March 30

Daily Energy Standup Episode #340 – Weekly Recap: Insights on Tech Demands, Policy Challenges, and Infrastructure Risks

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Highlights of the Podcast

00:00 – Intro

01:13 – Big Tech’s Latest Obsession Is Finding Enough Energy

05:05 – Riposte Capital Issues Statement in Support of Kimmeridge’s Proposal to Combine Kimmeridge Texas Gas with SilverBow Resources

08:35 – PetroChina Books Record Profit as Natural Gas and Fuel Demand Soar

13:55 – Mass casualties feared as boxship takes out bridge in Baltimore – other coal and exports blocked

16:03 – UK to miss out on $487 billion generated from offshore oil and gas market without stable energy policy

19:43 – Outro

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Stuart Turley: [00:00:15] Hello, everybody. Welcome to the Energy News Beat Daily stand up. This is the weekly recap for Easter weekend. I hope that everybody is just absolutely getting ready to spend some time with family. Go to church and absolutely be thankful for celebrating the resurrection of Christ. Hey, we appreciate all of the fans this week. It has been a while. We, we covered the story with the Baltimore, bridge incident. And, man, that thing where our hearts and and prayers are going to go out for all of the folks that are impacted. It is going to be a long road to recovery. So with that, enjoy your family, hug everybody. And again, thank you for everyone, for all the wonderful feedback that we’re getting for Michael and I and all of the other podcast guests that have been on. Thank you and have a great Easter. Talk to you all soon. [00:01:12][57.7]

Stuart Turley: [00:01:13] Big tech latest obsession. Finding enough energy. Behind door number two. The AI boom is an insatiable appetite for electricity. And this is actually causing one of the biggest problems in the world. Energy hypocrisy. Let’s go green. No. We need everything we can get. Oh, let’s shoot down nuclear. You’re seeing you’re already getting a sense for what’s going on in our energy thread today in the. ceraweek. We’re sitting here. Bill Vass, vice president of engineering at Amazon Web Services, said the world adds a new data center every three days. Holy cow, Batman, we’re talking some serious a heat generation. People don’t realize how much cooling data centers have to have. We’re going to build 100GW of new recyclables in a few years. You’re kind of stuck where it says we’re not going to build, 100GW of new right now or renewables. Dominion energy, in, Richmond is really trying to pick up energy demand. They are, they’ve got data centers coming out the wazoo up there. And they’ve got some serious problems. So let’s take a look. We’re putting the accelerator down on developing these clean resources. They are missing the boat. Honestly, Nuclear’s, the only way you’re going to be able to solve a I’s demand hunger. Necessity. And second only to that is natural gas. That’s all you’re hearing. Those are your two choices. The others cannot be attached to the grid fast enough. Natural gas, first nuclear, second. Wind and solar are incapable physically. In order to get this done, you gotta love it. [00:03:14][120.6]

Michael Tanner: [00:03:15] It really highlights and very interesting conundrum that a lot of these big tech companies are coming in. Do they want to transition so much to green? But in order to power these massive data centers that can run these huge AI models. But guess what? You’re going to need power at the cheapest possible cost, even more then just I mean, you think the data centers right now, the current today’s data centers need low cost energy. You’re only going to need more as these models get bigger and bigger and bigger and bigger. [00:03:44][29.3]

Stuart Turley: [00:03:45] And three weeks ago, Michael, you and I talked on the podcast about Amazon Web Services, bought a nuclear reactor from a university. That’s how you’re going to get data centers. You’re gonna support your, you know, instead of that, movie support your local gun, Sheriff, Sheriff, you’re going to have to go support your local universities, nuclear. And by they’re cutting back and reactor. It’s already sitting there. That’s the only way you’re going to be able to do that. [00:04:14][29.7]

Michael Tanner: [00:04:15] Yeah, it’s it’s it’s a little bit crazy. And I think that people are going to start realizing that very quickly. And you’re going to see even a quicker shift to the natural gas is clean crude. It’s going to become very apparent that that’s where we need to spend all of our time and spend time reducing methane. [00:04:33][18.4]

