Week Recap: Biden’s Rules, China’s Probe, Tesla, New Geothermal

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Weekly Daily Standup Top Stories

Biden Administration Finalizes Power Plant Rule

Highlights of the Podcast

00:00 – Intro

01:02 – Biden Administration Finalizes Power Plant Rule

09:27 – China calls for ‘international investigation’ into Nord Stream attack

11:25 – Tesla Partners with Baidu for Full Self-Driving Rollout in China

14:33 – Kimmeridge Releases Presentation Outlining the Urgent Need for Board Change at SilverBow

18:09 – U.S. produces the energy everyone is looking for: 900 MW at the largest plant in the world

20:14 – When Worlds Collide – U.S. Gulf Coast Refiners Face Challenges To Accessing Heavier Crude Oil

25:57 – Outro

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

Michael Tanner: [00:00:15] What’s going on, everybody? Welcome into a special edition of the Daily Energy News Beat stand up here on this gorgeous Saturday, May 4th, 2024. For our special weekly recap. It’s been a long week, folks. We did a bunch of solo shows. Stu and I are going to be back full time together in the chair next week, so appreciate everybody hanging in. Who’s a busy, busy week guys. I had an opportunity to rant for a few shows, lots of earnings calls, lots of interesting stuff going on in the LNG side. So I’m just going to go ahead and turn it over to the weekly recap and the team to cue us up right now. As always, guys, the news and analysis you’re about to hear, brought to you by the world’s greatest website, www.EnergyNewsBeat.com The best place for all your energy and oil and gas news. Go ahead and check out the description below, all the links to the articles, everything you’ll need to know. But with that, I’m going to turn it over the weekly recap we’ll see on Monday. Folks. [00:01:02][47.0]

Stuart Turley: [00:01:02] Biden administration finalizes power plant rule. This one. I’ve got several things for mass producer, to bring up as I talk about these things, there are five key takeaways. I have to, take a look at this. The and the EPA is finalized its power plant rule, which, forces existing coal and new natural gas gas plants to use technology that is either neither economic nor commercial to reduce carbon dioxide, emissions, or to shatter the EPA. Number two will define the requirements for existing natural gas plants. Later. The author of this story feels that it may most likely be after November election. This is to pacify the green movement. Don’t kid yourself. Number three, since natural gas and coal supply about 60% of the U.S electricity and backup intermittent weather driven wind and solar units, the rule calls into question the survival and reliability of the electric grid. I kid you not, this is not good. If you’re going to take out the coal plants in a very expedient manner, we cannot get the regulatory process, done for nuclear fast enough. This is a recipe for disaster, and the only thing that’s going to solve it is rolling blackouts or using even less energy. Tell that to the AI in the data center, folks. The number for the rule is drawn by, some bipartisan criticism for its potential impact on the grid, which groups are concerned with the importance of reliable and affordable electricity? The rule will increase electricity prices and decrease reliability and raise the potential for economic disruption in the United States. The author has all five of these key takeaways. Wonderfully. The changes include, need to start capturing 90% of their carbon dioxide emissions by 2032, rather than 2030 as originally proposed. So what, they’re still not going to be able to do it. And is carbon capture and sequestration technology is neither commercially available nor economically. We’re already be industrializing the United States, just like Germany and Germany is now. The EU is