Podcast - Election Roundup: How a Trump Administration Could Shape the Oil and Gas Landscape

Liz Craddock: Hi everyone. Thank you for joining us today for this podcast, which is a miniseries of our Eyes on Washington for Holland & Knight. We're doing these on the upcoming elections and what we could potentially expect from a Trump 2.0 Administration. So for those of you who don't know me, I'm Liz Craddock. I'm a partner here at Holland & Knight. I've been in the energy space for over two decades here in D.C. I worked for Senator Mary Landrieu for about a decade, doing all things energy and getting to serve as her staff director of the Senate Energy and Natural Resources Committee when she was chair of the committee. I'm joined today by my colleague, Jim Noe, who's also a partner here at Holland & Knight. Jim, you want to give a quick intro about yourself?

Jim Noe: Sure. Liz. So I'm a partner here in the Washington office of Holland & Knight. Prior to joining Holland & Knight, I spent about 20 years in the oil and gas industry, both as a general counsel, CEO and running a trade association.

Liz Craddock: Thanks, Jim. Jim and I have had the pleasure of working together for, for many years now, so it's fun to be able to do a podcast with you now, Jim. Moving forward, we obviously get to cheat a little bit on doing some crystal balling on what a future Trump 2.0 Administration would look like, given the fact that we've already had a Trump 1.0 Administration. But with that, Jim, what do you think big picture we can expect from a Trump 2.0 ?

Jim Noe: Well, I think it's going to be more of the same of what we saw with, with Trump 1.0. The Trump Administration very early on in the administration had a series of executive orders and administrative priorities that made energy dominance, in the vernacular of the time, important policy for the administration. Undoubtedly, we'll see those issues continue. We've actually seen now-candidate Trump speak more aggressively and favorably on the oil and gas industry than perhaps we saw in the last election cycle when then-candidate Trump was running for the first time because we've seen him, him say things even in the Republican acceptance speech at the convention. I mean, he's revitalized the phrase "drill, baby, drill" from the McCain campaign. He's spoken of lowering energy costs, he has aggressively hit Biden and now Harris on inflation issues, which obviously energy costs are a key component of that. And even indicated that he was very focused on ensuring that the country drilled the so-called "black gold" under the feet of Americans. So I think potentially we could see more of the same, which was very favorable for domestic energy production for the most part, plus, perhaps a little more pointedness in the policy objectives of Trump Administration 2.0.

Liz Craddock: Yeah, I mean, I we've run through the items that this Biden Administration has put forth to sort of slow down or pause oil/gas development in this country. And we know all those issues, Trump on day one will essentially do away with. I mean, clearly the liquefied natural gas (LNG) pause comes to mind. You know, a recent court decision this summer has effectively ended the LNG pause. Although we know it will still take some time for the Biden Administration to make a determination there on things like those issues. So there'll be no more LNG pauses. There'll be no more restrictions in place slowing down permits on federal lands. You know, we could see more robust leases for onshore and offshore, although they probably have to redo the most recent offshore five-year plan, and that might take some time to do. But, but I think you're right. You know, are all of those things to the Biden Administration that have put sort of guardrails on the oil and gas industry, I think on day one, we know in a Trump 2.0 Administration, those will go away. You know, the one thing that definitely comes to mind, the methane fee. And this one has some longevity here in D.C. It's gone back and forth, you know, originally proposed during the Obama Administration. Trump rescinded that during his first term. But I think he'll have fewer opportunities, just given the history and what Congress has done on this issue as far as congressional review, or the CRA, what in his administration will be able to do moving forward. So that's one issue in particular from a Biden Administration that I'm not sure a Trump 2.0 will be able to completely come in on day one and repeal. You might have to take more of a nuanced scalpel approach on how to deal with that. And also a part of methane is the methane waste fee from the Inflation Reduction Act, IRA. You know, that's a law that was enacted by Congress, signed into law by the president. So, it would require congressional action to be able to rescind that new waste fee moving forward. So I think the congressional makeup potentially also has a huge impact on what a Trump 2.0 Administration may or may not be able to do.

