American Oil and Gas Reporter - July 2021 - 26

Dallas Fed Survey Sees Activity Surge
DALLAS-Oil and gas activity is definitely
on the upswing, according to results
of the Federal Reserve Bank of Dallas'
second quarter survey, which was released
June 23.
" Activity in the oil and gas sector
continued growing strongly in second
quarter 2021, according to oil and gas
executives responding to the Dallas Fed
Energy Survey, " the Dallas Fed says.
" The business activity index-the survey's
broadest measure of conditions facing
11th District energy firms-remained elevated
at 53.0, essentially unchanged
from its first-quarter reading. "
According to the Dallas Fed, oil and
gas production increased, according to executives
at exploration, drilling and production
firms. " The oil production index
rose from 16.3 in the first quarter to 35.0 in
the second quarter-its second-highest reading
since the survey's inception in 2016, " it
says. " Similarly, the natural gas production
index increased 19 points to 35.0. "
The Dallas Fed goes on to report that
the survey's index for capital expenditures
increased from 31.0 to 42.4, which points
to accelerated capital spending among
producers. Additionally, it reports, the
index for the expected level of capital
expenditures in 2022 registered at 53.0,
up from 49.5 in the first quarter.
However, the Dallas Fed acknowledges,
costs also are on the rise. Among oil field
service firms, it notes, the index for input
costs took a 20-point leap, from 36.0 to
56.0, which constitutes a record high and
suggests significant cost pressures. " No oil
field services firms reported a decrease in
input costs this quarter, " it reports, adding
that for among producers, " the index for
finding and development costs jumped from
3.9 in the first quarter to 28.3 in the second.
Additionally, the index for lease operating
expenses also increased, from -5.9 to 23.4. "
According to the Dallas Fed, the equipment
utilization index remained positive,
though slipping from 63.2 in the first
quarter to 42.0 in the second. Meanwhile,
in continues, operating margins improved
further, with the index increasing from
14.0 to 22.5. The index of prices received
for services rose from 20.0 to 30.0. " Oil
field service firms reported improvement
across all indicators, " it says.
Furthermore, the aggregate employment
index posted a second consecutive
positive reading, edging up from 8.4 to
9.9, the Dallas Fed reports. " Employment
growth continues to be driven primarily
by oil field services firms, " it states.
" The employment index was 25.5 for
services firms versus 2.0 for exploration
and production firms. The aggregate employee
hours index edged up from 22.8
to 24.0. The aggregate wages and benefits
index also increased, from 14.8 to 20.6. "
Moreover, it says survey recipients
indicate the near-term future appears to
be looking increasingly inviting. " Sixmonth
outlooks improved notably, with
the index moving up from 70.6 last quarter
to 71.9-the highest reading in the survey's
five-year history, " the Dallas Fed notes.
" While uncertainty continued to decline,
the aggregate index increased three points
to -19.6. "
On average, survey respondents expect
a West Texas Intermediate oil price of
$70 a barrel by year-end 2021; it details,
and Henry Hub natural gas prices of
$3.10 per million British thermal units
at year-end. For reference, the Dallas
Fed says, WTI spot prices averaged $71
a barrel during the survey collection
period, and Henry Hub spot prices averaged
$3.24 an MMBtu. "
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Lawsuit Over NEPA Reforms Tossed
ABINGDON, VA.-One of the lawsuits
anti-development groups filed against
Trump-era changes to National Environmental
Policy Act implementation was
thrown out on June 21 because the judge
considered it premature.
" I agree with the defendants and defendant-intervenors
that the plaintiffs'
claims regarding the 2020 Rule are not
appropriate for judicial resolution at this
time, " writes Judge James Jones of the
U.S. District Court for the Western District
of Virginia. " Delaying judicial
review of the 2020 rule until it can be
considered in an as-applied challenge
will not create a significant hardship for
the plaintiffs. "
Press accounts note that the Trumpera
adjustments have been described as
an effort to cut the time window for re26
THE AMERICAN OIL & GAS REPORTER
views of projects such as pipeline infrastructure
and exploration activity on public
lands from an average of four and a half
years to closer to two years.
Court documents point out that in
June 2018, the federal Council on Environmental
Quality issued an advance
notice of proposed rulemaking regarding
NEPA's implementing regulations that
sought feedback on 20 broad questions
related to the NEPA process. The initial
30-day window for the public to respond
to the ANPRM was extended in response
to public requests for more time.
" CEQ received more than 1.1 million
public comments regarding the proposed
regulations. The majority of these comments
opposed the changes that CEQ
had proposed, " Jones writes. " CEQ issued
a response spanning approximately 600
pages, but again did not address many of
the comments opposing the changes. Despite
significant public opposition to the
revisions, CEQ finalized the new rule
less than four months after the end of the
comment period. The final rule varied
little from the proposed rule. "
Even so, the court acknowledges that
the change in presidential administrations
since the CEQ issued the final rule constitutes
a wild card. " Following the
change in administration that resulted
from the 2020 presidential election, the
defendants have opted not to respond
to the plaintiffs' motion for summary
judgment on the merits, " Jones relates.
" Instead, the defendants argue that the
case must be dismissed because the
plaintiffs' claims are unripe and the
plaintiffs lack standing. "
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American Oil and Gas Reporter - July 2021

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