The direction of future federal and state government energy-industry regulation will have a significant impact on the midstream in the next two decades—either positive or negative. That’s the finding of a new Wood Mackenzie Inc. study prepared for the American Petroleum Institute.

“A Comparison of U.S. Oil and Natural Gas Policies” reviewed what could happen to the oil and gas industry overall by 2035. It plots the potential economic impact on the industry—as well as positives and negatives outcomes for job creation, the GDP, government revenues, household income and energy expenditures. The study plotted both upside and downside scenarios and compared them to a baseline forecast that excluded both pro-development policies and sharp regulatory constraints.

“Increases in U.S. oil and natural gas production are expected in all scenarios, but the regulatory environment is expected to have a very material impact on the pace of growth and the peak level achieved,” the Wood Mackenzie study said. “Pro-development policies could increase oil and gas production by 8 million barrels of oil equivalent per day (MMboed), whereas regulatory constraints could reduce it by 3.4 MMboed by 2035.”

In overall employment, the regulatory impact could swing as high as creation of 2.3 million additional U.S. jobs in the next 20 years, or go as low as eliminating 800,000 existing jobs, the report added.

“Midstream investment requirements are expected to be significantly impacted by the future regulatory environment,” the study emphasized. “Cumulative midstream capex is expected to be $118 billion higher through 2035 in the pro-development scenario and $171 billion lower under regulatory constraints.”

One example the study considers is a pro-development regulatory policy that would allow open offshore exploration and production along all coasts of the Lower 48 states.

“The development of new offshore areas could require capex of more than $500 billion by 2035 for gathering, processing, trunk-lines, and storage” overall, it said. That would include more than $200 billion to support 1.6 million barrels per day (MMbbl/d) of new production along the Pacific Coast, a similar investment to handle 1.4 MMbbl/d of new production from the eastern Gulf of Mexico and more than $100 billion for offshore East Coast production of an estimated 900,000 bbl/d.

Regulation designed to encourage development would also have equally positive midstream impacts, the study added. It pointedly considered the economic impact of contentious, Canada-to-Gulf Coast pipelines proposed in recent years.

“Wood Mackenzie estimates that construction of the northern portion of the Keystone XL Pipeline could result in up to $3.4 billion of direct capex spending in the U.S.,” the report said. “Increasing capacity of the Enbridge mainlines via the Alberta Clipper project is expected by Wood Mackenzie to result in $0.5 billion additional capex spend in the United States. Once construction is complete, revenue from throughput, ongoing operating expenses, and operational jobs contribute to economic benefits both locally and nationwide.”

On the opposite side of the question, the study found crude by rail traffic would be particularly hard hit by severe regulatory constraints. “Railcar modifications will increase the cost of leasing or purchasing railcars, while speed restrictions will result in a longer transit time to market,” it said. That would translate into higher costs for the energy industry.

Crude by rail tariffs could jump sharply from 2015 baseline rates by 2025 in that case, the study pointed out. Bakken shipments to Pacific Northwest refineries could rise an additional $3/bbl. Rates could go up $4/bbl to East Coast refineries while tariffs for shipments to the Gulf Coast would rise by $3.50-4/bbl, depending on the delivery point, it said.

In the 151-page study report, Wood Mackenzie also analyzed potential oil and gas pipeline capacity availability for the major U.S. unconventional plays, according to pro-development, baseline or regulatory constraint assumptions. The study also considered regulatory impacts in the upstream and downstream sectors, as well overall economic impact on each state.

The direction of future federal and state government energy-industry regulation will have a significant impact on the midstream in the next two decades—either positive or negative. That’s the finding of a new Wood Mackenzie Inc. study prepared for the American Petroleum Institute.

“A Comparison of U.S. Oil and Natural Gas Policies” reviewed what could happen to the oil and gas industry overall by 2035. It plots the potential economic impact on the industry—as well as positives and negatives outcomes for job creation, the GDP, government revenues, household income and energy expenditures. The study plotted both upside and downside scenarios and compared them to a baseline forecast that excluded both pro-development policies and sharp regulatory constraints.

“Increases in U.S. oil and natural gas production are expected in all scenarios, but the regulatory environment is expected to have a very material impact on the pace of growth and the peak level achieved,” the Wood Mackenzie study said. “Pro-development policies could increase oil and gas production by 8 million barrels of oil equivalent per day (MMboed), whereas regulatory constraints could reduce it by 3.4 MMboed by 2035.”

In overall employment, the regulatory impact could swing as high as creation of 2.3 million additional U.S. jobs in the next 20 years, or go as low as eliminating 800,000 existing jobs, the report added.

