Oil and Gas Trends

Upstream Industry Highlights

Digital Transformation Accelerates Efficiency: Operators are increasingly adopting AI and machine learning to optimize costs, production, and revenues. Tools like predictive analytics and digital twins are becoming critical for reducing operational expenses and improving well performance, particularly in the Permian Basin.

Permian Infrastructure Expansion: The Matterhorn Express Pipeline (completed in 2025) has alleviated gas takeaway bottlenecks, stabilizing production and reducing price volatility. Operators are also expanding into tier 2/3 acreage and deploying advanced completion techniques to offset declining productivity in tier 1 wells, ensuring sustained output growth.

Global Unconventional Exploration Resurgence: Activity is rising in Saudi Arabia’s Jafurah basin, Argentina’s Vaca Muerta, and Algeria, driven by improved investor confidence in long-term oil and gas demand. These regions are emerging as key targets for resource capture and portfolio longevity.

Gas-Focused M&A Activity Picks Up: With natural gas prices projected to average $4.25/MMBtu in 2025, companies are pursuing gas-weighted mergers to rebalance portfolios. Strategic deals aim to capitalize on LNG export growth and regulatory support under the new administration.

Regulatory and Policy Shifts  

The Trump administration’s recent executive orders and policy reversals are reshaping the regulatory environment for upstream oil and gas companies. This week, we explore a quick breakdown of key developments and their impact on the industry.

Expedited Permitting and Streamlined Approvals

The January 2025 executive orders, including Declaring a National Energy Emergency and Unleashing American Energy, prioritize faster permitting for energy projects. Agencies are directed to:

• Limit environmental reviews to statutory requirements, avoiding "arbitrary or ideologically motivated" methodologies.

• Use emergency powers to accelerate leasing and permitting processes.

• Revoke Biden-era climate-focused orders, such as Executive Orders 13990 and 14008, which had emphasized climate crisis mitigation.

While the National Environmental Policy Act (NEPA) reviews remain mandatory, agencies may reduce their scope, potentially shortening timelines for upstream projects. The Department of Energy (DOE) has already signaled support, prioritizing "efficient permitting" to enable private-sector investments.

LNG Export Approvals Restart

The administration lifted the Biden-era pause on LNG export licenses, approving the Commonwealth LNG project in Louisiana as the first major authorization. Key details include:

• Capacity: 9.5 million tonnes/year, targeting Asian and European markets.

• Timeline: Final investment decision expected by September 2025, with production starting in Q1 2029.

• Policy Shift: Contradicts Biden’s climate-focused analysis, emphasizing economic benefits and energy security.

This move signals renewed support for LNG exports, aligning with efforts to reduce Europe’s reliance on Russian gas. Operators should monitor gas-weighted asset opportunities and engage early with agencies to capitalize on streamlined permitting, though legal risks and market oversupply concerns remain.

Formation of the National Energy Dominance Council (NEDC)

Chaired by Interior Secretary Doug Burgum, the NEDC aims to:

• Cut regulatory barriers across energy production stages.

• Advise on "energy dominance" by improving processes and reducing compliance costs.

While still in its early stages, the council’s focus on deregulation could ease permitting and operational hurdles for upstream operators, though its long-term impact depends on sustained political support.

Legal and Implementation Challenges

The administration’s regulatory overhaul faces legal and political headwinds:

• Chevron Doctrine Impact: The Loper Bright Supreme Court decision limits agency discretion, potentially reducing regulatory overreach but requiring strict adherence to legislation.

• Legal Uncertainty: Executive orders face potential court challenges, and long-term viability depends on congressional action.

Operators must navigate evolving landscapes, as agencies like the Federal Energy Regulatory Commission (FERC) and the Bureau of Land Management (BLM) may adopt divergent NEPA frameworks, creating uncertainty. Legal risks highlight the need for agile strategies to mitigate delays or policy shifts.

Strategic Considerations for Upstream Operations

To thrive in this environment, operators should:

• Leverage Expedited Permitting: Engage early with agencies to capitalize on streamlined processes for new projects or expansions.

• Monitor LNG Export Trends: Assess opportunities in gas-weighted assets as LNG demand grows, particularly in Europe and Asia.

• Stay Agile: Prepare for potential policy reversals post-2025 elections, given the long lifecycle of energy projects.

Proactive engagement with agencies and dual compliance strategies (e.g., climate risk disclosures) will help navigate legal and investor expectations amid shifting priorities.

Looking Ahead

Upstream operators face a high-stakes regulatory landscape as the Trump administration prioritizes energy production over climate considerations. While expedited permitting and LNG export approvals offer near-term growth opportunities, long-term success hinges on navigating legal challenges, election-year volatility, and potential policy reversals. Key risks include LNG market oversupply, court battles over NEPA rollbacks, and shifting investor demands for climate disclosures. Operators must remain agile, diversify portfolios, and track policy shifts to capitalize on opportunities while mitigating risks. The next 12–18 months will test resilience in this dynamic environment.