Daily Energy Standup Episode #128 -Energy Shift: From Turbulence to Transformation in America’s Heartland and Beyond

The supply chain for minerals needed for EV batteries are dominated by China and developing countries We all know by now that the California Air Resources Board has banned the sale of traditional combustion trucks – […]

Oil drilling is collapsing in the US as producers rein in output, mirroring a recent plunge in rigs searching for natural gas. Rigs targeting crude declined by 11 to 575 this week, according to data […]

Highlights of the Podcast

00:00 – Intro
03:39 – U.S. legislator attempt to ban oil and gas exports
08:40 – Central Wisconsin communities unite to stave off looming wind turbine industry
11:48 – Tennessee Valley Authority proposes gas plant 122 mile pipeline for notorious Seaside
14:32 – California will be exploiting developing countries to achieve one point million EV trucks
16:35 – Oil drilling plunges the most back in two years with shale producers pulling back
21:09 – Market Updates
22:55 – Do you think the supply chain is easing and do you think the inflation on the drilling is easing or is it getting worse?
25:25 – Outro

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

Michael Tanner: [00:00:19] What is going on Everybody, Welcome into another edition of the Daily Energy News Beat Stand up here on this gorgeous Monday, May 22nd, 2023. As always, I’m your humble correspondent. Michael, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show, the purveyor of the show and the director and publisher of the world’s greatest website, EnergyNewsBeat.com, Stuart Turley, my man, how are we doing today? [00:00:42][23.6]

Stuart Turley: [00:00:43] I think I’m doing a lot better than you oh, mighty millennial you sound like you have a cold. It’s a beautiful day in the neighborhood where I’m at. [00:00:49][6.0]

Michael Tanner: [00:00:50] I just sort of killed an average man but I am here standing up for the people. You have been absolutely busy. We are busy this weekend, Stu. We have an incredible lineup for the show today we’re going to start off first up on the menu, U.S. legislators attempt to ban oil and gas exports. this will go over really well. So, Stu will we’ll talk all about the really it’s the reintroduction of a bill, but but Stu will break all down what’s going on in the Senate. [00:01:13][22.9]

Michael Tanner: [00:01:13] Next up Quote, it’s criminal. Central Wisconsin communities unite to start stave off looming wind turbine industry. This is a topic we’ve covered a lot about and this is now the latest example of local communities really pushing back against the wind industry. Stu will get us in here and talk about saving the birds in Central Wisconsin. [00:01:32][18.9]

Michael Tanner: [00:01:33] Next up, the Tennessee Valley Authority proposes natural gas plant 122 mile pipeline, Fort Notorious Seaside. This is actually a really interesting and great move. I think the Tennessee Valley Authority has gone ahead and commissioned a new natural gas facility to replace coal generation. I think probably the smartest way to reduce emissions right there. So we will give some props to the TVA and Tennessee in that segment. [00:01:57][24.2]

Michael Tanner: [00:01:57] Then finally, California will be exploiting developing countries to achieve 1.8 million EV trucks. Really just an overview about how in order to get to their 69 70% EVs by 2030, there are really going to have to kick up the rare earth mineral and the critical mineral mining. And where does that come from? Well, it comes from it comes from developing countries. And so Stuart kind of dive into a really great article that kind of rolls over all of that. [00:02:25][28.1]

Michael Tanner: [00:02:26] He will kick it over to me and I’ll quickly cover what happened in the oil and natural gas markets. We saw natural gas up at dollars and $0.50. We have a party over here it’s exactly what we need. We did see rig count plunge, though, but otherwise it was a fairly quiet weekend. Otherwise, we’ll let you guys then get out of here and start your Monday hopefully you only have a few meetings that you could bang your head over to get through so survive. Hopefully this makes it better. Guys. [00:02:49][23.3]

Michael Tanner: [00:02:50] Before we kick this show off again, as always, these stories are courtesy the world’s greatest website www.EnergyNewsBeat.com check out the description below. It has the links to the specific articles we’re about to hear. The team does a great job of curating that and making sure that everything is there. Stu does a great job of making sure that just if you go to EnergyNewsBeat.com you really get the best holistic view about what’s going on in the energy industry. [00:03:12][22.7]

