April 22

The Energy Question: Episode 97 – Chris Wright CEO of Liberty Energy


The Energy Question: Episode 97 – Chris Wright CEO of Liberty Energy

When the transcript becomes available, we will include it here. -Thank you!


David Blackmon [00:00:09] Hello everyone. Welcome to the Energy Question with David Blackmon. I’m your host David Blackmon, and my guest today is very special. One, Chris Wright, the CEO of Liberty Energy. Fantastic, CEO who does such great work in messaging, on behalf of the whole industry. Really. And, and there’s so much, there’s so much has so much to say about the energy transition and everything that’s happening globally. Chris, how are you?

Chris Wright [00:00:37] David. Oh, great. Glad to be with you here today. Felt a fellow energy nerd like me.

David Blackmon [00:00:42] Yes, sir. Absolutely. Yeah, I don’t, I don’t, you know, I don’t think we’ve talked since, we did that interview, for shell magazine years ago, wrote that cover story about you and the company and, I’m really sad that we haven’t, haven’t connected, since then.

Chris Wright [00:01:03] Well, glad we are today.

David Blackmon [00:01:04] Yeah. Me too. Listen, before we go into the Q&A, just talk about the things you’re doing at Liberty Energy and why you’re doing them.

Chris Wright [00:01:14] Well, I mean, first, the company, you know, we founded the company 13 years ago. You know, I’ve been an entrepreneur my entire career and my original company. 30 plus years ago, in A Blind Squirrel Finds Nut, we came up with a couple ideas that helped launch commercial shale gas production in the late 1990s. Was just awesome to work with all the different early players there in the Barnett I a few years behind that, I had an employee company. We were also early shale in player in the Barnett Shale. Back back in the MP business in the Bakken and then launched Liberty Energy to Frack Company 13 years ago with some great partners who are all still there and driving hard. We frack today about 20% of all the wells drilled in the US, in Canada. So it’s one of my proudest single stat is about 100 million people around the world get clean cooking fuels from the propane that comes out of wells fracked by liberty. And there’s, you know, I’m on a mission to help that 2.2 billion people that still don’t have clean cooking fuels to get them. So that’s my business. And, you know, look and energy. Look, I went to college to work on nuclear energy. I worked in solar energy in graduate school. I worked in geothermal energy for years. I’m not I’m not from Texas. I’m not an old gas guy by background. I just love energy and it matters. It’s the infrastructure that makes everything else in the world work. And it’s critically important for for everything humans do. And it’s poorly understood as you. Yeah. As you talk about it endlessly, it’s become ridiculously politicized these days to the great detriment of the energy system, all in the name of climate change or a supposed climate crisis that that none of the data, none of the real climate scientists claim is even there. So my goal when you’re writing this book is just to try to bring some facts and sobriety to the dialog. Everyone can have their own vision of the future and the trade offs they want to make. I just want it to be based on some facts, and most everything we hear about energy and climate change these days is not.

David Blackmon [00:03:20] Yeah, I have to agree with that. And it’s so much, you know, you talk about, the role of energy in everybody’s lives worldwide. And the shale revolution has played such a big part in enabling the industry to continue to meet the world’s needs of oil and gas and all the associated products over the past 25 years. And I think about it looking back, and I was at a company called Burlington Resources and the Barnett Shale kicked off. We were an early hemp company out there. So I’ve been involved in it since it really started. And, I wonder, you know, I got to think about the other day, I don’t think we could have a shale revolution in America if it was just kicking off today. What do you think about that? What would our politics and our policies that are in place now allow for that to happen again?

Chris Wright [00:04:14] I feel the same way, David. I worry about that, in fact. And I I’ve often said that that thank God the shale revolution started when it did, because, yeah, I think it probably wouldn’t happen today because it took innovation, it took trial and error, it took different companies. It took some dynamism. You know, it has societies of our own societies gotten wealthier. It’s just so easy to stop things today. And therefore it’s hard to do things. And if you can’t do things, you can’t innovate, you can’t bring something new. So I, I share that that same, negative view you do that it probably if it was just going today, it probably wouldn’t catch fire. And to me I say, look, there’s a lot of things to celebrate about the shale revolution. To me, by far the biggest one is globally oil, natural gas and natural gas. Liquid prices are dramatically lower today than they would be without that flood of supply from the shale revolution. And that just that saves consumers a couple trillion dollars a year, just improves the standard of living of all 8 billion people on the planet. So thank thank God for the shale revolution.

