Government regulation is the top risk seen by crude oil and natural gas exploration and production companies, according to a study of annual reports by the top 100 producers done by accounting and consulting firm BDO USA LLP.
The study of annual filings with the U.S. Securities and Exchange Commission also found a large jump in concern over the regulation of hydraulic fracturing, which has become a top method for extracting oil and natural gas from shale formations in the United States, according to BDO.
“A big part of the No. 1 risk is that lurking belief the industry has a target on its back in the eyes of the government,” said Charles Dewhurst, who leads BDO USA’s natural resources practice.
While increased government regulation or new laws limiting energy companies have been an abiding worry for energy producers, increased regulation of fracking, as hydraulic fracturing is called, jumped from a risk seen by just over half of the companies in 2011 to a fear of 74 percent this year.
“I think fracking is viewed very poorly by many environmental groups,” Dewhurst said.
Those groups have raised fears about the fluids used under high pressure to break underground rock formations to release supplies of crude oil and natural gas.