Daily Energy Standup Episode #343 – Mexico’s Oil Curb, Germany’s Coal Shutdown, and Nuclear Power for U.S. Shale

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Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the Wednesday, April 3rd, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up Mexico curbs oil exports. Next up in a two part little lie, cost one whole phase out. Germany shuts down 15 coal fired power plants. oh. Next up, the cost of electrifying commercial truck fleet is $1 trillion. And then finally, in the news segment, U.S. shale drillers to produce Permian drilling emissions increase reliability with nuclear reactors. You got to love to see this stool. Then toss it over to me. I will quickly cover what happened in the oil and gas market today. We saw natural gas prices spike a little bit, but oil trading at about 4 to 5 month high sitting at 8584. I will then quickly cover what the API thinks the EIA crude oil inventory will be. You’ll hear that at 1038. Then Schlumberger dives in and goes ahead and does a little bit of an M&A deal. We will cover all that and a bag of chips folks. But before we do that as always I am Michael Tanner joined by Stuart Turley. I hope you’re having a great day. You go and kick us off. [00:01:24][69.5]

Stuart Turley: [00:01:24] Hey, let’s go down our, buddies down in Mexico. No, oil is what I think the title of the thing should be. Mexico curbs oil exports. This is pretty darn funny. The export cut coming at a time when OPEC and its allies are already curbing production, threatens to drive oil prices up. JPMorgan Chase last week warned that global benchmark Brant could hit $100 a barrel. And what we’re seeing also this morning was that there was another downstream, attack on, from Ukraine on, Russian supplies. So the hoodies and the blowfish over there are also targeting some new activity going on. So the world around production is a little bit dicey. [00:02:14][50.0]

Michael Tanner: [00:02:15] Is Mexico in BRICs? [00:02:16][0.9]

Stuart Turley: [00:02:19] I don’t think they are. [00:02:20][0.5]

Michael Tanner: [00:02:20] No, because this isn’t interesting. You know, I was going to the I mean, this is even more than, in my opinion, an interesting move. Mexico aligning themselves with OPEC and cutting production. It’s an interesting, you know, Japan. [00:02:34][14.0]

Stuart Turley: [00:02:37] It is they’re tightening even further with Venezuelan exports set to fall after the reinstatement of US sanctions on it. Oil could keep rising as Pemex starts commercial operations in the old mega refinery known as those boxcars, with capacity to process 340,000 barrels of crude a day. [00:03:01][23.8]

Michael Tanner: [00:03:01] Yeah, I think it’s interesting. Mexico deciding to align themselves with OPEC. It could be a sign of the future. And where you know how OPEC continues to play a force in what’s going on. [00:03:12][11.1]

Stuart Turley: [00:03:13] But this is Houston because they don’t want to sell the Mexican crude to the U.S refineries. That tells me that they ain’t digging the Biden administration is what the underlying current this story. [00:03:25][12.3]

Michael Tanner: [00:03:25] Interesting. All right. What’s next? [00:03:27][1.6]

Stuart Turley: [00:03:28] Let’s go to somebody else that does not like Biden. Coal phaseout Germany shuts down 15 coal fired power plants. This is just in that kind of an amazing story. Again, they’re bragging their net zero is actually doing great. Michael. They keep forgetting that they’ve d industrialized anything and nothing’s being manufactured. Germany’s aiming to phase out its coal fired plants by 2030. However, due to the energy crisis, 15 power plants were kept on the grid temporarily to battle surging energy prices. As they’ve stabilized, Germany has decided to shut them down. This is a quote, from the Auerbach told the German Press agency. Several coal fired power plants are still on the grid, as precautionary measure over the last two years have therefore been served, super furious and now can be taken off the grid for good. I think it’s. [00:04:30][62.2]

Michael Tanner: [00:04:30] Dumb. Yeah, well, depending on what they’re going to replace it with, and what this article conveniently leaves out is what’s going to replace this. [00:04:37][7.4]

Stuart Turley: [00:04:38] And there’s nothing online. Actually. Yeah. Yeah. Retro. [00:04:43][4.3]

Michael Tanner: [00:04:44] Well into so what are you going to return to? You’re going to have to buy your gas from somewhere else. You’re going to have to do all of these things that they claim they don’t want to do, because they don’t want a good bed with Russia. It’s it’s look over here, but not over here. [00:04:57][12.7]

Stuart Turley: [00:04:57] No. Personally, I still think that the war is going to end before for too long. I think that if they just let him negotiate a deal, it would happen. Let’s go to. [00:05:08][10.6]

Michael Tanner: [00:05:08] Do over there. What’s next? [00:05:09][1.0]

