What’s New in Oil & Gas: February 2025 Edition
The oil and gas industry has seen big changes this past month. New government rules, market shifts, and ongoing environmental concerns are the most prominent changes set to affect oil and gas companies from the month. Here’s a simple look at what’s happening and what it means for oil and gas development.
Policy and Regulatory Updates
Fast-Tracking Fossil Fuel Projects
The Trump administration has declared a national energy emergency, enabling the U.S. Army Corps of Engineers to expedite over 600 infrastructure projects, like pipelines and gas plants by skipping some environmental checks. This move aims to accelerate fossil fuel development by specifically bypassing certain environmental reviews, though it has faced criticism from environmental groups concerned about potential ecological impacts.
Methane Emission Fees Implementation
The Environmental Protection Agency (EPA) is set to implement a Waste Emission Charge, commonly known as the methane fee, starting this year. The fee begins at $900 per metric ton of methane emissions, increasing to $1,500 by 2026. This regulation is expected to impact oil and gas producers, particularly smaller operators, due to the financial and operational challenges of compliance.
What this means for oil and gas development…
1. With fewer hurdles, companies can start projects faster. This could lead to more jobs and energy production. But, companies need to consider how to work with the communities around their developments to address potential concerns and environmental effects.
2. Companies need to find ways to cut methane emissions to avoid extra costs. This might mean investing in new technology or changing how they operate. Smaller companies could face financial challenges due to these new fees.
Market Dynamics
BP Shifts Focus Back to Oil and Gas
BP has decided to increase spending on oil and gas projects to about $10 billion each year. At the same time, they’re cutting investments in renewable energy. This change aims to boost profits but has raised concerns among environmental groups.
This decision aims to enhance profitability and address shareholder concerns. CEO Murray Auchincloss stated,
“We recognize that our previous approach was overly ambitious. By refocusing on our core strengths in oil and gas, we aim to deliver greater value to our shareholders.”
Chevron Plans Significant Layoffs
Chevron is planning to lay off 15% to 20% of its workers, which means about 6,000 to 8,000 jobs. This is part of a plan to cut costs and increase cash flow. The company aims to save $2 to $3 billion by 2026 through these layoffs and other efficiency measures. Vice Chairman Mark Nelson explained,
“Chevron is taking action to simplify our organizational structure, execute faster and more effectively, and position the company for stronger long-term competitiveness.”
Occidental Asset Divestitures
Occidental Petroleum Corporation has announced agreements to divest assets in the Permian Basin and the Rocky Mountains for a total of $1.2 billion. This strategic move is part of the company’s debt management plan and reflects a broader trend of portfolio optimization within the industry. President and chief executive Vicki Hollub said,
“The transactions announced today continue to high-grade our portfolio and accelerate the progress toward achieving both our medium-term balance sheet deleveraging target and shareholder return pathway.”
Global Production Forecasts
The U.S. Energy Information Administration (EIA) forecasts that non-OPEC+ countries will lead the growth in global petroleum liquids production in 2025 and 2026. Notably, the United States is expected to contribute significantly, with an anticipated increase of 1.1 million barrels per day during this period.
What this means for oil and gas development…
1. If the 45Q tax credit is maintained or enhanced, companies may find it financially advantageous to invest in CCS technologies. This can help meet regulatory requirements and position businesses as leaders in sustainability. Early adoption of CCS can also provide a competitive edge as environmental regulations become more stringent.
2. Companies operating in Colorado and potentially other states will need to implement strategies to achieve mandated emission reductions. This may involve investing in cleaner technologies, enhancing energy efficiency, and reevaluating operational practices. Proactive compliance can improve public perception and reduce the risk of regulatory penalties.
Environmental and Sustainability Initiatives
Carbon Capture Incentives
The current administration is evaluating the future of the 45Q tax credit, a crucial incentive for carbon capture and storage (CCS) projects. This credit has been instrumental in promoting CCS technologies, which are increasingly relevant for midstream operations aiming to reduce carbon footprints. Staying informed about potential policy shifts is essential, as they could influence the financial viability of CCS projects and related infrastructure investments.
State-Level Emission Reduction Efforts
Colorado has adopted new rules requiring a 22% reduction in greenhouse gas emissions from midstream oil and gas operations by 2030. These regulations represent a significant step toward state-level environmental accountability and may serve as a model for similar policies in other regions.
What this means for oil and gas development…
For midstream companies, the production surge means:
1. New pipeline projects and facility expansions to manage growing volumes.
2. Greater emphasis on storage solutions as producers seek flexibility in volatile markets.
3. Export terminal upgrades to handle increased outbound shipments.
For upstream companies, ramping up production requires:
1. Quick access to drilling services and supply chain efficiency to capitalize on market conditions.
2. Balancing production growth with cost controls to maintain profitability.
Downstream players can anticipate:
1. Refinery utilization rates rising to meet demand for refined products.
2. Opportunities to enhance petrochemical output and expand market reach.
Strategic Considerations for Industry Stakeholders
Regulatory Compliance: Staying abreast of federal and state policy changes is crucial for strategic planning and operational adjustments.
Investment Opportunities:
Asset divestitures and shifts in global production forecasts may present opportunities for strategic investments and portfolio diversification.
Sustainability Initiatives:
Engaging in carbon capture projects and adhering to emission reduction mandates can enhance environmental stewardship and align with evolving regulatory landscapes.
As the industry navigates these developments, proactive adaptation and strategic planning remain key to capitalizing on emerging opportunities and mitigating potential challenges.
Why Partner with Constructable for Your Next Build?
Navigating evolving regulations, market shifts, and sustainability initiatives can be challenging—but you don’t have to do it alone. At Constructable, we specialize in helping oil and gas clients build faster, smarter, and safer with a proven track record of delivering projects that meet regulatory requirements while accelerating operational readiness. Whether you’re planning new infrastructure, optimizing existing facilities, or exploring carbon capture solutions, we’re here to be your trusted partner every step of the way.
Ready to get started? Contact us today at (832) 844-0500 or email us to learn how we can help you get to operations faster than anyone else.
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