Oil and Gas Infrastructure Priorities Expected Focus of Trump’s First 100 Days
President-elect Trump’s Contract with the American Voter promises that the new Administration will prioritize infrastructure development during Trump’s first 100 days in office by seeking to introduce and pass the “American Energy and Infrastructure Act.” The package, which Trump has stated will leverage $1 trillion worth of public-private partnerships and private investments, may include support for transportation, energy, water, telecommunications, and cybersecurity projects. Democrats, including House Minority Leader Nancy Pelosi, have expressed a willingness to work with President-elect Trump to develop this bipartisan infrastructure package. Indeed, while the development of infrastructure legislation may afford significant opportunities for compromise with Congressional Democrats on transportation programs and cybersecurity initiatives, the energy provisions stand to be among the more controversial components of the legislation.
The Administration’s priorities for energy infrastructure will likely align with Trump’s campaign focus on oil and gas exploration, production, and transportation. As the development of energy infrastructure in the oil and gas sector is typically led and financed by private industry, the energy title of the infrastructure package is more likely to be laden with policy and regulatory reforms to expedite permitting processes than the funding and financing assistance that may appear under other titles.
Both Republican members of the incoming 115th Congress and the incoming Administration have indicated that reducing the federal regulatory burden on oil and gas developers will indeed be their energy priority for 2017. The campaign’s infrastructure memo cited a Wall Street Journal article estimating that $33 billion worth of projects have been either rejected by regulators or withdrawn by developers since 2012; the U.S. Chamber of Commerce’s “Progress Denied” report lists 351 energy infrastructure projects stalled because of the current regulatory framework.1 The study asserts that successful construction of these projects could produce a $1.1 trillion short-term boost to the economy and create millions of jobs—exactly the economic boom the Trump Administration hopes to create in the energy sector.2
Democrats will not look favorably upon regulatory reform that hastens the permitting for projects akin to the controversial Keystone XL and Dakota Access pipelines – symbolic legislative approvals which may be included in the legislative package for good measure, although the Administration is expected to quickly approve applications for both projects. Regulatory reform that directs the Department of Interior to revise its drill permit application process will also be controversial; previous legislative proposals have included a provision establishing an automatic approval after 60 days if the Department of the Interior does not issue a decision. Moreover, the package could draw on previous Republican proposals to speed the permitting process for the development of Liquid Natural Gas (LNG) export facilities, which have included requirements that the Department of Energy issues decisions on applications within 30 days after the conclusion of National Environmental Policy Act (NEPA) review.
Other legislative options to support the oil and gas industry include expanding the federal land available for oil and gas exploration. This expansion will likely include a five-year Outer Continental Shelf leasing program and additional leasing opportunities in the Alaskan National Petroleum Reserve (NPR). Opening the Arctic National Wildlife Refuge for oil and gas exploration is also on the agenda for the Trump Administration. To assist with financing oil and gas exploration, previous proposals have sought to establish a fund to provide 50% matching funds for joint projects with states to conduct oil and gas resource assessments on federal lands with oil and gas potential.
Beyond these regulatory reforms, the infrastructure package could provide financing opportunities for energy projects—both traditional and renewable—if it stands up an infrastructure bank. Moreover, if it is packaged with a larger tax reform initiative, federal tax credits to support traditional energy resources could be expanded—and could have significant implications for existing credits that support renewables and biofuels.