Michael Tanner: [00:03:14] Dashboard.EnergyNewsBeat.com the best place for all your data and energy news combined. Get it while you still can. You definitely going behind a paywall at some point, so make sure you guys check it out, we love your feedback. [email protected]. I’m out of breath tho Stu where do you want to begin? [00:03:29][14.5]

Stuart Turley: [00:03:30] Well, let’s take a look here let’s start with the first one this is this could be this is a dumpster fire waiting to happen here Dude U.S. legislator attempt to ban oil and gas exports. This would be a disaster. Okay. 3 U.S. legislators have proposed a bill that would reimpose a ban on U.S. crude oil exports on the ground, that this would benefit coastal communities. [00:04:03][33.5]

Stuart Turley: [00:04:05] The Energy consumers, U.S. and energy consumers as a whole and it will help the U.S. achieve its climate change goal. No, it will bring the economy to its knees. Let me give you a quote in here. Oil and gas companies continue to pad their pockets at the expense of Americans and consumers and front-line communities, all while fueling our global climate crisis, Markey said. I got to go see who. [00:04:35][30.2]

Michael Tanner: [00:04:35] He and Malarkey. [00:04:36][0.6]

Stuart Turley: [00:04:37] Oh yeah, Senator,. [00:04:37][0.7]

Michael Tanner: [00:04:38] What a bunch of Malarkey. [00:04:38][0.6]

Stuart Turley: [00:04:39] Oh, our Country. [00:04:41][1.3]

Michael Tanner: [00:04:41] Boom. I’m so good. [00:04:43][1.4]

Stuart Turley: [00:04:43] I love this one. Our country is due for an oil change a ban on oil and natural gas exports overseas is a win for environmental justice for our economy and our planet. [00:04:59][15.5]

Michael Tanner: [00:05:04] This is another example of not thinking about the second-order effects. It sounds all well and good. Oh my goodness. We export 4 million barrels of crude oil a day according to the EIA. You can look this stuff up, guys. I’m looking at this right now. Okay. Well, if we ban that, then we’ll have 4 million barrels here at home. [00:05:26][22.1]

Michael Tanner: [00:05:27] What they don’t realize is the reason why we have to export that is for a few reasons. Lack of pipelines and guess what? Your favorite act, The Jones Act. If we were to get rid of The Jones Act, you could very easily then navigate American crude oil from one part of the country to the other and not have to go run a pipeline. [00:05:50][23.4]

Michael Tanner: [00:05:51] I mean, think about it. You could say, well, it’s all from the Gulf of Mexico to California without having to import somebody else. But no American made ship is going to be able to do that. If all of a sudden you remove The Jones Act from the equation this get solved. [00:06:05][14.4]

Michael Tanner: [00:06:06] So, again, they’re not thinking about the second order effects here and again, that’s just what bothers me it’s a press release they throw out a press release on his website who were reintroducing this act. You know, this is You’re killing me here, guys. [00:06:18][12.6]

Stuart Turley: [00:06:19] Hey, it’s even one more magnitude worse than that. [00:06:24][5.2]

Michael Tanner: [00:06:25] Third degree effects 3rd degree effects. [00:06:27][2.1]

Stuart Turley: [00:06:28] Okay, we’re on the third degree and even though I was a first degree black belt only, I didn’t get to the second order of black belt. Now, here’s. Here’s where it gets funky. The EPA has set up the regulations on our refineries to take the heavy crude, and we have not been able to update it so we have the light and sweet crude. Guess what Michael was kilt the Keystone pipeline, which would have brought heavy oil down from the oilfields, ends up in Canada, which is actually ecologically better than using heavy oil from Venezuela, Iran, Russia, and we import all that. [00:07:15][47.2]

Stuart Turley: [00:07:16] So this is all a self and wounded foot, just like going hunting with Cheney. This is like going hunting with Cheney and shooting yourself, except he gets you in the box. I mean, this is absolutely horrific there’s a fourth order of magnitude. It disrupts the entire global market if you thought the rest of the world hated us now. [00:07:46][30.4]