gone. And so when you sit back and take a look at the GDP growth for the EU and the economic people are going hungry, this is a significant issue. And, pacification of the, the left or the greenies that are out there, I’m all about let’s save the environment. Let’s save, the planet, let’s not pollute. But let’s have a discussion on this. Let’s also go into your fossil fuel plants that are not retrofitted with carbon capture systems. Must exit the grid by January 2039, instead of January 2040 as originally proposed. This is even more of an issue, because it’s just not going to be there. They’re making it fiscally, unsound for, power plants to keep their power on line. And solar is not going to be there. Wind is not going to be their facilities. That broke ground after the proposal came out last year and will run frequently, must capture 90% of their emissions or prevent that amount from emissions in some other way or close down. This is absolutely right. Mr. Producer, if you could bring up, the first video and let’s take a look at this video. The video is CO2, methane and generated around the world. I want to bring this up just from a standpoint as as we kind of watch this video go around. We start we’re looking at Spain, and you’re seeing that you can even see the this methane map and CO2 is picking up, a where the shipping and air and you take a look at China. Holy smokes. That is where most of the population and pollution is happening right now is India and China. Miss producer, can you go ahead and bring up the second video? The second video is a China coal power plant. And as I watch this, you take a look at the smog. This is one power plant. And we’re going to go through some of these other numbers here in a second. This is an eye opener for me. There’s an article that just came out yesterday. And it says that China is now putting out more CO2 than the rest of the Western. So as, as a western, civilized countries combined. Period. And so when you look at this video as we’re watching this video, you can understand why. Now, Mr. Producer, can you bring up the next global, coal plants globally, slide and you’ll take a look at that slide. It is amazing. Take a look at all of the coal plants in the U.S. and, and then, there’s, I have to take a look. There’s 6500 or so, and there’s 2000 some on in the U.S.. So. Thank you, Miss Producer. Let’s go to this other slide. U.S. power, generation capacity under development with construction, kickoff scheduling between 2024 and 2028. This graph really takes a good look at, in the southeast southwest and how the plants are all aligning out in the megawatt usage. I don’t have time to go through it now, but it is in the article. Take a look at it. And there is absolutely no way that we can get by without natural gas or coal. Now, if we just got rid of coal, I’m all in on getting rid of coal in an orderly fashion. But I did not know this in Miss Producer, in. Can you bring up the natural gas plants of the U.S. and of the natural gas plants in the U.S.? I did not know how many were in, California there. There are a significant number of natural gas plants in California. This is huge. Now, there is, coal plant in, Nevada. And I’m looking at how much in California is the largest energy importer in the U.S. they import coal, electricity from Nevada. I’m trying to get the numbers of how much they import, but they do use coal as it’s imported from Nevada. Pretty interesting information there. So when we take a look at the takeaways of the new EPA, regulatory issues going on right now, we take a look at natural gas, coal and the whole mix. We need a balanced diet of power, and we need a we need it all wind, solar I don’t care, but you’re not going to regulate yourself into net zero. Cannot be done. What’s going to happen? People are going to, have serious feeling issues. [00:09:27][504.2]