Stuart Turley: [00:04:34] Okay. One last thing. This, I’m going to go to the next article here. And just a real quick Kathryn Blunt from The Wall Street Journal wrote this story. I want to give a shout out to Kathryn. I interviewed her almost a year ago or more, and, it was pretty cool. I don’t understand, how that just happened. My camera. I knew that I was talking about Kathryn Blunt from the For our Podcast listeners. [00:04:59][24.4]

Michael Tanner: [00:04:59] It’s a I. [00:04:59][0.4]

Stuart Turley: [00:05:00] It’s I it just zoomed in on my nose now that we were talking about it. [00:05:04][3.9]

Michael Tanner: [00:05:04] Rip Stone capital, they go ahead and issue a statement in support of Kim Rogers proposal for the merger between Silver Bow and, Silver Bow and. Cambridge, Texas Gas, which is their internal kind of gas company. This is an absolutely. Where’s the quote in here? Stu is is pretty unbelievable, you know. Yeah. Let me let me find here they they do a pretty good job of just ripping them repeatedly. This is the quote out of the release Stu. Repeatedly ignoring shareholders interest has become somewhat standard practice for silver, both as management and the board has pursued their own agenda at the expense of the shareholders. Again, guys, this is rip Stone capital. They’re one of the larger shareholders in Silver Boat, owning about 9.9%. They’re in favor. So Cambridge obviously they’ve got somebody on their train right now. It’s rip Sot capital. Excuse me not rip Stone, but it just sounds cooler. If he if it was everyone’s got a stone in their name. What they bring up which is just absolutely like hey we’re we’re not against it over here. I love that Stu. They’re they’re going after him right now. What they claim is that, you know, this combination is going to further consolidate. They believe that the 2025 EBITDA of the combined company is going to be in line to peers. You know. Well, what I think is, is going on here is I think what’s going on here is a is a battle of managers. Okay. So obviously Kim Ridge right. Stone they’re not necessarily a fans of what’s going on with Silver Bowls management right now. Now you always wonder one of the problems that oil and gas companies have had for a while is management has owned very little of the actual equity of the underlying company. So what does that mean? If you have no equity in a company that you’re running well, who cares about profitability? I’m getting my I’m getting my plan. I’m getting my compensation, you know, for a salary. I’m getting my benefits. But I have nothing tied to the success of the company. It’s almost the anti of what Elon did with Tesla where said, I’m literally just going to put my entire compensation plan relative to, you know, these different financial benchmarks. That’s not what’s happening in the oil and gas business. You’d be shocked to find how little management teams, specifically of public companies, actually own of the underlying ego, which means there’s a slight misalign of incentives here. If I owned 0% of a company, but yet I’m in charge of its financial decision making, well, I’m going to do everything I can to increase my compensation. You know, I, I, I don’t have the share and I don’t mean I would just, you know, bump my salary, but I but I’m not financially incentivized in order to do the work of the shareholders, which is what the CEO of a company is designed to do. It’s designed to watch out for the shareholders of the company. So I think what they’re calling out is a is a fact that is not unique to Silver Bow, but it’s now that they’ve got somebody trying to do a merger that clearly Silver Bow doesn’t want. Now all of a sudden they’re getting behind it because guess what Cambridge comes over. They do this merger Cambridge is in charge now. So guess what. Their management team is gone now. They’re not thought immediately but they’re gone within six months. It’s a slow death. It’s a profitable death for them. They’re getting their change of control packages I’m sure are great. I’d love to have one of those change of control million dollar packages in there. But it doesn’t. It doesn’t mean that they’re going to go, that they’re going to go softly. But I do love that big one of the largest shareholders siding with Cambridge. It’s going to get spicy here. It’s going to get spicy peak oil. [00:08:33][209.0]