Michael Tanner: [00:07:49] Yeah, I mean, because it’s not just as simple as, Oh, those barrels will be spent here. There’s a reason why exporting exist in a in a quote unquote, free market. There’s a reason why goods have navigated to where they go, because it’s the most efficient route possible. It no pun intended. It’s the most it maximizes it’s where the marginal benefits each, the more equals the marginal cost that’s where goods flow to. [00:08:14][25.3]

Stuart Turley: [00:08:14] Right. And this is not an argument of whether or not climate change or anything else this is a fact market issue. We’re not moving off of we’re going to go through some of this here in a second. [00:08:27][12.1]

Michael Tanner: [00:08:27] I mean, yes, we all know Stu’s big on climate change, so we don’t need to reiterate that here. [00:08:33][5.4]

Stuart Turley: [00:08:33] Oh, no. This is this is all this is all market, baby. [00:08:36][3.1]

Michael Tanner: [00:08:37] Okay. What’s next? [00:08:38][0.8]

Stuart Turley: [00:08:38] Okay. It’s Criminal! Central Wisconsin communities unite to stave off looming wind turbine industry. Michael this is criminal! [00:08:50][11.8]

Michael Tanner: [00:08:51] It’s great. Reporting from The Epoch Times, though. I love that. Love that. Love that shop. [00:08:55][3.9]

Stuart Turley: [00:08:56] They are, and Matt Gregor we got to give him a hat tip. He is a fantastic reporter. Central Wisconsin Communities are coordinating efforts to shine a light into the flickering shadow cast of looming by a wind turbine industry. This is a revolt happening here, Attorney Marty Manchin told the Epoch Times. I’ve never seen our communities engage like this in my life. [00:09:29][32.8]

Michael Tanner: [00:09:30] I thought these. [00:09:31][0.8]

Stuart Turley: [00:09:32] This is from Tom Wilcox this is critical, these companies are sneaky about it all, said Tom Wilcox, also a member of the Farm Land First and chairman of the town Green Grove and own Wisconsin they don’t want to come right out and say how this will work. In fact, part of the reason is why people don’t know this is happening as farmers have to agree to keep their mouth shut on the details of the contract. [00:10:01][29.2]

Michael Tanner: [00:10:03] It’s insane! I also love this, this month, at least 13 central Wisconsin towns have passed health and safety ordinances, setting ground rules for companies seeking to build wind turbines up to 600 feet tall and as close to 125 feet from their homes. Oh! Welcome to the oil and gas business baby, Welcome to Setback Rules! [00:10:23][20.4]

Stuart Turley: [00:10:24] Oh, yeah. And you and I talked about this a couple of years ago when we had really helped out some very large oil and gas companies. We talked that it was going to all forms of energy, Michael, didn’t we? [00:10:38][14.1]

Michael Tanner: [00:10:39] We did know that solution we built could very easily be rolled out to wind, solar or whatever, because these set back rules and these and these disproportionately impacted community guidelines will be rolled out to the wind and solar industry. Yes, they will. [00:10:53][14.0]

Stuart Turley: [00:10:54] And when we talk about economies of scale, we laughed last week. One of the best stories was the wind farms are falling over all the turbines are falling over. They don’t last past eight years the economics don’t add up. [00:11:10][16.0]

Stuart Turley: [00:11:10] And when they hit carbon net zero at ten years where they’ve paid for and sold their climate worth, you know, worth is that ten years break even. But they’re failing and not being profit without tax subsidies. Let’s not slam wind, Let’s not slam solar as an idea, let’s let the markets decide. [00:11:37][26.9]

Michael Tanner: [00:11:40] And we will see how they decide what’s next? We know what Tennessee decided. [00:11:44][3.9]

Stuart Turley: [00:11:45] Oh, absolutely TVA got a lot of money from TVA Tennessee Valley Authority proposes gas plant 122 mile pipeline for notorious Seaside. Let me go into this just a little bit here. In a draft environmental review, the TVA compares the option of gas and solar for the Kingston site. [00:12:08][22.6]

