Warren's 2020 ascent sends ripples through oil industry

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:

• Elizabeth Warren's plan to pressure Big Oil into breaking up
• Elizabeth Warren on the issues, in under 500 words