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Cimarex makes contingency oil, gas permit plans in event of Biden presidency

oil gas, biden

By: S&P Global Platts – With the US’ 2020 presidential election less than three months away, Cimarex’s drilling plans could change if Democratic contender Joe Biden, who has made negative suggestions over how he might handle aspects of energy production including fracking, beats Republican incumbent Donald Trump whose policies favor energy development.

Cimarex, which operates on acreage in the Permian Basin in West Texas/New Mexico, has 32 federal permits approved and “mostly ready to go,” company CEO Tom Jorden told the webcast Enercom Oil & Gas Conference.

Existing federal permits are good for a two-year time frame, but about half the 32 approved permits will need extensions, he said. Cimarex also has 14 additional permits in progress that are expected to receive approval shortly. The company has West Texas properties mostly in Culberson, Reeves, Ward and Loving counties.

“We feel very solid on where we will be in the next few years where we are with federal permits,” Jorden said. “But … there are risks associated with that. We’ve never had a federal permit extension denied, but a different posture on permits could lead to a different result, on things like right-of-ways, species protection, and water [issues].”

Many in the energy industry are concerned a Biden Administration could move to ban new permits for hydraulic fracturing of wells.

‘Very optimistic’ about 2021

While Jorden said Cimarex is going into 2021 “very optimistic,” and has heard “encouraging signs” regardless of the outcome in November, the company is making alternative plans to protect its operations either way.

He was not immediately specific on the contingency plans except to say that if necessary, drilling of New Mexico wells could be accelerated.

In addition, a panel of energy consultants at the conference said they aren’t too worried about the threat of executive orders against the energy industry from a potential Biden presidency.

“There may be one as a sop to the left, but we’d be in court the next day if a fracking [ban] on federal land was attempted via executive order,” Kathleen Sgamma, president of Western Energy Alliance, told the panel. “I know API [the American Petroleum Institute] would be if a frac ban was proposed.”

But for other energy regulation, “I think we’d see Obama-Biden times eleven,” Sgamma said, referring to the Barack Obama administration from January 2009 to January 2017 when Biden was vice president and more energy regulation was put in place.

Now, “the rhetoric is so much more vitriolic,” Sgamma said. “They have to be making progress toward net-zero [emissions], so I’m not as optimistic as to the moderation of a Biden Administration,” she said of the Democratic Party which is much more less fossil fuel-friendly.

Elizabeth Ames Coleman, co-founder of EnergyNorthAmerica up at night, said executive orders by Biden don’t keep her up at night, but she does believe that Democrats in Congress who call for more regulation, mean business.

No ‘dramatic’ measures likely

“We don’t know … who is creating his talking points,” Coleman said of Biden. “If he’s the old Joe Biden, I don’t think he’d entertain something so provocative and dramatic as a frack ban as a way to implement the leave-it-in-the-ground policies as some … members of Congress want.”

But that “pull from the left” may influence small changes, and incrementally, “these are death by a thousand cuts for an industry,” she said.

Former Ambassador to Iraq Christopher Robert Hill believes if elected, Biden would be more moderate than his rhetoric suggests and than his party’s extreme elements.

“I don’t see Biden as being an anti-fracking guy [and] I’m not sure the party has been hijacked and become a leftist organization,” Hill, currently chief global advisor at the University of Denver Global Engagement said. “Biden has been quite clear on his belief that we need to do more with renewables, and we’d probably see a big push for that in the US and make sure China doesn’t lead the world in solar.”

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