Jim Noe: Yeah, I think that's right, Liz. And I think just going back to the Trump 1.0 Administration on crystal balling that to what a 2.0 administration would mean. I mean, there's a lot of low-hanging fruit I think we would see the Trump Administration tackle fairly early. And in addition to the methane fee, which as you noted, is a bit more complicated to undo, there's a lot that, that I think could be done less problematically, including expanding access to drilling on public lands in offshore waters. For offshore that would require a redo of the five-year plan, which is the plan that is put in place by each administration that outlines the number and frequency of offshore oil and gas sales. I think we'll see much more access, many more sales, if the process can be figured out to undo the very anemic Biden five-year plan. I think we'll see more acres being offered and sales in BLM land out west and public lands. The Trump Administration was, was very keen to open access to a lot in Alaska and make drilling programs in Alaska more palatable, more economical, less burdensome. I think we will potentially see a rollback of some of the increases in fees for drilling oil and gas on public lands and offshore waters. And really everything the Biden Administration has done that has created speed bumps for the oil and gas industry, I think are agenda items for the Trump Administration to undo. I think importantly, and you raised the issue with respect to the methane fee, the industry I think would all agree on what the wish list would be of a Trump 2.0. But there's uncertainty as to how to do the things. I think what to do is pretty obvious and pretty known to most of us in Washington that watch these things. But how to do it was a bit of an issue for the Trump 1.0 Administration. There was some concern of a lack of expert governance and having people in the administration that could understand the so-called "deep state" and the bureaucracy that goes with an executive branch action on how to effectuate that. You know, I think we saw the very nefarious, at least in some circles, Project 2025 really arose from conservatives that were attempting to pre-arm a Trump 2.0 Administration with even written executive orders and policies. So, that concern that the industry has on ensuring that we identify the "what" but also identify the "how" is taking on a new life as we see this campaign unfold. But, the Trump Administration in the first go round had a bit of a nuanced and complex view of domestic energy production. You know, the Trump Administration, at the time, was in conversations with the Saudi government, who is a big player in OPEC (Organization of the Petroleum Exporting Countries), formerly one of the or the largest oil producer prior to America taking that distinction away over the last several years. The Trump Administration was concerned certainly about price at the pump of gasoline, but also had international concerns at play as well. And now some of those international concerns about ensuring that that we have stable energy prices and that some of our international oil-and-gas-producing states are comfortable with the administration policies could be also mitigated by the continuing war in Ukraine with Russia and a potential escalation of hostilities in the Middle East.

Liz Craddock:  And when you talk about international issues, it definitely makes me think of tariffs. And Trump has said a lot on the tariff run. And so how would his potential tariff policies impact the oil and gas industry?

Jim Noe: Yeah, that's one issue where there's clear misalignment between the oil and gas industry and even candidate Trump at this point. Is that the industry has been very concerned about what a Trump 2.0 Administration could do with respect to tariffs. I mean, we've seen in the first administration, Trump was very aggressive in imposing new tariffs, continuing existing tariffs. And a bit of a protectionist bent to the Trump Administration, which is probably further fostered by Trump's selection of J.D. Vance, who has shown some level of protectionist mentality, ensuring that domestic manufacturing industry remains strong and free from what's seen as unfair competition from places like China. So we could see the imposition of tariffs, which the industry is largely against, because tariffs imposed by a U.S. administration almost inevitably result in tariffs in other jurisdictions. So when the oil and gas industry is looking to export, whether it's LNG or oil or natural gas, to other places around the world, the industry could be subject to tariffs if the Trump Administration imposes similar tariffs. You know, the oil and gas industry is a huge consumer of steel products. And there's been discussion and there was movement in the last administration when Trump was in the White House about steel tariffs on imported foreign-made steel, which, certainly, could help the domestic steel industry. But the oil and gas industry is very much opposed to it. So it's not all goodness and light with the Trump Administration for the oil and gas industry. There's certainly some difference of opinions, and tariffs certainly is a significant source of disagreement.

