Oct 22, 2019

Warren's 2020 ascent sends ripples through oil industry

Photo: Zach Gibson/Getty Images

Elizabeth Warren's rise in the 2020 Democratic primary fight is forcing oil companies and analysts to grapple with the potential effects of the liberal Massachusetts senator winning the White House.

Why it matters: Warren, now challenging Joe Biden for frontrunner status, has pledged to halt hydraulic fracturing — the extraction technique that has enabled the U.S. oil and natural gas boom. She's also pledged to end new leasing on federal lands.

What they're saying: "Elizabeth Warren’s comments to 'ban fracking everywhere' drew a lot of attention and raised concerns for those invested and active in the industry," notes a recent RBC Capital Markets report.

  • Tudor, Pickering, Holt & Co. analyst Jake Roberts tells the Wall Street Journal that clients are abuzz about Warren's plans. “‘If Sen. Warren were to win’ was getting a lot of airtime in our meetings,” he said.
  • The same WSJ piece reports, "Analysts with Piper Jaffray’s Simmons Energy heard so much about Ms. Warren from money managers recently that they parsed her energy and infrastructure policy proposals in a note sent to clients last week."

Where it stands: Warren would need Capitol Hill's help for an outright fracking ban, and that's very unlikely to materialize.

  • But even the prospect of curtailing fracking and new leasing on federal lands is sending ripples through the sector.
  • RBC's U.S. production forecast would be 1.2 million barrels per day lower in 2025 if there was a fracking ban imposed on federal lands starting in 2021.

The intrigue: Targeting federal lands in particular would create bigger risks for some companies than others, based on how much of their acreage centered in those areas versus state and private holdings.

  • RBC and other analysts are already tracking which companies would have significant exposure, like big independent producers Devon Energy and Concho Resources.

But, but, but: Efforts to stymie drilling on federal lands would face vigorous legal and political opposition and bureaucratic hurdles.

  • The RBC report notes that the industry would "pursue legal recourse including an injunction until courts make a final decision on that action."
  • And a Bloomberg story on Warren's plans earlier this month, summarizing analysis from Sanford C. Bernstein's Bob Brackett, states that "any impact from a Warren win may be short-lived."

Go deeper:

Go deeper

The growing anti-Warren consensus shows the limitations of her plans

Illustration: Eniola Odetunde/Axios. Photo: Sean Rayford/Getty Images

The Economist came down hard on Sen. Elizabeth Warren last month, describing her regulatory proposals as "jaw-dropping" and warning of "a severe shock" were her plans to be enacted.

The state of play: Similar sentiment has arrived from Steve Rattner, the manager of Mike Bloomberg's fortune, who says that a "Warren presidency is a terrifying prospect." Billionaires Leon Cooperman and Jamie Dimon have also joined the chorus.

Go deeperArrowNov 7, 2019

Billionaires are not happy with Elizabeth Warren and her wealth tax

Photo: Joseph Prezioso/AFP/Getty Images

Billionaire hedge fund manager Leon Cooperman again unloaded on Sen. Elizabeth Warren in an interview Wednesday with CNBC, a month after sending her a five-page letter.

Why it matters: His comments came in response to Warren's latest TV ad, which is titled “Elizabeth Warren Stands Up to Billionaires,” and will begin running on the network soon.

Go deeperArrowNov 14, 2019

A fracking ban could be a dicey proposal for Democrats in 2020

Data: KFF and The Cook Political Report; Note: Margin of sampling error for Democrat voters: ±3%, Swing voters ±4%; Chart: Andrew Witherspoon/Axios

New polling of four battleground states shows the Green New Deal concept is highly popular, while calls to ban hydraulic fracturing could create political headwinds.

The big picture: Elizabeth Warren and Bernie Sanders have embraced both ideas, while Joe Biden has not called for a fracking ban.

Go deeperArrowNov 8, 2019