“Midstream investment requirements are expected to be significantly impacted by the future regulatory environment,” the study emphasized. “Cumulative midstream capex is expected to be $118 billion higher through 2035 in the pro-development scenario and $171 billion lower under regulatory constraints.”

One example the study considers is a pro-development regulatory policy that would allow open offshore exploration and production along all coasts of the Lower 48 states.

“The development of new offshore areas could require capex of more than $500 billion by 2035 for gathering, processing, trunk-lines, and storage” overall, it said. That would include more than $200 billion to support 1.6 million barrels per day (MMbbl/d) of new production along the Pacific Coast, a similar investment to handle 1.4 MMbbl/d of new production from the eastern Gulf of Mexico and more than $100 billion for offshore East Coast production of an estimated 900,000 bbl/d.

Regulation designed to encourage development would also have equally positive midstream impacts, the study added. It pointedly considered the economic impact of contentious, Canada-to-Gulf Coast pipelines proposed in recent years.

“Wood Mackenzie estimates that construction of the northern portion of the Keystone XL Pipeline could result in up to $3.4 billion of direct capex spending in the U.S.,” the report said. “Increasing capacity of the Enbridge mainlines via the Alberta Clipper project is expected by Wood Mackenzie to result in $0.5 billion additional capex spend in the United States. Once construction is complete, revenue from throughput, ongoing operating expenses, and operational jobs contribute to economic benefits both locally and nationwide.”

On the opposite side of the question, the study found crude by rail traffic would be particularly hard hit by severe regulatory constraints. “Railcar modifications will increase the cost of leasing or purchasing railcars, while speed restrictions will result in a longer transit time to market,” it said. That would translate into higher costs for the energy industry.

Crude by rail tariffs could jump sharply from 2015 baseline rates by 2025 in that case, the study pointed out. Bakken shipments to Pacific Northwest refineries could rise an additional $3/bbl. Rates could go up $4/bbl to East Coast refineries while tariffs for shipments to the Gulf Coast would rise by $3.50-4/bbl, depending on the delivery point, it said.

In the 151-page study report, Wood Mackenzie also analyzed potential oil and gas pipeline capacity availability for the major U.S. unconventional plays, according to pro-development, baseline or regulatory constraint assumptions. The study also considered regulatory impacts in the upstream and downstream sectors, as well overall economic impact on each state.

The direction of future federal and state government energy-industry regulation will have a significant impact on the midstream in the next two decades—either positive or negative. That’s the finding of a new Wood Mackenzie Inc. study prepared for the American Petroleum Institute.

“A Comparison of U.S. Oil and Natural Gas Policies” reviewed what could happen to the oil and gas industry overall by 2035. It plots the potential economic impact on the industry—as well as positives and negatives outcomes for job creation, the GDP, government revenues, household income and energy expenditures. The study plotted both upside and downside scenarios and compared them to a baseline forecast that excluded both pro-development policies and sharp regulatory constraints.

“Increases in U.S. oil and natural gas production are expected in all scenarios, but the regulatory environment is expected to have a very material impact on the pace of growth and the peak level achieved,” the Wood Mackenzie study said. “Pro-development policies could increase oil and gas production by 8 million barrels of oil equivalent per day (MMboed), whereas regulatory constraints could reduce it by 3.4 MMboed by 2035.”

In overall employment, the regulatory impact could swing as high as creation of 2.3 million additional U.S. jobs in the next 20 years, or go as low as eliminating 800,000 existing jobs, the report added.

“Midstream investment requirements are expected to be significantly impacted by the future regulatory environment,” the study emphasized. “Cumulative midstream capex is expected to be $118 billion higher through 2035 in the pro-development scenario and $171 billion lower under regulatory constraints.”

One example the study considers is a pro-development regulatory policy that would allow open offshore exploration and production along all coasts of the Lower 48 states.

“The development of new offshore areas could require capex of more than $500 billion by 2035 for gathering, processing, trunk-lines, and storage” overall, it said. That would include more than $200 billion to support 1.6 million barrels per day (MMbbl/d) of new production along the Pacific Coast, a similar investment to handle 1.4 MMbbl/d of new production from the eastern Gulf of Mexico and more than $100 billion for offshore East Coast production of an estimated 900,000 bbl/d.

Regulation designed to encourage development would also have equally positive midstream impacts, the study added. It pointedly considered the economic impact of contentious, Canada-to-Gulf Coast pipelines proposed in recent years.