Stuart Turley: [00:05:10] Oh, I. Tell them exactly how to, needs to happen. Cost of electrifying commercial truck fleet is 1 trillion. This doesn’t even include the trucks that. Listen to this article. You can’t buy this kind of entertainment. The charging infrastructure will cost 620 billion, according to a new survey from Clean Freight Coalition. That’s not any of the other stuff. That’s not the updates to the grid. That’s nothing. I mean, that is just absolutely almost nothing. The study forecast infrastructure build out for the electrification of medium and heavy duty commercial vehicles, exposing what the CFC calls a massive investment gap. [00:06:00][49.9]

Michael Tanner: [00:06:03] Massive investment. Yeah. [00:06:04][1.4]

Stuart Turley: [00:06:05] Okay. [00:06:05][0.0]

Michael Tanner: [00:06:06] I think it’s interesting. And, you know, I love this point down here. For example, you know, diesel trucks again you have to replace these trucks too. So it’s a trillion on everything. But the truck class A diesel costs about $180,000 compared to the battery truck, which is well over 400,000. [00:06:21][14.3]

Stuart Turley: [00:06:23] Exactly. So, now the the particulars bill or the Inflation Reduction Act, they spent what, $7 billion and got 2 or 3 in chargers installed. How in the world are you going to charge these bad dog trucks? You’re going to have a boatload of batteries and you’re not going to be able to charge them. This is absolutely hilarious. The study found that while medium duty vehicles, will face fewer roadblocks, economic and operational constraints make electrification very challenging for the heavy duty segment. I think it just means to be it. Electrification is tough across the board. [00:07:06][42.8]

Michael Tanner: [00:07:07] Oh, it is tough. I mean, you I could have told you that before we started the segment. [00:07:10][3.0]

Stuart Turley: [00:07:11] Oh yeah. I just thought it was really pretty funny. There’s a couple there in a statement, also is clear that an industry with a yearly turnover of about $800 billion and a profit margin of around 5%, cannot invest 620 without financial support in order to get it done. Really? Wow. This is this is like Oklahoma State kind of math here. Wow. [00:07:33][22.8]

Michael Tanner: [00:07:34] Yeah. No kidding. All right. Well let’s let’s talk about this last one here. This is a super interesting article I. [00:07:39][5.3]

Stuart Turley: [00:07:40] Love this one. And U.S. shale drillers to reduce Permian drilling emissions increase reliability with nuclear reactors. This is a really good one. Diamondback. Who’s, really, president. Cosan. Whole Elko. He is developing a advanced fusion reactor and, is in discussions with several other oil companies. I mean, take Chris right over there at Liberty, energy with their electric flat frack fleet. They are perfect for small nuclear reactors in the fields. This is a direct quote. Small nuclear reactors could make sense as low cost, low carbon, high reality, reliability, alternative energy source for a company like Diamondback whose energy needs to continue to increase. Vanderhoff said by email. I the oh, close, 15 megawatt system would be false. A small, far smaller than the conventional reactors used today, which typically produce about 1000MW. A megawatt is enough to power, 200 typical homes. [00:08:56][76.5]

Michael Tanner: [00:08:57] Well, Diamondback, we love them over there. If you’re a frequent on Twitter, you you’d know that, Diamondback President Casey. And of you, he loves to to chop it up on Twitter. I think this is interesting. This is a meeting of the minds do small modular reactors and E and P, you know, I think it’s great. It’s been been heads again. [00:09:17][20.2]

Stuart Turley: [00:09:18] Chris Wright and Doug Sandridge, we’re talking about this. And we were going to have a podcast before we had number, jump in on here. We’re going to talk about, how oilfield service could really benefit from this. [00:09:33][14.5]

Michael Tanner: [00:09:33] Oh, there’s think about, you know, instead of having to use diesel on these frack, you know, on these, on these well pad you could just throw in a little hammer. It’s very interesting. Very interesting. I think we’re far away from that technology though. So I’m not going to go so far to say is it’s here tomorrow but it could be here soon. [00:09:49][15.8]

Stuart Turley: [00:09:50] It’s going to be here before they electrify the trucks. [00:09:53][3.6]

Michael Tanner: [00:09:55] Yeah. So here it is. Who knows what will happen? [00:10:00][5.0]

Stuart Turley: [00:10:01] What’s a few trillion between printed friends? [00:10:03][1.7]

Michael Tanner: [00:10:03] Yeah. No kidding. What else you got? [00:10:05][1.4]

Stuart Turley: [00:10:06] That’s it for me. Talk to you. [00:10:07][1.2]