Stuart Turley: [00:12:08] TVA says it prefers the plan for natural gas it’s also called methane due to its main Planet warming ingredient because it can build gas facilities faster than it can the equivalent amount of solar capacity under its current regulatory process. [00:12:29][20.3]

Stuart Turley: [00:12:31] There’s a great map in here, how it is. Michael, they forgetting nobody in the entire environment, in the entire energy sector, except a few folks are talking about the grid. It takes years to bring on a solar or a wind farm on to the grid. And when you do bring it on to the grid, you have to buy three times, four times, five times no 180 times the amount of power in order to do it because of the renewables. No! TVA is just trying to deliver good service to their their customers. Good. [00:13:13][42.1]

Michael Tanner: [00:13:13] When you think about it, Why did they go into this this review between solar and gas power plant? Well, they have the Kingston Fossil plant currently has some coal generation and they’re retiring that coal generation where the worst coal ash spill occurred in 2008. [00:13:30][16.7]

Michael Tanner: [00:13:31] So, I mean, this wasn’t the cleanest of all coal so I applaud them for going through this study. And I think it’s what we’ve clearly talked about on the show. If you put gas and solar head to head, it’s it’s no competition in our opinion. [00:13:45][14.9]

Stuart Turley: [00:13:46] And you know, what you can do is just use the same infrastructure, update the boilers, update everything else. And you’ve got a very low cost to the whole thing anyway. I thought it was great! I want to just give a positive shout-out to DVA for trying to do the right thing. [00:14:09][23.1]

Michael Tanner: [00:14:10] Yep. [00:14:10][0.0]

Stuart Turley: [00:14:11] And one last thing the EPA last year said that we reduced our emissions in the United States remember, we’re 17% of the global emissions. We reduced it and all the other countries increased and we did it by they said natural gas. [00:14:29][18.3]

Stuart Turley: [00:14:30] Okay, moving right along. California will be exploiting developing countries to achieve one point million EV trucks. This one from my cookies. And in Texas, cookies mean a body part. So we’re talking this is not good. [00:14:49][19.7]

Stuart Turley: [00:14:51] The supply chain for minerals needed for EV batteries are dominated by China in developing countries. We know now that California Air Resources Board has banned the sale of traditional combustion trucks that run of diesel by 2036. [00:15:09][18.8]

Stuart Turley: [00:15:11] California now requires fully electric truck fleets, recently advanced clean fleets regulation phasing in. In the second order of magnitude, Michael is the second World country and the kids in the Congo and in China that we’re buying all of this stuff from is just hacking me off. Okay. Thank you very much it’s exploiting kids. [00:15:44][32.4]

Michael Tanner: [00:15:45] Yeah, it. Well, I think that’s the issue when you and I mean, really, the funny part is these electric trucks are worse than electric cars because the range is even worse. It’s even a worse spend of money than it is going to getting getting a Tesla. [00:16:00][15.2]

Stuart Turley: [00:16:01] Oh, absolutely! And now we did see that the hydrogen with Ford trucks, we talked about that last week may have the power and the energy in order to make it. But the energy and the technology for hydrogen is not there yet the jury’s still out on when hydrogen can come in, but it is better than the EV for saving kids. [00:16:25][24.1]

Michael Tanner: [00:16:26] All right. I’m waiting on bated breath for hydrogen. [00:16:28][2.6]

Stuart Turley: [00:16:29] Oh, your bated breath with a cold has got to be bad okay, let’s go to oil drilling plunges the most back in two years with shale producers pulling back. Michael, I’m going to really let you kind of tackle this one since this is in your wheelhouse. [00:16:45][15.4]

Michael Tanner: [00:16:46] Yeah, I mean, really, what what what, what what have you discovered on Friday was that Baker Hughes and in various dropped recounts, we declined by 11 to a total of 575, which is really the biggest weekly drop since September of 2021. [00:16:59][12.5]

Michael Tanner: [00:17:00] Mainly we saw and I think the most interesting part was the pullback was in the Permian and Lee County, New Mexico, which is two of what are considered some of the more prolific shale plays in the country right now. [00:17:15][15.0]

