US Oil & Gas to Face More Restrictions under Biden: WoodMac [UPDATE]

(Updates with information about Georgia Senate races)

There will be greater restrictions on US oil and gas development but a Biden administration will be a boon for the offshore wind sector, Wood Mackenzie said in a research note on November 7.

Democrat Biden has been declared winner of the hotly-contested US presidential election, even though Republican incumbent Donald Trump has disputed the result and is pursuing legal action in several states. Biden will look to put the US on a track to net-zero emissions by 2050, and take the country back into the Paris climate deal, WoodMac said. Control of the Senate - previously held by the Republicans - won't be decided until run-off elections are held in Georgia on January 5 for that state's two seats.

While Biden has denied intending to ban fracking, he has promised to end the sale of new leases for oil and gas development on public lands and waters. 

"Onshore, the impact would be minimal. Offshore, the effects would be more significant, although they would take some time to become apparent," WoodMac said. "A ban on new leasing, if permanent, would mean that by 2035 US offshore oil and gas production would be about 30% lower than if lease sales had continued."

WoodMac also noted that federal permits for infrastructure projects will also be decided upon based on the greenhouse gas emissions they cause, "creating new hurdles for developers of oil and gas pipelines and export facilities."

Biden's presidency will be a boon for the offshore wind sector, the development of which has slowed under the Trump administration, WoodMac said. The president-elect is also looking to put in place tighter fuel economy standards, spurring the sale of electric vehicles (EV). There could be 4mn EVs on the road by 2030, or 60% more than under Trump administration rules. Still, this will only represent 1.5% of the vehicles on US roads by the end of the decade.

Biden was strongly critical of Trump's decision to take the US out of the international deal over Iran's nuclear programme. However, "that does not mean he will move quickly to relax the sanctions that have been imposed since 2018," WoodMac said. "Negotiations about a possible renewed deal are not likely to begin until June 2021 at the earliest, after Iran's elections, and there is no guarantee that the two countries will reach agreement."