Stuart Turley: [00:09:27] China calls for international investigation into Nord Stream attack. China’s deputy envoy to the UN has called for an international probe into the bombing of the Nord Stream, gas pipelines. This is a very interesting, especially since we had, Secretary Blinken meeting with president G. Yesterday, two days ago. This is actually very interesting because now China does not mince words. You can even go take a look at what plants they had in the meeting with Blinken. There’s a lot of hidden undertones in the backdrop and in the poisonous plants that were. On that table. They don’t like him. And that was very evident. If you take a look and you understand the Chinese methodology of subtle hints in meetings, and it is there. Now let’s take a look at Nord Stream one and Nord Stream two. Those were four pipelines. Three of the four were destroyed, allegedly by the US with help from Norway. Allegedly, I don’t know, but boy, Putin sure said why would I blow up my own pipeline? I don’t know EMEA. All I do is go flip a switch on the generators, on the turbines on them, one end of it, and he could shut it down so he doesn’t really need to turn it off. Now. Why are they calling? Why is China calling for this? Now, this is important because this has been going on since it was blown up, since, President Biden said there will be no Nord Stream, and then all of a sudden that happens. Was that, unbelievable? Funny story. I just had to just put it out here for you to take a look. [00:11:25][117.1]

Michael Tanner: [00:11:25] Tesla partners with BYoD for full self-driving rollout in China. I’m reading straight from the article here. First, bullet point. Tesla’s full Self-Driving, what they call FSD system, has been approved for use in China. They went ahead and partnered with the aforementioned Chinese tech giant, by Uber mapping and navigation software to support the full Self-Driving within China. This approval within China is seen as a major boost for the company, which has been facing multiple challenges due to the worsening EV price war and high interest rate. It’s actually caused Tesla shares to drop, jump in the pre-market trading after it was reported in Bloomberg that Beijing Beijing had went ahead and give that green light to roll out its full self-driving. You know, in a separate report by the Wall Street Journal, it a backtracked a little bit. You know, Beijing has tentatively approved the company’s plan to launch full Self-Driving. This does come, as I’m reading straight from the article here. Come one day after Elon Musk unexpectedly visited Beijing on Sunday and met with Premier Lin Cao, who was Communist Party chief in Shanghai when Tesla was setting up its automobile manufacturing plant. They all go on to say that, Musk also met with Robin Zhang, chairman of Tesla battery supplier contemporary Amperex technology, which is in Beijing. Analysts are out in full force, Wedbush Securities senior analyst told Bloomberg. Quote, this is a watershed moment. This could open up full self-driving in China. This is his quote, which I view as unlocking what could be a golden opportunity for them. And again, they read this earlier in the article, but I think it comes down to the inevitable price war again, as China does what they do, everything is going to be a race to the bottom on price. So Elon Musk and Tesla’s trying to figure out exactly how are they going to compete in China. If they’re going to be charging a premium price? Well, they means they probably got to have self-driving, because if you don’t have self-driving and you’re charging $80,000 per car, it’s going to hard to compete with another EV that’s got better battery life, longer range for a lot cheaper because it’s manufactured in Chinese. It’s exactly what you know why we buy Chinese products all the time? Because they are able to offer the lowest price. So I think this I agree with the analysis here in terms of this is a boon for Tesla. And then it’s clear and their stock ran a little bit today mainly off that back. So great. For right now. You have to remember there was a lot of security concerns that they had to I you know this is a I were reading straight from the article. Sources say Tesla will partner with the BI you to support the navigation and mapping. Here we go. Okay, here’s the real quote here, folks. Tesla also has multiple data security and privacy requirements that satisfy the country’s regulators. That’s a one sentence. It’s very ominous. I’d love to see the source code behind that Tesla. Hey, how do you know this? Are they sharing this data with the Chinese communist regime? Who knows? I think that’s an interesting question. Is anytime you’re in a Tesla, at least the United States, we don’t. They’re recording you in the test suite. If you’re driving around a Tesla, I don’t think they have cameras looking at you in the car. You’re an idiot. But that being said, what do they do with that information in China? Do they have to share that with the Chinese Communist Party? Interesting note that I love how they just one little sentence in there. Obviously, you know, they’re trying to make Tesla look good. Yeah. We you know, we they’re you I’m with you Tesla is great but could be interesting to see what their their data privacy stuff is on that. So we will make sure to follow up with that. I’d be interested to know what stu knows about that. [00:14:33][187.5]