Michael Tanner: [00:17:15] And if there’s any places where you can make money at lower oil prices, it’s it’s the it’s West Texas in Lee County, New Mexico, it’s pretty you know, you throw Eddy County in there. But really, those are the places where theoretically at $40 oil, not that you should be drilling, but you should be able to do be producing and making money and maybe even at a $40 oil price, there are some wells that theoretically could make money. [00:17:37][21.9]

Michael Tanner: [00:17:38] This all just to me signal something everyone claims they think oil is going to be 100, but heating oil is going to be a hundred bucks. Why are you why are companies in the more prolific plays pulling back on rigs? Why? [00:17:54][15.4]

Michael Tanner: [00:17:56] If Scott Sheffield really thinks oil is going to be 100 bucks, why would he not leverage his cash on hand now and leverage oil prices being at 71 and go to a rig and say, I want five rigs at you know, I’ve been paying 100 grand a day. I want 75 a day, and I’ll run that for the next two years. Why wouldn’t he do that? [00:18:17][20.6]

Stuart Turley: [00:18:17] I think I got two answers for you, One is the investors are used to getting their money back, which is absolutely good fiscal responsibility. So they’re not just willing to do that. And they are seeing some troubled times coming around the corner. [00:18:35][17.8]

Stuart Turley: [00:18:36] We have the Biden and the Congress not talking, but in that in his discussions, he posted out capital gains taxes up to 45%, top individual tax rate at 39.6%, corporate tax rate up to 28%, 25%. Minimum tax rate, taxes on cars, foreign profits to 21%. So, you know, when you’re sitting here talking about tax, you’re talking about the inability for them to cut spending. Who knows what the market is going to do. [00:19:22][46.0]

Michael Tanner: [00:19:24] I think it’s the third I think there’s a third option you’re out. [00:19:26][2.2]

Stuart Turley: [00:19:27] Okay, cool. [00:19:27][0.3]

Michael Tanner: [00:19:27] All of these shell CEOs lie through their teeth about how many subprime drilling locations they have. Every M&A deal that we see. Oh, we’ve got over 200 high-quality, well, locations to drill. Yeah, and it’s $70 oil. You’re dropping rigs. Coo! They’re probably not high-quality. [00:19:48][20.2]

Michael Tanner: [00:19:48] So I’m going to throw the third option there that they’re lying through their teeth when they say, oh, we just paid $1,000,000,000 for 600 high quality locations it’s a rounding error It’s six. But I’m mostly being facetious. [00:20:03][14.8]

Michael Tanner: [00:20:03] But I think it’s more of the you know, what they say in public is not what they believe privately and we have to watch what do they do not what do they say? I’m very big on when somebody tells you who they are believe them. [00:20:18][14.8]

Michael Tanner: [00:20:24] There’s a lot of our guys really think about all the M&A deals, Why do you think I specifically read the comments on those M&A deals? And I say, well, we’ve committed to we’ve discovered over 200 optimal drilling locations. It’s like cool at 70 bucks, jaw dropping rigs. Sweet makes sense. Does it add up in my book. [00:20:42][18.2]

Stuart Turley: [00:20:43] You are one of the best at how do I say this digger’s on press releases for The IR Guy of the Week that is your passion and you do it really well. [00:20:53][10.4]

Michael Tanner: [00:20:55] This podcast is over 300 high quality episodes mind you, we’ve only put out 120. Don’t actually go look at the stats, but we’ve got over 300 high quality episodes out there it’s the same thing. [00:21:06][11.3]

Stuart Turley: [00:21:07] Right. [00:21:07][0.0]

Michael Tanner: [00:21:07] Rant over! Let’s go into oil prices and gas prices. Get you guys out of here. Not much really happened on the oil side, really, as we as debt talk sort of paused. We were hoping to have an agreement coming into Friday we didn’t actually see that happen. So we did see oil tumble from around $73 down to around 71-90. Market does seem to open a little bit lower somewhere around 7169. So as the market opens here shortly, we will we will discover what happens there. [00:21:36][28.5]