Michael Tanner: [00:10:08] All right, well, before we do that, guys, we’ll go ahead. And pay the bills here. As always you can check us out www.energynewsbeat.com. The best place for all your energy and oil and gas news. And the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear. When it comes to the oil and gas business. Check out the description below for all of the timestamps linked to the articles. You can jump around and take a look at any different segment. You can hit dashboard.energyNewsbeat.com, and go ahead and check out our data news product. We love you and any feedback appreciated. Email the show questions at energy newsbeat.com again energynewsbeat.com. [00:10:49][41.2]

Michael Tanner: [00:10:51] I mean or oil up to to your really 3 to 4 month highs to we’re sitting at at 8515. You know peak was a little bit about 8544. as prices rolled over in in the morning we saw Brant all the way up to 89, 56, or about a 1.7% gain on that. So absolutely unbelievable crude oil prices. Having a great, great day. Unfortunately it’s it’s it’s off the back of a few things. One, we’ve got increasing, Ukrainian attacks going on in rushing energy facilities and the, the rising tensions in the Middle East right now with Israel taking out, some Iranian generals, you know, people are starting to get on edge a little bit. You know, both those things have kind of taken prices and driven them up. Not much of domestic activity is really driving this, you know, all all very much happening. You know, we you you will hear today, a ministerial panel meeting of the OPEC, producing countries. Unfortunately, there’s going to be no change to their oil output policy according to sources, so probably won’t see any movement there. We did see an expansion of of of Chinese manufacturing data for March that just dropped, which, you know, gives a little bit of a green light to some of the demand issues that we could see. You know, we also saw yesterday the API drop, it’s crude oil inventory estimates in which, over at Cushing, in which you’ll see today, as you listen to this, at 1030, you’ll be go and throw that image up. Miss produce, you talk about a -2.2 million barrel draw from the Strategic Petroleum Reserve or an estimate. So you know that’ll definitely you know definitely bullish on that. And we saw a little bit in the afternoon on Tuesday a little bit of that that driving upwards. And you know from a demand from a price standpoint considering that that draw. So the only other interesting thing I saw us do is Schlumberger. They jump into the M&A game and go ahead and buy up oilfield service company champion X for $8 billion. You know, the underlying deal was an all stock deal. You know, again all stock deal. You know gotta love when oil is 85 bucks. You’re not you’re you’re an energy company or an oilfield services. You can use your you got more purchasing power with your stock because everybody wants it now because you go up. So they valued it specifically at about 7.75 billion. You know, it’s their second line. It’s their second acquisition in a week. From, from Schlumberger. But they, they bought an overseas company, Cameron International, last week. You know, this really comes off the heels of what we saw last year with, with Patterson, and next year going ahead and announcing their all stock deal, to to to scoop it up, you know, now, I mean, really what you’re looking at, is about a 14% champion ownership, and, and the rest sitting there with Schlumberger. So it’s going to be very interesting, to see how this one plays out. Its its biggest purchase since 2016. Which is when they made that Cameron International deal, with in 2016, they made a little bit of a smaller deal earlier last week. You know, they’re projecting something pretty crazy. They think they’ll give about 7 billion over to shareholders over the next two years. And and and and their 2024 shareholder turnover target is about $3 billion. So you know that’s that’s not a it’s not a great a great deal. Market really liked it. Champion shares surged by 10% on off market trading. prior to that. You know, there’s there’s a bunch of other nuances in here. But you’re what we’re seeing on the MP front, guys, you’re seeing on the service side. So it’s, it’s it’s a merger. Merger by death. But but, you know. [00:14:17][206.4]

Stuart Turley: [00:14:18] Merger by desktop. It almost sounds like a movie. What’s up? Merger by death. That has to be a movie. [00:14:25][6.7]

Michael Tanner: [00:14:26] Let’s get maybe Hollywood working on an inaugural documentary. [00:14:28][2.4]

Stuart Turley: [00:14:30] I love it. Murder by death. Merger by death. [00:14:33][2.9]

Michael Tanner: [00:14:33] Yeah. No kidding. So. Well, all right, guys, well, we’ll go ahead and, let you guys get out of here. Unless. Do you got anything else for the crowd? [00:14:41][7.4]

Stuart Turley: [00:14:42] Oh, no. It’s going to be a fun week. [00:14:43][1.8]

Michael Tanner: [00:14:44] It’s going to be a fun week. It’s going to be a crazy week. We appreciate everybody who’s tuning in. Tomorrow will be our last show of the week. And then you’ll hear, weekly recap and a bunch of other stuff. But for Stuart Turley and Michael Tanner, we’ll see you tomorrow, folks. [00:14:44][0.0][829.8]

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