Washington (Platts)--7Nov2012/837 pm EST/137 GMT

The reelection of President Barack Obama clears the way for several regulatory steps the administration was planning to require safer offshore drilling and revamp onshore royalty rates, oil and natural gas industry observers said Wednesday.

Obama's victory also solidifies his administration's five-year plan for offshore oil and gas exploration, which had been aggressively fought by House Republicans, who passed their own, more expansive plan earlier this year -- part of a package of bills meant to form the basis of a Mitt Romney energy policy.

What is less clear is how the Obama administration will handle the approval of the Keystone XL Pipeline, which would bring oil sands from Alberta to the US Gulf Coast. While many observers believe Obama will approve the pipeline early next year, his reelection has also emboldened environmental groups who wasted no time Wednesday arguing against the line.

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The Obama victory brought pledges of cooperation from oil industry groups, which had fought hard against the administration's policies in the months before the election.

"With both candidates supporting more development of America's vast oil and natural gas resources, energy is a big winner in this election," said Jack Gerard, president of the American Petroleum Institute.

"Americans have made their decision," said Gerard, who was rumored to be in line for a top post in a Romney administration. "We look forward to continuing our work with the president and helping him fulfill his campaign promise to increase domestic oil and natural gas production that will create American jobs and strengthen our economy."

The Independent Petroleum Association of America said it "appreciates President Obama's affirmation of natural gas as an abundant and affordable energy source that will supply the United States for more than 100 years."

But the group also said it would continue to fight efforts to impose new regulations on the industry, especially relating to hydraulic fracturing.

"One-size-fits-all regulations from Washington that duplicate what regulators are doing at the state level threaten new supplies of energy and make it next to impossible for independents to operate on federal lands, both onshore and offshore," IPAA Chairman Virginia Lazenby said in a statement.

A second Obama term will also free the Interior Department to begin issuing a series of proposed regulations it had been promising on the design and testing of blowout preventers used in offshore drilling. Those rules had been promised by September, but have yet to be issued.

Interior's Bureau of Land Management had earlier this year pledged new rules to raise onshore drilling royalties, regulations that could potentially be issued soon.

CONTROVERSIAL KEYSTONE XL

Perhaps the highest profile post-election energy issue is the Keystone XL Pipeline.

Obama rejected TransCanada's application for the project, saying there was not enough time to complete needed environmental analysis before the expiration of a congressionally-mandated deadline. The US State Department is reviewing a new application, which will reroute a portion of the line away from sensitive areas in Nebraska.

"We continue to believe that the Keystone XL Pipeline will be approved," TransCanada spokesman Shawn Howard said Wednesday. "The facts that support the approval of Keystone XL remain the same -- and the need for this pipeline grows even stronger the longer its approval is delayed."

But several environmental groups said that Obama's reelection lends support to their contention that the pipeline should be scrapped.

"The new Obama administration should be an opportunity for Canadians and Americans to work together to fight climate change," Danielle Droitsch, the Canada program director for the Natural Resources Defense Fund, said in a blog post. "Now is not the time to be at odds over dirty energy sources of such as tar sands. It is the time for North American leadership in tackling one of the world's most pressing threats."

Canadian Natural Resources Minister Joe Oliver Wednesday said his government was confident Obama will approve Keystone XL, according to AFP.

"We believe that the Keystone XL will be approved by the Americans because it is clearly in the US national interest in terms of national security, jobs and economic growth," Oliver told reporters in Ottawa, AFP said.

"We'll continue of course to advocate for approval of the pipeline," Oliver said. "Right now we're not in the middle of an election campaign, and [so] it will be decided by the [Obama] administration on its merits."

--Gary Gentile, gary_gentile@platts.com
--Meghan Gordon, meghan_gordon@platts.com
--Edited by Richard Rubin, richard_rubin@platts.com

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