Stuart Turley: [00:08:34] Oil demand outpaces expectation testing calculus on peak crude. You know we keep doing peak crude. And everybody’s saying have we reached peak crude in the Permian. And I think we’re not even close. here’s what you know, we talked about this last week a little bit, Amir Nasser, CEO of Saudi Aramco. We should abandon this fantasy of phasing out oil and gas. This is one we didn’t talk about. Was Russell Hardy, the CEO of, v toll, the global oil trader? He had said the same kind of thing. Peak oil and consumption to oil 2030s because of downgraded expectations and the adoption of electric vehicles. Michael, this is just an absolute trend. And then there’s also, oil governor, governor Group expects an increase of 1.4 million barrels per day this year. To refer to figure to figure. Would you you like, says the consensus is, expectation about 1.5 million in demand, but argues there’s considerable upside to risks. What are your thoughts on demand? [00:09:57][83.1]

Michael Tanner: [00:09:58] Well, I mean, it’s clear that we’re probably going to see demand slightly higher than supply. I think that’s the current sentiment right now, considering where oil prices are. You’ve got all of these different, you know, oil traders, Trafigura, Gunvor, they’re all in the same. Aim in down the same gun barrel. Is that, you know, really the fantasy of phasing out oil and gas? Is it coming? And we need to make sure that we have enough demand. I see, you know, demand somewhere in that 1.3 to 1.5 million range. That’s not going to shock anybody. I’m always going to be a little bit higher than what the IEA says. I mean, they still the IEA in their defense still has demand rising by 1.3 million barrels a day, which was clearly less than yet. Last year’s 2.2 million. Right. Where’s that extra growth going to come from this year? You know, we talked a lot last week about AI and some of that stuff. So I don’t know how much crude oil demand you’re going to see from the increase today. You’re going to see probably a lot more than that gas and LNG demand. But there is something to be said about where is that energy going to come from? You know, I think all eyes are going to be on India as they continue to grow, grow, grow, buy cheap Russian oil, continue to, to increase. I think, you know, you know, Helen Curry, the chief economist over ConocoPhillips, pointed out, you know, really what you need to do is look at where the emerging market growth is going to come from. It’s probably going to be India. The other thing is, what are EVs going to do depending on that route. So I think there’s a lot of different stuff. I’m going to take the over on the IEA number though. Trust me. [00:11:30][92.1]

Stuart Turley: [00:11:30] I loved your comment there. Her quote we’re looking for another record high in world demand. I like your comment. Petro China books. [00:11:39][9.3]

Michael Tanner: [00:11:40] President XI. [00:11:41][0.4]

Stuart Turley: [00:11:41] New bridge and Z record profit as natural gas and fuel demand soar. You know, I think you can recognize this red net total revenues for Petro China slumped by 7% in 2023. In their, this year, the volumes processed by a crude jumped 15.3% year over year. Jet fuel soared by 77%. Production rose 14.4 and diesel output 8.9. Michael, here’s where I talked about this a few about a month ago. And that is that the, downstream capabilities of, China are, increasing downstream is increasing. And, Californian chatter heads are looking to import from China. Refined goods. Yeah. [00:12:47][65.5]

Michael Tanner: [00:12:48] Yeah. It’s it’s it’s it’s pretty crazy. I mean, everybody wants to go get their, their oil and gas from somewhere other than the United States. You know, I mean, this just goes to show that, you know, China’s going to continue, to dominate the market from a buying perspective. You know, they’re the the world’s top importer. You know, it is interesting to know that that the total revenues did slumped by 7%. But that’s mainly due to international oil and gas prices, which affects their upstream unit volumes up. We also saw the same thing happened with with the Chinese National Offshore Oil Company, which saw its net profit in 2023, slipped by 12.5% again due to those international prices. So I mean, they’re going to continue taking a long over there, but as long as they keep buying, it’s it’s not really going to matter now. [00:13:35][46.9]