David Blackmon [00:05:20] And if you know, you talk about innovation, creativity in the industry, today America is the biggest producer of both oil and natural gas on earth by far. I mean, really, it’s not even close. How do we account for that, given that that we’ve continued to expand overall production of both, even in this administration, which does so much every day to try to inhibit the industry’s ability to get its business done, is it all just because of that innovative and creativity of spirit in the business?

Chris Wright [00:05:55] Well, I think there’s two other great American gifts are American institutions, property rights. We’re the only country in the world where the farmers and ranchers own the mineral rights beneath them. Even the birthplace of modern property rights and the United Kingdom nationalized mineral rights underground. So that’s critical for why the shale revolution happened here. And why is federal a federal government with its all of the above climate policy, which has nothing to do with stopping oil and gas production in the US. But they believe it does that that private ownership of mineral rights and our federal system. So different states can do different things that are regulatory format, can’t drill shale gas in New York state, but you can in Pennsylvania. You know, you can in Texas and Oklahoma and Wyoming and North Dakota. Colorado, where I live, has just tremendous resources. We’ve been a very large producer, but it’s just in a regulatory process of strolling slowly, strangling our industry certainly already ended the dynamism. There’s like three companies that produce almost everything. So the sort of entrepreneurial let’s try this dynamism in our industry has already been squelched in Colorado. And and again, they’re just going to continue to reduce innovation. Colorado was a leader in oil and gas production. And we’re going to we’re going to be in also ran in a few more years on the current trajectory. But I think that property rights and that federalism has made it so that production, as you just pointed out, our production has been robust, strong, world changing in spite of increasing federal opposition.

David Blackmon [00:07:28] Well, you and I can talk along these lines all day, I think, but I want to get to this bettering human lives. This is a third issue of this. I believe that your company is has published on an annual basis. Talk about why, first of all, you all produce, you know, decided to produce this report each year.

Chris Wright [00:07:51] First, I have to say it’s not an annual report. The first one that. Well, the first one was about three years ago, and then a year and a half later was the second one, and this one just came out. You know, I spent a good chunk of my evenings in my Christmas vacation writing this report with this report now, basically a small book. So it’s it’s a lot of effort, but it’s a passion. And I got a great team working with me to get graphics and data and make it beautiful and self-publish it. But, we wrote it in response to Larry Fink’s letter in January of 2020 that every public company should list its plan to align with the Paris Accords and be net zero by 2050. That was a responsibility of public company CEOs across all industries. And we’ve been a public company for about six years. I thought that was an outrageous misunderstanding of climate change and where it ranks in the world’s problems, which is it’s a real and global issue. It isn’t even close to the top five problems on the planet. But yet we should take all of the large companies in the United States and focus on that issue. That’s just an awful misallocation of resources. And, so I wrote the first Bettering Human Lives report to just lay out the facts about energy. The facts about climate change. We know the past, or at least the recorded data. We don’t know the future, but all projections of the future should be based on what’s happened to date. And so to me, it was just to put better context around that. And I thought a lot in our industry are passionate, hard working, great leaders, but they themselves are busy running businesses. They know their businesses. They know the oil and gas industry, but maybe less familiar with just the broader how does the whole energy system work? What are the roles different things play in it? And of course, they probably didn’t spend the ten years I did kind of digging into studying climate change and speaking and engaging on that effort. So to me, I thought, that’s something I got to do. And, and then it’s been used starting to be used in universities in high schools now. So this last one, I thought I’ve really got to expand it, bring in more case studies. I had some couple of friends of mine help me with data and focus on case studies and, yeah, expanded it wider. It’s long, but it’s broken into pieces. So I encourage certainly all the viewers. There’s ten takeaways at the front. And then there’s a letter from me that’s long years, but it’s got some pictures in it and some graphs, and it’s sort of a summary of the rest of the report. And if it intrigues you, you know, keep going. There’s a lot in there.