Michael Tanner: [00:21:37] You know, Fred, Ron Paul came out to say that there’s really no decision on U.S. rate interest hikes. It’s kind of funny that, you know, every chairman, Jerome Powell or they’re going to be, you know, going to raise interest rates. What do you think he’s going to tell you? No one is gonna tell you what they know. They’re going to wait till the media commercial airs, but they got to ask the question. [00:21:53][16.5]

Michael Tanner: [00:21:54] So I think the one thing it would be interesting to point out, Stu, is that crude did notch its first weekly gain in a month. So on a week to week basis, we this is our first positive week we really like that. [00:22:05][11.1]

Michael Tanner: [00:22:06] I think when we look over what happened on natural gas prices, mainly just some supply cut offs from what’s going on up in Alberta and what’s happening here at home with some natural gas pipeline shutdowns, I’m just for routine maintenance. We did see prices popped about $2 in 59, said I am skeptical that we’ll be able to maintain that. But if we can see some continual supply shortcomings that could yield well for natural gas prices, how high could they go, who necessarily knows? [00:22:33][26.9]

Michael Tanner: [00:22:34] And I think we really covered the other big thing that happened on Friday really was U.S. breakouts falling. And, you know, all those high quality drilling locations, unfortunately, are now screwed. Here’s what it is, too. It is what it is they’ll they’ll be there, they’ll be they’ll still be there are $40 oil. You’ll still have the opportunity to drill all of them so you got anything else? [00:22:53][19.4]

Stuart Turley: [00:22:54] Just one more question. Do you think the supply chain is easing and do you think the inflation on the drilling is easing or is it getting worse since you’re in the business? [00:23:04][10.1]

Michael Tanner: [00:23:05] I think. I think inflation on the service side is coming down a little bit because I think as recounts fall, service companies have to drop their prices in order to stimulate people right now. Because think about it like, you know, we you know, I I’ve we have multiple bids out for fracs. They’re all coming in lower than expectations and I it just is what it is. [00:23:27][21.4]

Michael Tanner: [00:23:27] Now. What does that mean? That means that service companies understand that in this pricing environment, they need to incentivize people to continue to drill, which means drop their prices. So again, you have the public perception of what, oh, my goodness, You know, right we’re investing. you know, and in reality, we’re just we’re just pumping money back to shareholders and that’s fine and I’m okay with that. [00:23:51][24.1]

Michael Tanner: [00:23:54] I’m of the mindset, Stu, that that there are very few high quality drilling locations left in America that you’ve got a lot of tier two acreage left over. Obviously, there’s some Tier one available, but but companies aren’t selling that. And if you’re going to go buy that, you have to buy Pioneer like that’s just or you have to go buy Diamondback or go by Crown Quest and they’re not going to sell, that’s going to cost you at least 20 bills. So that’s how you get Tier one acreage nowadays. [00:24:21][26.8]

Michael Tanner: [00:24:21] On the open market for the smaller companies, the Earth Stone Energy’s the the northern oil and gas is you’re buying Tier two acreage at Tier one prices, and that means you might sneak a few high quality locations in there. But any time I see that stat line on a press release, I take 75% of that and just chalk it to the wall because they pump that number up. I’m just telling you how it goes I hate to say it. [00:24:46][25.1]

Stuart Turley: [00:24:47] Well done, Michael. [00:24:48][0.7]

Michael Tanner: [00:24:50] You got anything else? [00:24:50][0.5]

Stuart Turley: [00:24:51] It’s going to be a crazy week, especially especially after listening to Biden this morning in Japan. It is going to be horrific. [00:25:02][10.7]

Michael Tanner: [00:25:03] Well, while on that lovely no case, we’ll let you get out of here start your week. We hope it’s not too bad and hope you don’t have crazy meetings that bang your head in against the wall. But if they do, just know you’ll be out here soon. Great. And we appreciate you guys checking us out www.EnergyNewsBeat.com for Stuart Turley Im Michael Tanner, we’ll see you tomorrow, maybe [00:25:03][0.0]