Stuart Turley: [00:13:35] They’re still buying everything they possibly can. Now what do you think that Russia’s, the Ukraine attack in Russia on their refined products, is going to do because that drove oil up, if I remember right, today, there was some things going on. Hey, this is a disaster. And, it’s really sad to hear what is going on. Mass casualties feared as BOC ship takes out bridge in Baltimore. Here’s where I didn’t know this Michael Cole. Other coal and exports blocked. Miss produce. Or if you could have her, bring in. You’ll see. UN baffle me. Baltimore. There is a, map of this, bay. Baltimore is now effectively cut off for traffic by C major. All route for I-95 around Baltimore is also cut off. This is a disaster for several different reasons. I did not know that. But this bridge, Michael, right there with a little circle around it, that’s the bridge that was built for one reason, hauling, chemicals around Baltimore to go to the north. And guess what? That’s gasoline. That’s diesel. That’s chemicals. They don’t like pipelines. So that’s a that is how everything rolls. So this is significant for energy going north. Unbelievable. [00:15:12][96.1]

Michael Tanner: [00:15:13] Yeah. It’s. It’s an absolute disaster. I mean, we can only be thankful that it happened at 1:30 a.m. and not 6:30 a.m. during the, you know, a massive cold, or else there would have been a lot more, a lot more tragedy. We we were praying for everybody out there in Baltimore, but yes, I, I’m with you. I didn’t know this was a, a big shipping, specifically coal coal shipping corridor. So, you know, you immediately saw the price of coal go ahead. And our coal per ton spike slightly. We also saw some stocks relative, to, shipping around that Baltimore area under armor. [00:15:47][34.3]

Stuart Turley: [00:15:48] Five years, seven, 5 to 7 years to replace it. [00:15:52][4.1]

Michael Tanner: [00:15:52] Yeah, absolutely. So absolute disaster. But and we’re just praying for everybody effective out there. But yeah, you know that we’re still using coal and it’s it’s going to get cut off here. [00:16:03][10.7]

Stuart Turley: [00:16:03] The UK to miss out on 487 billion generated from offshore oil and gas market without a stable energy policy. This is following along in the story with Colorado is that they are in the $170 million budget deficit, but they’re trying to get rid of oil and gas, which is providing a lot of revenue to the state. People don’t, and companies and investors don’t want to invest into oil and gas, which we if you haven’t, if you’ve listened to the show, you know that there are decline curves. You drill a well and then the oil, and gas have a declining relation, ratio coming out of that. Well, you have to keep drilling. So here’s in this this is from the world, oil website. Without stable energy policy in a global competitive tax regime, the UK will miss out on the lion’s share of the benefit of a domestic oil offshore energy market that could grow to 450 487 billion U.S by 2040. You sit back and take a look. Energy policies need to be balanced. You need all kinds of for all energy. The oh UK CEO David White House said the UK has 450 billion pounds of domestic energy opportunity that could transform the economy to support jobs. The warning lights are flashing. I think that that’s pretty important. Warning lights are flashing. We’re in a global race for investment, and UK energy companies need support of long term policies, a stable tax regime and responsible radical rhetoric, rhetoric from all sides. Our journey to net zero and beyond depends on responsibility, making of most of our oil and gas production, which is at record lows. We’re facing a situation where we must import energy that could have been produced here, where we must rely on a supply chain, companies that could have been based here. The UK is world class oil and gas. sector has reduced emissions by 24% since 2018, and we must build our low carbon future on this achievement. Well said. I’m telling you what, we have to have leaders and people understand that we oil and gas in the is not the bad guy. It is how you use oil and gas. It is nuclear. Let’s use nuclear. Let’s use wind, let’s use solar. But let’s do it responsibly. But let’s also get to net zero down the road when we can’t. Right now the U.S is going to have supply chain issues like you wouldn’t believe. The Brooklyn incident is really going to start waking up to the folks on the northeast. They’re going to have higher gas prices. It’s going to be happening immediately. So this is we’re just in the beginning phases of really understanding how much important that bridge was. [00:16:03][0.0][936.1]

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