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06 04, 2013 by Fuel Fix
Energy companies see looming regulatory and law changes as their biggest concern, according to an annual study released Monday by BDO USA.
Every one of the top 100 energy companies named regulatory risk as the greatest threat to their business, citing concerns about an increasingly stringent regulatory environment, and its impact on the growth of the industry.
The anticipated regulations cover a range of sectors within the industry, including hydraulic fracturing, pipeline construction and various offshore regulations.
“2013 will serve as a reality check for U.S. oil and gas companies,” said Charles Dewhurst, leader of the Natural Resources practice at BDO. “The industry is butting up against some uncomfortable obstacles, including the delayed approval of the Keystone XL pipeline, opposition to fracking and a strained refining capacity. Aspirations of U.S. energy independence will hinge upon the industry’s and government’s ability to find mutually-agreeable resolutions to these problems.”
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BDO’s analysis is based on a review of the most recent 10-K filings by the top 100 oil and gas companies.
Companies said that hydraulic fracturing regulations were the most likely to change their business, with 85 percent of the companies specifically citing it as a possible threat to operations. Several states have been considering new regulations to further oversee an industry that has received considerable public attention over water usage and clean-up issues.
More than 80 percent of companies also expressed concern that the combination of infrastructure limitations and growing production volumes could limit growth within the sector, up from 29 percent in 2011.
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