’s campaign (not counting outside PACs that helped) spent $1.09 billion directly, the Harris campaign blew by that figure, spending $1.5 billion directly in just 15 weeks! No, folks that’s not a typo–and to top it off, the Harris campaign finished the election, $20 million in the hole. Absolutely amazing. 

The New York Post did an excellent job of summarizing the sorry situation. “Kamala Harris spent $1.5 billion on her failed presidential campaign,” noted the paper’s editorial board, “hemorrhaging, on average, $100 million per week—proving that she and her claque are as bad at managing money as they are at generating coherent policy ideas.” The Post has a real point—imagine Harris and her group with their hands on the U.S. Treasury. 

Election’s effects on the upstream industry. Needless to say, the U.S. upstream industry is very pleased with the Nov. 5 result. That large sound that some of you across the pond in Europe might have heard was the giant, collective sigh of relief coming from operators, service companies and drilling contractors throughout the country.  

Industry professionals will be glad to know that the President-elect is wasting no time in putting together a wide-ranging energy plan. Word has leaked out to Reuters that Trump’s transition team has put several leading items into the plan, including the lifting (perhaps on day one) of current President Joe Biden’s “pause” on LNG export licenses; expediting drilling permits on federal land; increasing the number of offshore lease sales; and possibly restarting the Keystone XL pipeline project. To this list, this editor would add the likelihood that the EPA will be reined in, with onerous items like methane reporting rules rolled back or repealed. You can also look for Trump to repeal some of Biden’s key climate legislation, where possible. 

For a deeper dive into what the new Trump administration might do, please take a look at Contributing Editor David Blackmon’s excellent post-election analysis in the Oil and Gas in the Capitals column. We also want to steer you over to the Executive Viewpoint column, where Tim Tarpley, President of the Energy Workforce & Technology Council, discusses the path that President-elect Trump may take towards unleashing the economic power of American energy. 

Cabinet picks. In addition to fashioning energy plans and a program to control the U.S. border, Trump has worked at what may be a record pace to pick the members of his Cabinet, as well as other prominent White House and Executive Branch positions. Two Cabinet picks that will have great effect on the upstream industry will be Secretary of Energy and Secretary of the Interior.  

Fig. 2. Secretary of Energy nominee Chris Wright, founder, CEO and Chairman of Liberty Energy. Image: Liberty Energy.

For Secretary of Energy, the President-elect has picked Liberty Energy founder, CEO and Chairman Chris Wright, Fig. 2. Liberty Energy is an upstream service firm headquartered in Denver, Colo.  Wright is the founder, Chief Executive Officer, and Chairman of the Board of Liberty Energy. He completed an undergraduate degree in mechanical engineering at MIT and graduate work in electrical engineering at University of California-Berkeley and MIT. In 1992, he founded Pinnacle Technologies, whose innovations helped launch commercial shale gas production. Wright served as CEO of Pinnacle until 2006. In addition, he was Chairman of Stroud Energy, an early shale gas producer, before selling to Range Resources in 2006. In 2010, Wright founded and served as Executive Chairman of Liberty Resources, a Bakken-focused exploration and production company, and Liberty Midstream Solutions until its sale in 2024.  

In addition, Wright is a Trump campaign donor, he supports fracing, and he has been a strong critic of efforts to fight climate change featuring government initiatives. If confirmed by the Senate, he also will serve on the newly created National Energy Council. 

Fig. 3. Secretary of The Interior nominee Doug Burgum, current Governor of North Dakota. Image: Official portrait, Office of the Governor.

For Secretary of the Interior, Trump is nominating North Dakota Governor Doug Burgum, Fig. 3. He has served as governor since December 2016. Growing up in North Dakota, Burgum graduated with a bachelor’s degree in university studies from North Dakota State University in 1978. He earned a master’s of business administration from the Stanford University Graduate School of Business in 1980. From 1983 into 2007, he spent 24 years as a software executive. In 2006, Burgum founded the real estate development firm Kilbourne Group, and then, in 2008, he co-founded venture capital firm Arthur Ventures. He ran for North Dakota governor in 2016 and won with a wide share of the vote, and then Burgum was re-elected easily in 2020. In June 2023, the governor announced a presidential bid, but by December, he had suspended his campaign, citing problems with the Republican National Committee’s high threshold of campaign donations and polling numbers to qualify for debates. He then endorsed Trump and became a highly active surrogate, who campaigned for the former and future President, right up to Election Day. 

