In the State of the Union address Tuesday night, President Obama recognized the impact of the oil and gas industry, specifically the natural gas boom that has unfolded in the unconventional resources space across North America in recent years. With that in mind, Obama outlined a plan to use a portion of revenue generated from oil and gas drilling on federal lands for research for alternative fuel technology.
Obama’s proposal calls for the diversion of these oil and gas drilling revenues into an Energy Security Trust that would fund research for American production of renewable energy and help shift cars and trucks from the use of oil. Such measures may "free" families and businesses "from the painful spikes in gas prices," he said.
Obama recognized the natural gas boom as bringing cleaner power and greater energy independence to the US and said that the administration “will keep cutting red tape and speeding up new oil and gas permits.”
Obama’s recognition of the transformative nature of the US oil and gas revolution is good news for both exploration and production companies and oilfield service companies as the Energy Security Trust could expand onshore and offshore leasing, said Global Hunter Securities in a note to investors Thursday.
“Similar programs have been proposed in the past, requiring the revenue to come from projects where drilling is currently off-limits. Expanding oil and gas drilling helps to alleviate the fear that budgets will be cut for existing alternative energy projects. Not yet the Grand Bargain on energy we’re hoping for, but on the face of it this is the kind of proposal that could get support on both sides of the aisle,” noted the analysts.