David Blackmon [00:10:25] Yeah. And it’s an extremely easy read, folks. And it’s, that it’s just chock full of so much information that, so much of it you don’t really see in the general media, of course, because they don’t want to talk about truth or facts about any of this. And it’s just a really valuable tool for those who want to get a real understanding of how energy impacts everyone’s lives on the planet. And, and this whole obsession about net zero, which, I mean, I don’t even believe net zero by 2050 is even possible or by really any year, frankly, on this planet. I wonder what you think about is that even an achievable goal?

Chris Wright [00:11:05] No. Yeah. One of my ten takeaways is zero energy poverty by 2050 is an achievable goal, and it’s a hugely human, planet enhancing goal. Net zero emissions by 2050. Is number one impossible? There’s no chance of it happening. But the trillions of dollars we’re spending, towards it are making very little progress in reducing greenhouse gas emission. But they’re making meaningful progress in making energy more expensive, energy less reliable, and moving investments away from places that are investing a lot of money on this. You know, the United Kingdom has reduced their greenhouse gas emissions more than any other country. 40% reduction in their greenhouse gas emissions. But there’s some ridiculousness in that they’ve had a 28% reduction in energy consumption. They just moved their industries outside the United Kingdom. They’re not made with natural gas in the Midlands of England, those products are now made in China or Vietnam. In a coal powered factory loaded on a diesel powered ship and ship right back to them. That’s not a climate policy. That’s an exporting of emissions in blue collar jobs. They also silly cow would a zero emission fuel. Of course it’s much dirtier, much more carbon intensive in coal. They shut down one of their big coal plants, and they now power it with clear cut forestry in the southeast US that’s shipped over and burnt in the Drax power plant. Like, if you call something a crisis and we must achieve goal, it just throws open these doors to all these just totally foolish policies. They’re not meaningfully changing greenhouse gas emissions, but they’re harming the lives of their citizens. It’s it’s just a travesty. And now it’s just become a political reason to do anything that you want to do. Do before anyway. All in the name of net zero.

David Blackmon [00:12:54] Yeah. And they’re also in Germany too. Same thing. They’re in the process of reducing their emissions. They’re also completely industrializing their economy. Right. And destroying millions of jobs. And as you say, sending all those businesses to China is just.

Chris Wright [00:13:13] And Germany’s this giant industrial powerhouse. No, they more than tripled their electricity prices before Russia invaded Ukraine. They’ve made life very hard for their moderate to low income cities, exported their industry, spent somewhere between a half and $1 trillion, scaled to our economy size 5 to $10 trillion. And the net result was they went from 80% of their primary energy from hydrocarbons to 74%. Like that’s just the benefits, like immeasurably small. And the cost is gigantic. And yet in the US we’re doubling down that direction. Germany, at least now, is building new combined cycle gas power plants or building LNG import terminals. Maybe they’ve gone far enough down the road. They’ve hit peak beat crazy, and they’re going to start to slow. They’re not publicly admitting as much, but they are actually changing their policy direction everywhere, eventually will. We’re never going to get close to net zero, but the damage is going to be huge. Eventually this madness, of course, will be stopped. It’s just the sooner it stop, the better, the less collateral damage.

David Blackmon [00:14:18] Yeah, what I’m worried about is, and I agree with you, I think eventually it will stop because it has to. Or we’re all going to go back to a 19th century existence. But but I worry that it will stop and begin to reverse itself before we experience a pretty major energy crisis. You know, historically, it’s always taken an energy crisis in the US to really create a sea change in energy policy. I wonder if you share that concern, that we won’t do it in time to avoid some sort of major upset.