Michael Tanner: [00:14:33] Let’s quickly close here with Kimmeridge. They released a presentation outlining urgent need for board change at Silver Bow. This is round four. You know, ding ding ding ding ding. We can get a little live. What’d you wanna call it? A little boxing ring going here. Kimmeridge is has, you know, holding about 12.9% of Silver Bow shares has basically fired back round for, you know, really the biggest you know, we’ve talked about this at like Silver Bow is trying to hold off a corporate takeover by Kimmeridge. They say they’re trying to basically launch a takeover proxy war with the company. So that Silver Bow would buy Texas Kimmeridge Gas, which is formerly Laredo, at a valuation that they don’t think is right. They think that, they’re over that, Kimmeridge is overvaluing ATG and wants to merge with Silver Bow and basically take over Silver Bow so that they can use silver bows balance sheet to buy Texas Kimmeridge Gas, which they believe is overvalued. They walk through for claims here quickly for Silver bow. This is Kimmeridge’s rebuttal to what? Came out to me. Do you ever follow the song, guys? I think we need to do a deal. Spotlight on this person gets a lot of crazy stuff going on with this. Here’s the first no claims that Kimmeridge locks a proxy fight to facilitate a path to change. This is silver bows. Claims Kimmeridge launched a proxy fight to facilitate a path to change control of the company without paying a premium to silver shareholders. Kimmeridge then kind of fires back and says they haven’t bought shares in over six 650 days. They were engaged with them for over two years and asked for a specific thing. Silver bow then says Kimmeridge directors that they nominated because remember, in this proxy battle, Kimmeridge is trying to nominate new board members. Silver bow claims these Cambridge directors are conflicted with and would not look out for shareholders in the best interest, Kimmeridge or Kimmeridge back, she said. They’re highly qualified, independent. And in the third quote, that, Silver Bow claims is that Super Bowl strategy has proven to be resilient through market cycles. This is where the fireworks Kimmeridge fires back says that quote specifically they go silver was generally negative for TSR since CEO Sean Wolverton tenure and 2.6 annualized TSR over a year and Warriors lengthy tenures. Ooh hit him with a cheap company, trades at the lowest valuation multiple out of its peers at on a five year basis. Espo has stock has underperformed the blended commodity group by 58% highlighting the lack of alpha generated from leadership. Ooh. So the rebuttal from Kimmeridge goes at the three key points that round three silver bow claimed in their, you know, the future of silver bow.com or whatever website they put out. So they’re going right at it. Where do I stand on this? We’ve talked about this much. I think there’s, you know, there’s there’s room in the middle. Is Kimmeridge overvalued? Kimmeridge is probably what does any company who owns something will do that? I’ve been part of numerous organizations who you ask what we you know, internally, they much more value their asset than what they do on the street. The reason why they do that is because they so own that. Because if somebody valued that more than you do, you would transact with them. So there’s there’s a reason for that. So too, I think they’re trying to force it. You also agree the fact that Silver Bow has underperformed relative. Absolutely. I mean that’s you know, common I mean everybody knows that it’s something that hounded Silver Bow for years Kimmeridge just trying to step on an opportunity. It’s interesting that there’s this claim that they that you know, six months ago they couldn’t get financing silver Bow fired back in one of their rounds. That hey, you had a we had an agreement, but you couldn’t find financing. And they were using that to say, oh, watch, because you was a bad investment. I don’t quite know if I know that for sure, but I do think, it it’s it’s it’s pretty obvious that silver bow management has underperformed relative to the market. So it’s going to be interesting to see where this thing goes. I’m sure they’ll be around five guys, but we’re gonna we’re gonna go and leave it there. [00:18:08][215.3]

Stuart Turley: [00:18:09] U.S. producers, produces the energy everyone is looking for. This is a 900 megawatt geothermal power plant. This is pretty cool. Geothermal. And, you know, the potential technology I am seeing a lot of people talking about. Geo power is almost 27 times expansion by, 2050, reaching approximately 100,000,000MW. According to the doe e g e a geothermal energy association, in the form of moderate expansion. But it anticipates broader scale of 21,000MW of geothermal capacity by 2050. The exciting thing about geothermal is geothermal can take advantage of the ENP oilfield service and everything else to try to help get that technology so that we can use some of the abandoned wells so we can use, take advantage of the ESG and get rid of orphan wells and turn them into, geothermal, energy. This one, the newest Geo, is undergoing 900MW in the LA area and the Imperial Valley in California. The only time I’m really, really proud of California, they’re doing something like this. This is pretty darn cool. So geo thermal. I am a huge fan, and I want to give a shout out to Doug Sandridge today. I’m wearing his shirt that he gave me. I signed the oil and gas executives for nuclear. I am a huge nuclear fan and, we have got to have, the low impact, environment and long, low cost, energy to all consumers.  [00:20:12][123.5]