It should be noted that Burgum was one of several candidates under active consideration to be Trump’s running mate before J. D. Vance was chosen. Given the significant role that the Bakken shale plays in North Dakota’s economy, Burgum has developed an appreciation for the upstream oil and gas industry. He is known as a strong advocate for drilling and has urged federal officials to increase energy and mineral production on U.S. lands. 

A grievous lack of North Sea reality. If the British portion of the North Sea wasn’t already under great duress, the national government added to it on Nov. 25. The North Sea Transition Authority (NSTA) announced that in an historic move, it is fining Repsol North Sea £350,000 ($439,000) for a situation dating back to 2018 that reached a crisis point in 2020. NSTA said that RNS’s “behavior led to a shut-in at Flyndre field for five days and hampered economic recovery of petroleum.” NSTA went on to say that the company “failed to ensure its economic recovery obligations” and had “Imposed an unreasonable time limit on negotiations” centering on a transportation rate hike.   

RNS operated the Fulmar facility in the Central North Sea, which ceased production in 2018, but continued to be used for the transportation of oil and gas by Flyndre, Auk and Clyde fields. Auk and Clyde were owned and operated by Repsol Resources UK Ltd. Flyndre was owned and operated by TotalEnergies, before being taken over by NEO from July 2020 forward. 

Before NEO took control of Flyndre, the NSTA claims that RNS told TotalEnergies that it intended to increase transportation charges through Fulmar and, when TotalEnergies questioned the hike, RNS supposedly issued a Termination Notice, saying that the agreement would end on Aug. 6, 2020. 

RNS is alleged to have refused TotalEnergies’ request for further talks and the provision of information. Accordingly, on Aug. 6, the transportation agreement ended and, as a result, the Fulmar facility—which was undergoing maintenance—did not reopen on Aug. 8, as planned. 

NSTA says that Flyndre remained shut-in until Aug. 13, when a temporary agreement was reached, which allowed transportation of oil and gas from Flyndre to resume. The situation was only resolved permanently when RNS took ownership of Flyndre field in November 2021. 

Regardless of whether RNS deserved to be fined, the actual levy is excessive. This NSTA action also will put concerns and doubts in the minds of other operators as to whether they should continue in the North Sea. With NSTA setting this precedent, the natural thought would be “who is next, and how excessive will the next fine be?” This is yet another negative factor to add to the list of reasons for operators to skip the North Sea, including the continued money grab by the UK government through excessive taxes. 

UK Prime Minister Kier Starmer and his regime have helped to bring on this mess, as they  continue to tilt at windmills (pun intended). Meanwhile, NSTA had the nerve to say that it was concerned that Repsol’s “behavior” could have a “negative impact” on investment in the North Sea. It seems to this editor that NSTA and the Starmer regime are far more guilty of this charge than Repsol. 

IN THIS ISSUE 

Special focus: Advances in Production. In the first article in this month’s lead theme, a Baker Hughes author describes how an automated, intelligent chemical injection technology minimizes corrosion and scaling, extends ESP run life, and has been increasing Permian basin production. In another article, two experts from Saudi Aramco discuss a novel approach of recovering energy from high-pressure multiphase streams. A combination of a turbo-expander and a liquid jet ejector can be used to extract energy from multiphase streams during production. In a third feature, a ChampionX author explains that digital control architecture optimizes plunger lift wells, with advanced functionalities and high-resolution data unlocking exponential increases in efficiency and optimization. Finally, two developers from ClampOn describe how cutting-edge choke condition monitoring can help reduce choke failures by monitoring vibration and acoustic levels, offering operators necessary information to change choke flow and plan maintenance intervals. 

Shale completion technology: Using expandable casing patches to reinforce well integrity.  In this article, a Coretrax author says that casing patch systems offer significant downtime reductions to operators in the face of unique well integrity problems, such as casing leaks or corrosion. As the global energy sector moves toward greener solutions, these advanced systems allow operators to extend the lives of existing wells, optimizing production and, in turn, minimizing environmental impacts of a traditionally large carbon footprint industry. 

ShaleTech report—Marcellus and Utica shales: which future for Marcellus and Utica shales? 

Contributing Editor Gordon Feller says there are multiple possible futures that lay ahead for the Marcellus and Utica shales. But there are varying opinions of where these two prolific shale plays are headed. While some of this variability is due to uncertainty about traditional factors like commodity prices, equipment and services availability, operator fiscal situations and availability of prospects to drill, the regional industry is taking some encouragement from continually improving drilling metrics, as well as the recent election of former and future President Donald Trump.