Chris Wright [00:14:55] I agree with you, David. I think that’s what’s going to happen. People say, Chris, do you think you’re sober presentation of data that’s going to change the public, you know, public view. And my answer is no. You know, maybe the people that engage in it, but it’s only crisis. And when it becomes personalized, the pain that people are going to rise up and say, enough of this, we’re already seeing it in Europe. Look at what’s going on in Holland, what happened in France, what’s happening in Germany, even in Italy, and in the United Kingdom. So and I just great dialog with my son, a wonderful, very smart, thoughtful kid. I say, look, we’re going to more top down control. We’re taking away human liberty in the name of net zero 2050. The loss in liberty is much larger than the loss of real emissions. But that loss of liberty and then bringing higher energy prices, lower quality lives and more more top down diktats on what you can do and can’t do. People are getting angry about that, and the response is not going to be a nice swing. Back to classical liberalism. Free people, free markets, free trade. It’s angry populism. You know, this, this effort to build this top down control. It is breeding. What just what you would expect to be. We’re seeing that across Europe. We’re seeing some we’re seeing that in the US.

David Blackmon [00:16:11] Yeah. I, this reminds me of, an article I came across last week, I believe is a published in time magazine. Actually, it was by a Swedish professor at, one of the universities in Sweden talking about how the Chinese Communist government is the ideal government to actually accomplish this energy transition. And and my response was to laugh and say, well, yeah, you’re absolutely right. It and there’s a lot of reasons why that’s the case. And it, it plays out in America in that it just seems like every policy decision now by this administration moves us closer to a full authoritarian form of government, doesn’t it? I mean, it just it’s not only that China’s system is ideal for this, it’s that we’re moving in that direction in the Western world.

Chris Wright [00:17:06] We are. Sadly, you look, when I was in college in the 80s, you know, probably a third of the faculty were communists. You know, they believed, you know, markets don’t work and most Americans are stupid rubes. And they have to be controlled in a design society by smart people like them. You know, that that’s a very common view among sort of. Right. You certainly on universities and sort of wealthy and arrogant people is we gotta we gotta control these these dumbasses and design society. And then you had to be the university campus to say you were pro communism. Because when we were in a Cold War with the Soviet Union in East Germany, and the average person would never be enamored with with that kind of a system when the Berlin Wall fell. Well, now, you know, the clothes came off and no one could really be pro communism. In fact, nobody wanted to be pro socialism anymore. And environmentalism. And in my first, my view of it really filled that hole. It became the new purview of people who want top down control. Well, now it’s not to, you know, distribute economic resources and control the economy. It’s to save the planet. And of course, you got to do anything. If the planet’s going to just it’s gonna die. That’ll justify anything. This word crisis in the climate crisis. Crisis is a word that justifies rash, extreme actions. Because it’s a crisis. There’s no time for thought and evaluation. But yeah, the net result has been quite negative. And of course, the kids, I think, who are like I speak at college campuses, I’m going to do a bunch of those this spring and fall. They’re idealistic, they’re great. They want to make the world a better place. They want to have meaningful lives. Like their hearts are wonderful. But this climate crisis, the world is coming to the end. There’s these devils and you can be an angel. And here’s what virtue is. This is intoxicating. But of course, if I go speak there and lay out the story, you know, climate change is real slow moving and not actually a crisis, but 2 to 3 million people dying every year simply because they don’t have a propane cookstove or a gas cookstove like you do at home. More than a quarter of humanity doesn’t even have that, and millions died from that. I think they they mostly change. Oh my gosh, that’s the crisis. It’s an error. Let’s work on that. They’re they’re they’re about justice. They’re about making the world a better place. We just need to engage with them. We’ve let the kooks define how the world works. And that’s a great, great cost to our society.

David Blackmon [00:19:36] It is. And in over the past couple of years, I really started noticing it, in late 2022, that the, the, the activists, the climate alarm activists, the, the loud spokespeople that are in the media all the time appear to be becoming increasingly emboldened in talking about the more Malthusian aspects of their philosophy population reduction, deprivation, economic growth, all those kinds of things. Do you think that they’re increasing boldness and frankly and openly talking about this stuff is likely to create a quicker public backlash, or is the public even paying attention?

