Elizabeth Warren has previously taken aim at America’s most productive sectors, Wall Street, and Silicon Valley. Now, she’s going after another valuable area of the economy with a push against America’s energy companies. Ryan Dezember reports for the Wall Street Journal on the industry response to Warren’s September 6 tweet that not only will she put a moratorium on new fossil fuel leases for offshore and public lands, but that she will ban fracking, everywhere. He writes:
Outlawing a technique that energy producers use to blast oil and gas from shale formations would require legislation and spur a torrent of opposition from companies, investors and probably even state governments.
Substantial as those hurdles may be, they haven’t stopped analysts from running the numbers for investors and energy executives to see what might happen, if hydraulic fracturing were banned.
They are particularly focused on Ms. Warren’s threat to choke off drilling on federal lands.
“‘If Sen. Warren were to win…’ was getting a lot of airtime in our meetings,” said Jake Roberts, an exploration-and-production analyst at Houston’s Tudor, Pickering, Holt & Co. “We were surprised to see people taking it so seriously.”
In response, the energy-focused investment bank has sent clients more than 80 pages of research detailing exploration companies’ exposure to federal lands and pondering energy markets minus U.S. shale output, which has glutted global markets and depressed prices.
Tudor Pickering estimates that if fracking were banned, natural-gas prices in the U.S. would jump to somewhere between $9 and $15, up from $2.32 per million British thermal units on Friday. The firm figures that oil, which ended Friday at $53.78 a barrel on the New York Mercantile Exchange, would rise to the $80-to-$85 range and could risk shooting to $150 during market shocks.
Entire oil-field service companies would become obsolete. Pipeline owners would suffer without replenishment, as existing wells peter out. The winners would be Canadian shale drillers and big global operators like Exxon Mobil Corp. and Chevron Corp. , for which higher energy prices would offset losses on U.S. assets.
Read more here.