It’s never easy in the commodity world, and despite oil prices comfortably above $50/bbl across the Permian, a new worry has come to the fore as we start the second month of 2021. No, it’s not a Reddit movement focused on the oil market, not even an OPEC+ action this time. The latest news that has wildcatters muttering through clenched teeth came from Washington D.C., where the Biden administration recently announced a pause on leasing federal lands for oil and gas development. While it’s far too early to discern what this decree — or future actions — will mean for the Permian, we get the sense that the headlines aren’t capturing the nuances of drilling activity in West Texas and southeastern New Mexico. In our view, at its worst, a long-term ban on drilling on federal lands would produce some clear winners and losers, while the near-term impact is potentially just a ripple in the ocean. Today, we examine what the latest drilling data from the Permian tell us about the possible outcomes of the new administration’s recent actions.
There is one thing we want to make clear before we get started today: this is not a blog about politics. That’s not what we do at RBN. However, we don’t stick our head in the sand either, when regulatory changes come along that may significantly impact the oil and gas sector. We get particularly interested when those changes might affect one of our core focus areas, namely the Permian Basin. So here are the facts as we know them regarding the recent orders. On January 27, President Biden signed an Executive Order (EO) that paused leasing of federal lands pending a review of oil and gas permitting and leasing practices. The EO followed a Secretarial Order (SO) issued by the Department of Interior (DOI) on January 20 that established a 60-day window during which some processes, including permitting, can no longer be delegated to lower-ranking officials for approval. As we see it, the SO is potentially more restrictive than the EO, though there is no outright ban on activity as leadership at DOI can still approve items previously delegated to their subordinates. In fact, it was reported last week that 70 permits had already hit a snag in the new process and will have to be resubmitted. That makes for a good headline, though the DOI reiterated last week that it was still approving permits. That said, it is really the potential impact here that gets some folks in the Permian worried.
What if the federal government makes these temporary orders more permanent? What would that mean for the Permian Basin? We give it our best shot at assessing the potential impact today, though many unknowns remain.
The RBN NATGAS Haynesville is a weekly natural gas fundamentals analysis focused on supply, flow, and LNG-driven demand dynamics within the Haynesville basin.
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About the song
"Don't Come Around Here No More" was written by Tom Petty and Dave Stewart, and is the third song on side one of Tom Petty and the Heartbreakers' sixth studio album, Southern Accents. Released as the first single from the album in February 1985, it went to #13 on the Billboard Hot 100 Singles chart. The music video for the song, directed by Jeff Stein, is a psychedelic take on the tea party scene from Alice in Wonderland. It received heavy rotation on MTV at the time. Personnel on the record were: Tom Petty (lead vocals, piano), Mike Campbell (guitar, bass synthesizer), Benmont Tench (string synthesizer), Stan Lynch (drums, percussion), Howie Epstein (bass, backing vocals), Dave Stewart (electric sitar, synthesizer, backing vocals), Dean Garcia (intro bass guitar), Daniel Rothmuller (cello), Alan "Bugs" Weidel (wild dog piano), and Marilyn Martin, Stephanie Spruill, Sharon Celani (backing vocals).
Southern Accents was recorded in 1983-85 at Gone Gator One, Sound City, Village Recorder, and Sunset Sound in Los Angeles, and Church Studio in London. It was produced by Tom Petty, Mike Campbell, Jimmy Iovine, Dave Stewart, and Robbie Robertson. Released in March 1985, It went to #7 on the Billboard Top 200 Albums chart, and has been certified Platinum by the Recording Industry Association of America. Three singles were released from the LP.
Tom Petty and the Heartbreakers were an American rock band formed in Hollywood, CA, in 1976 by Tom Petty, Mike Campbell, Ron Blair, Benmont Tench, and Stan Lynch. Petty, Campbell, and Tench were in the band Mudcrutch before it evolved into Tom Petty and the Heartbreakers. Eight members passed through the ranks of the Heartbreakers until Tom Petty's death. They released 13 studio albums, and 68 singles, and were inducted into the Rock and Roll Hall of Fame in 2002. Bassist Howie Epstein passed away in February 2003, and Tom Petty in October 2017. The Heartbreakers disbanded after that. Guitarist Mike Campbell played lead guitar on Fleetwood Mac's 2018-19 world tour, and recently released the debut studio album with his band The Dirty Knobs, entitled Wreckless Abandon.
