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Editorial

Buy American… again

By Corinna Petry

February 2017 - If Chevron Corp. is an indicator, it’s clear that oil companies have dramatically lowered their capital and exploratory budgets. Chevron estimates it will invest between $17 billion and $22 billion on projects during 2017 and 2018, down from a level of $40 billion in 2014. 

In a late 2016 investor presentation, Chevron reported it would conduct fewer major capital projects, but pursue more brownfield opportunities and increase its activity with shale and tight formations. The key takeaway is that any “expansion [will be] strongly linked to oil prices.”

During fourth quarter, the company still got about as much out of the ground as it did during the same three months of 2015, signaling that there is greater production per well, so more is being extracted with less money going into the ground. Nonetheless, Chevron identified seven shale and tight sites in its “future opportunity queue.” They are all in North America.

Meanwhile, with a new administration signing executive orders, many believe current obstacles to pipeline construction may be swept aside.

On Jan. 26, TransCanada Corp. submitted a Presidential Permit application to the U.S. Department of State for approval of the Keystone XL Pipeline. 

“The project is an important new piece of modern U.S. infrastructure that secures access to an abundant energy resource produced by a neighbor [Canada] that shares a commitment to a clean and healthy environment,” Russ Girling, TransCanada’s president and CEO, said in a statement.

“Enhanced standards and the use of advanced technology will help ensure XL will be built and operated to uphold our fundamental commitment to safety and the communities we serve,” he added. 

Further, in a memorandum, President Trump directed relevant federal agencies, including the Army Corps of Engineers, “to expedite reviews and approvals for the remaining portions of the Dakota Access Pipeline, a $3.8-billion, 1,100-mile pipeline designed to carry around 500,000 barrels per day of crude oil from the Bakken and Three Forks areas in North Dakota to oil markets in the U.S. 

“Timely review and approval of energy pipelines is critical to a strong economy, energy independence and national security,” according to the Jan. 24 White House statement.

The section of the memorandum that might be of greatest interest to Modern Metals’ readers is this: The president “directed the Secretary of Commerce … to develop a plan under which all new pipelines, as well as retrofitted, repaired or expanded pipelines, inside the borders of the United States, including portions of pipelines, materials and equipment be produced in the United States, to the maximum extent possible and [as] permitted by law.”  

Still, our experts predict that 2017 won’t be a boom year for energy companies until crude prices reach a certain, clearly profitable level that is sustainable. Please check out their forecasts and commentary in our cover story. MM

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