Chris Wright [00:20:21] I know, I, I think so the more extreme it gets further, I feel the backlash already happening. More and more people are like, yeah, maybe it didn’t really make sense to me. It seemed a little exaggerated. I think the further they push, you know, these extinction rebellions, they’re going to stop the roads and prevent people from going to work. And Greta’s proclamations of the end of the world coming. This, I think, is helpful. Actually, I think this hits the average person that simply don’t it, you know, it’s they give away, it lives on live. They don’t engage in climate and energy stuff. So if they only heard one narrative, they kind of assumed it’s true. But now that narrative being exposed is yeah, that sounds a little too extreme to accept. I think we’re starting to see a backlash, but of course it’s going to be a long it’s going to be a long road back to sobriety. We got to have some fun on the way. David, we had at my house last year, an end of the world party on I think it’s June 16th, 2023 because Greta tweeted on on June 16th, 2018. And if we don’t stop using oil and gas within five years, the world’s going to end. So we held a party. Turned out it was on Tuesday night. I was worried about partying too hard on a Tuesday night. My son in law said, well, if the world’s going to end, what does it matter? So we let loose. We had fun. We had all generation. My mom was at the party, we had kids at the party. And I think it’s we’ve got to engage at all levels on this stuff and expose that just for foolishness of this. How is your life today compared to five years ago? Actually, for most people it’s a little bit better.

David Blackmon [00:21:57] So what? You know what you’re doing is so bold to me. I and I, you know, worked for a lot of CEOs who just didn’t want to be in the media at all. And, you know, I was at independent producers. I couldn’t blame them. It wasn’t going to do them any good. But you’re out there, you’re doing podcasts, you’re doing public speaking, you’re all over television, all this writing, you’re doing all this advocacy. Have you experienced a lot of blowback from that, from investors or from, you know, from local or national media? I mean, it’s a hard thing you’re doing, and people should appreciate that.

Chris Wright [00:22:34] Well, mostly what I get is the opposite. People saying, wow, thank you for saying that, ensuring that investors, you know, they’re getting pushback from university endowments that said they must divest. So, you know, like how to do it. The bettering human lives to them is some material to respond back to that. Hey, actually being against hydrocarbons doesn’t better lives. It impoverishes lives and it doesn’t meaningfully address climate change either. So no good. David, you know, the Wall Street Journal wrote an article saying energy CEO fights climate science leading in North Face. I thank them for writing that article, though with a title like that, a lot of people read it. It linked the video that I made summarizing the last report called Let’s Be the Be was called let’s be honest, it brought more people into that dialog. I don’t mind taking the arrows. I’m very comfortable with the facts and some knowledge of the information that goes behind the trade offs. I want to have that public engagement, that public dialog. In fact, you probably know also my company, Liberty Energy, we are suing the SEC for these climate disclosure rules. We we won this day in your fifth circuit Court on the thing now with the lottery. The case is going to be heard in the eighth circuit. But Liberty will be very active in that litigation. In fact, you may see me in front of Congress, defending why we’re suing and why these rules are not only beyond the SEC’s purview, but they’re not good for American society. If you make it harder, riskier, and more expensive to produce oil and gas in the United States, which is the objective of this administration, what’s the net result of that? Two things come out of it. One is if you make it harder to do something and riskier to do something here on balance, on the margin, you’re going to get less of it. So we have a little less oil and natural gas production we otherwise would. And what does that mean. Demand doesn’t change so you get higher prices. So when I was back in Washington I thank them all. They’re enriching my company’s record profitability, our industry’s nearly record profitability. But heck, we’re only 1% of America. The rest of America has higher energy prices than they should otherwise. And your chilling investment into our country, maybe I don’t want to put my plant in the United States. Maybe they’re not going to have an energy system that’s conducive to manufacturing we do today. But if they’re going to go the other direction, maybe we’ll invest that capital somewhere else. So the cost in, of course, where’s that incremental oil and gas going to come from? It’s going to come from, you know, Iran or Venezuela or Russia or Saudi Arabia. And where’s the environmental plus in that? You know, so like the even their climate policies, I think their main impact is to increase greenhouse gas emissions if they can implement their policies, this is just displacing it to a less clean production, raise prices and weaken America. But how do you rally a populace behind that policy outcome set? So I’m very happy to have that dialog in public. And and I know you’re doing the same thing.

