We recently spoke with Nathan Judge of Atlantic Equities LLP about the Gas Transmission space as part of our Oilfield Services/Pipelines & Distributors Report. With the new administration in place one thing is for sure some changes are coming;
Mr. Judge: Generally, the Administration has emphasized the need for energy independence, and energy independence is a pretty broad statement. The Administration has also been looking at things like reducing carbon or actually regulating carbon emissions, perhaps putting some type of penalty on emitting carbon. Those have very different effects on the gas transmission, gas pipeline business, but generally there is an underlying supportive environment from the Administration to promote additional gas transmission infrastructure in the country. Policies to limit carbon could also provide an additional boost to natural gas demand. That said, there have also been some changes implemented by the Administration that would reduce the amount of tax breaks that E&P producers get. That potentially could lower the amount of gas being provided from some unconventional basins. So we have a mixed bag as far as that is concerned. There is also this big question mark around changes in personnel at the FERC, the Federal Energy Regulatory Commission. The previous Chairman has recently resigned and there is an interim Chairman who could potentially be the permanent Chairman. That’s important because we have historically seen some fairly robust returns over the life of these projects, and if there is a change of returns allowed by the FERC on these pipelines, it potentially could be lower than it has historically, which would be a very big negative for the group.
This still seems like a developing story so gather as much information as possible and pay attention.
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