“Wood Mackenzie estimates that construction of the northern portion of the Keystone XL Pipeline could result in up to $3.4 billion of direct capex spending in the U.S.,” the report said. “Increasing capacity of the Enbridge mainlines via the Alberta Clipper project is expected by Wood Mackenzie to result in $0.5 billion additional capex spend in the United States. Once construction is complete, revenue from throughput, ongoing operating expenses, and operational jobs contribute to economic benefits both locally and nationwide.”

On the opposite side of the question, the study found crude by rail traffic would be particularly hard hit by severe regulatory constraints. “Railcar modifications will increase the cost of leasing or purchasing railcars, while speed restrictions will result in a longer transit time to market,” it said. That would translate into higher costs for the energy industry.

Crude by rail tariffs could jump sharply from 2015 baseline rates by 2025 in that case, the study pointed out. Bakken shipments to Pacific Northwest refineries could rise an additional $3/bbl. Rates could go up $4/bbl to East Coast refineries while tariffs for shipments to the Gulf Coast would rise by $3.50-4/bbl, depending on the delivery point, it said.

In the 151-page study report, Wood Mackenzie also analyzed potential oil and gas pipeline capacity availability for the major U.S. unconventional plays, according to pro-development, baseline or regulatory constraint assumptions. The study also considered regulatory impacts in the upstream and downstream sectors, as well overall economic impact on each state.

The direction of future federal and state government energy-industry regulation will have a significant impact on the midstream in the next two decades—either positive or negative. That’s the finding of a new Wood Mackenzie Inc. study prepared for the American Petroleum Institute.

“A Comparison of U.S. Oil and Natural Gas Policies” reviewed what could happen to the oil and gas industry overall by 2035. It plots the potential economic impact on the industry—as well as positives and negatives outcomes for job creation, the GDP, government revenues, household income and energy expenditures. The study plotted both upside and downside scenarios and compared them to a baseline forecast that excluded both pro-development policies and sharp regulatory constraints.

“Increases in U.S. oil and natural gas production are expected in all scenarios, but the regulatory environment is expected to have a very material impact on the pace of growth and the peak level achieved,” the Wood Mackenzie study said. “Pro-development policies could increase oil and gas production by 8 million barrels of oil equivalent per day (MMboed), whereas regulatory constraints could reduce it by 3.4 MMboed by 2035.”

In overall employment, the regulatory impact could swing as high as creation of 2.3 million additional U.S. jobs in the next 20 years, or go as low as eliminating 800,000 existing jobs, the report added.

“Midstream investment requirements are expected to be significantly impacted by the future regulatory environment,” the study emphasized. “Cumulative midstream capex is expected to be $118 billion higher through 2035 in the pro-development scenario and $171 billion lower under regulatory constraints.”

One example the study considers is a pro-development regulatory policy that would allow open offshore exploration and production along all coasts of the Lower 48 states.

“The development of new offshore areas could require capex of more than $500 billion by 2035 for gathering, processing, trunk-lines, and storage” overall, it said. That would include more than $200 billion to support 1.6 million barrels per day (MMbbl/d) of new production along the Pacific Coast, a similar investment to handle 1.4 MMbbl/d of new production from the eastern Gulf of Mexico and more than $100 billion for offshore East Coast production of an estimated 900,000 bbl/d.

Regulation designed to encourage development would also have equally positive midstream impacts, the study added. It pointedly considered the economic impact of contentious, Canada-to-Gulf Coast pipelines proposed in recent years.

“Wood Mackenzie estimates that construction of the northern portion of the Keystone XL Pipeline could result in up to $3.4 billion of direct capex spending in the U.S.,” the report said. “Increasing capacity of the Enbridge mainlines via the Alberta Clipper project is expected by Wood Mackenzie to result in $0.5 billion additional capex spend in the United States. Once construction is complete, revenue from throughput, ongoing operating expenses, and operational jobs contribute to economic benefits both locally and nationwide.”

On the opposite side of the question, the study found crude by rail traffic would be particularly hard hit by severe regulatory constraints. “Railcar modifications will increase the cost of leasing or purchasing railcars, while speed restrictions will result in a longer transit time to market,” it said. That would translate into higher costs for the energy industry.

Crude by rail tariffs could jump sharply from 2015 baseline rates by 2025 in that case, the study pointed out. Bakken shipments to Pacific Northwest refineries could rise an additional $3/bbl. Rates could go up $4/bbl to East Coast refineries while tariffs for shipments to the Gulf Coast would rise by $3.50-4/bbl, depending on the delivery point, it said.

In the 151-page study report, Wood Mackenzie also analyzed potential oil and gas pipeline capacity availability for the major U.S. unconventional plays, according to pro-development, baseline or regulatory constraint assumptions. The study also considered regulatory impacts in the upstream and downstream sectors, as well overall economic impact on each state.