David Blackmon [00:25:26] Try and, have a lot smaller platform than you do, but I do my best. Nikki Harlem. And I want to bring it, you mentioned, demand not changing while we, we, you know, these policies cause us to produce a little less funky Harlem in early February. Said that, she told an interview at CNBC she she thinks we could be in a structural supply deficit, for crude oil by the end of 2025, a long term structural deficit. And a lot of it has to do with lack of investment or not inadequate investment and finding new reserves over the past decade or so. I wonder if you have an outlook on that. Do you agree that that we could be in that kind of, shortage, of supply that soon? I, I’ve been predicting it, along about 26 or 27, 25 seems a little early, but the dang, that’s that’s a real problem if it’s going to come that fast.

Chris Wright [00:26:27] Yeah. Look, I, I think years from now, people are going to look back and say, Vicky was a prophet and she is the one who started to speak out on it and give the data about the shrinkage in exploration spending, not just production spending, but exploration spending, finding the reserves for five, ten, 20 years from now, the data is compelling. Vicky’s been explaining that and showing that to people and giving that bold conclusion that could be unpopular. People hate oil and gas in her message. We’re not going to have enough of it. And I think she’s 100% right. I spoke yesterday in Shreveport and the day before in Houston. And one of my messages there is, if you look at the data, the world oil demand in the last decade, was meaningfully higher than the decade before the growth rate. That was the fastest decade over decade increase in demand for barrels of oil, which was. And then that was faster than the growth rate the decade before. We don’t even see a slowing in the growth in absolute terms. Yes, in percent terms as we get wealthier, but we don’t even see a slowing in the growth in absolute demand for oil. But yeah, we’re talking about a peak in a few years, like based on what, 1 billion people. I love Virgin Murphy’s term and I use it all the time. The lucky 1 billion like people on this podcast live well, energized lives and we consume on average among all of us, 13 barrels of oil per person per year. The other 7 billion consumed three barrels per year and per person. What do you think those people want? They want improve their lifestyles and move towards? We do. And of course they want that. We would want that too. And they’re going to get it. And it’s as they get it, they’re going to need more oil, more natural gas, and certainly in the next few decades, likely more coal as well. I’m not Anti-coal. Yeah. If you’re in a wealthy society and you can displace gas with coal, God bless you. You don’t have local gas production. Coal’s the cheapest resource you’ve got. Get electricity and heating your people. Yes, there’s trade offs and there’s trade offs with everything. But bettering lives, making people live longer, more opportunity rich lives. Nothing trumps that.

David Blackmon [00:28:38] Well, I want to personally thank you for all you’re doing. We’re out of time. I want to end this by giving you a chance, to tell everyone where they can contact, or or follow what you’re doing. How can they get a copy of the bettering Human Lives? Book and, and just, you know, just tell folks where to find you.

Chris Wright [00:29:02] You bet. So, look, our website is just liberty, energy.com, Liberty and energy, the two things that enabled the modern world. And if you just Google bettering human lives, Liberty, energy, it’ll take you right to the report. There’s as David said, there’s three versions, but the latest one is live is Bettering Human Lives 2024 and I and thanks to my daughter, I’m on LinkedIn, just Chris Wright, Liberty Energy on LinkedIn. And so talks I give her writings and stuff like that in the report. A lot of that is on my LinkedIn thing. So you can scroll through that. You can find the article where the Wall Street Journal said, fighting climate, science. And yeah, all of that stuff is there. But thank you all for listening and engaging in these energy climate dialogs. They’re important for the world. And thanks, David, for hosting these dialogs all the time, I appreciate you.

David Blackmon [00:29:51] Hey. Thank you. Thank you again. And thanks, Erick Parel, our producer and sandstone Group, for hosting the podcast. And thanks to all of you, our viewers and listeners for for tuning in. And we’ll see you next time.


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