Liz Craddock: One issue we haven't talked about yet that we know that a Trump 2.0 will be aggressive on moving on is anything that the Biden Administration has done to sort of prop up EVs or electric vehicles in this country. Trump 2.0 Administration will certainly want to dismantle and try and dismantle as quickly as possible. So, there are two main things on that front. There's the [U.S. Environmental Protection Agency] EPA tailpipe regulation or rule. So I do think a Trump 2.0 will look at dismantling that or undoing that. And depending on the Congress that's elected, should he be reelected, he may have help in Congress from a congressional disapproval resolution in advancing that. And the other is all of the EV tax credits from the IRA. I think that those will be a little harder to get rid of, given the fact that it would require Congress to repeal them. But no doubt Trump has definitely made aggressive statements on his dislike for electric vehicles and the federal government sort of propping them up. So I definitely think we'll see swift movement and whatever his administration can do to sort of dismantle those Biden Administration policies.

Jim Noe: Yeah, I think that's right, Liz. I mean, certainly EVs have been a target for candidate Trump. He's clearly not a fan of some of the policies that the Biden Administration has rolled out with respect to EVs and also with respect to all of the funding, whether it's sourced from the Inflation Reduction Act or the infrastructure bill. There's significant funding that has been dedicated toward energy transition and green technologies that Trump, during the Republican National Convention, said that not only is he not in favor of continuing those funding and subsidies and grants and loans, that any funding that was allocated for those projects that have not been distributed to end users could be at risk. And lawyers could debate about what's possible there, but certainly funding that was authorized in prior Congresses, certainly could be stalled or redirected or just simply killed over time. You know, the other area of interest for the Biden Administration that we've seen candidate Trump speak very negatively about is offshore wind. I think we've seen wind have its ups and downs through the years, and there may be some commercial headwinds that, no pun intended, the wind industry may be facing, but without, without a lot of details, I think we all agree that offshore wind under a Trump Administration would not be a favored industry like it has enjoyed over the last three and a half years.

Liz Craddock: No, but I dare say that he'll have to be supportive of a potential offshore wind industry, at least for the foreseeable future, given how it's tied to offshore oil/gas development through the IRA. You know, redoing a five-year plan at the Department of Interior would take some time. So, Trump would at least have to acquiesce, potentially, in supporting offshore wind just to ensure that we have offshore oil and gas, at least for one to two years before a potential new five-year plan could be installed over at the Department of Interior. So there's lots of interesting entanglements from all these issues. From bouncing from an Obama Administration to Trump to Biden and potentially back to a Trump 2.0, sort of whiplash in a lot of issues, but hopefully some opportunities to think through about energy policy, specifically oil and gas in this country, and how we can move forward on producing our energy assets in an affordable way that helps energy consumers around the country and, frankly, the globe. All right, we talked a lot about what a Trump 2.0 would, would look like. Have we forgotten anything, Jim, that we need to discuss?

Jim Noe: I think if we, bottom line a Trump 2.0 Administration, I think we, we would see fairly robust aggressive policies to promote the oil and gas industry. I think that's not uncertain. In our podcast that we did on a potential Harris Administration, there was a lot more uncertainty as to what a Harris Administration will do. I think those uncertainties are really not there with the Trump Administration. I think we all can foresee what a Trump Administration would do with respect to oil and gas issues. And it's going to be interesting to see how the next few months play out.

Liz Craddock: It will be very interesting to see what happens in early November. So thanks everybody for listening to us today. We appreciate it. Holland & Knight is doing a series of these podcasts that are focused on the election. So hopefully you enjoy the one that Jim and I did today. And you can tune into future podcasts from Holland & Knight. Thanks, everyone.