Michael Tanner: [00:20:14] Let’s move to the next one here. When worlds collide U.S. Gulf Coast refiners faces challenges to assessing heavier crude. This is a little bit of in the weeds, but since I’ve got the solo show today, I’ve got the keys to the Kingdom. I wanted to bring this up. We’ve talked a lot on the show about refining margins, and I talk about that relative to when the EIA releases all their I, I, I, I like to look at the supply. We bring it up every once in a while in terms of what’s going in and out of the refineries from a utilization standpoint. But there also is something to refining these refineries, being able to handle a certain type of crude, specifically heavier crude. Obviously, you can have an idea. West Texas Intermediate, which is the standard oil price oil composition that people base everything off of. We’ve heard of that. You can imagine that is almost green looking. It’s a vial. It’s very easily pouring in. It’s definitely a little bit see through if you only have a little bit of to. That’s that light, sweet, crude. What comes up from Mexico, what comes up from Venezuela. What comes from Russia is really a heavy crude, which is almost could be considered more of a paste. Now heavier crude has a lot of impurities in it which cause it to. Trade at a, discount relative to the light sweet crew. But what it also requires is different retrofitting on the refineries. And because of some of the stuff that’s happened in Mexico, specifically over their future forecasted supply of oil, it’s it’s kind of thrown some of these refineries into into whack here. So I’m going to go ahead and read a few, a couple paragraphs out of here. The prospect of decreased crude oil supplies from Mexico, the top international supplier, to the US Gulf Coast, is creating uncertainty among heavy crude focused refineries, Mexico’s state owned country, Pemex or Petro. Pemex instructed its trainee use unit to cancel 436,000 barrels a day of crude exports for April and decided, and to supposedly focus on producing domestic oil at its new or processing the domestic oil at its new 340,000 barrels per day. Does Baucus refinery and or existing plants, while this refinery startup is not nearly as imminent as Pemex says, the cancellation of Mexican crude imports could be problematic for U.S. refiners with plants built to run heavy crude a necessary ingredient reading to optimize operations and yield. Adding to this complexity of the situation is the upcoming start of the Trans Mountain pipeline expansion and recent reinstatement of U.S. sanctions on Venezuelan crude. And this is from, you know, they go on to examine sort of the potential fallout from this decision from Pemex in terms of where those heavy crudes were going. Specifically, the heavy crude is going to be less and less available. So they the really great overview. I’d recommend going to energy Newsbeat and reading this. Andy, if you can go ahead here and pull up. Figure one the typical qualities of Pemex crude oil. You’re going to see the different grades there Olmec es mas, Maya and Altair. You’ll notice that Maya is their, flagship grade. Basically, it’s the majority of their, exports are specifically coming in that Maya flagship blend. The interesting part is that that Maya crude blend does definitely have a little bit of a smaller gravity. You see, the API gravity of the Altamira is a little bit lower sitting at 15.5, whereas the Maya is about 2021 to 20. With this restriction in Mexico now sending their a lot of their domestic heavy crude to within with all of this crude from Mexico now and Pemex staying within Mexico, it goes to wonder where are these U.S. Gulf Coast refineries going to find their heavy crude? We also know Venezuela is this. The sanctions are ramping back up. People of you know, we we drew a little bit of oil. There was a few loads coming out of Venezuela, but now the prospects per se of a lot more oil coming out of Venezuela is not going to happen. So a lot of what these Gulf Coast refineries are dealing with right now, what this analysis shows is it tries to plant out where exactly are these going to come from. And the big the big, big answer, specifically in this article, as I mentioned, was that Trans Mountain pipeline, which flows from Edmonton all the way down to British Columbia and the Puget Sound system, where there are a bunch of refineries. Canada also has a decent amount of heavy crude. So if we have to now shift ourselves and buying it from Canada, those differentials are a little bit different. You pay a little bit more of a premium for the Canadian heavy crude than you would the Mexican heavy crude. So all of a sudden now the spreads on what a refinery can make or not, it could go down. And specifically if you’re talking about, you know, the margin that makes up the refining basis, it could get very interesting here. I love this breakdown. You know, via RB, RB and energy. We do a lot of that stuff. You know, it’s a $25 billion investment that Trans Mountain pipeline. So whether or not that’s going to be able to completely take over or not it’s going to be interesting. You know, the this article goes on to say the extent to which an individual refinery can lighten up its crude slate by very, varies by, say, switching to lighter crudes would increase cost given that light crude is more expensive than heavy goods. However, the light heavy crude differential continues to narrow and may narrow further on the US. On the U.S Gulf Coast, as measured by West Texas Intermediate, spread to Houston. You know, these these narrower differentials are expected to incentivize some Gulf Coast refiners to shift towards lighter crude slates. Further, we expect the minimal impact of crude runs, an increase in Latin America imports. or they they see minimal impact to overall crude runs in some increases to Latin American imports, to the United States Gulf, excluding Venezuela. So it looks like they’re thinking a lot of this is going to come from, from, Latin America, Canada and be able to fill the gap. But very interesting what Mexico, has decided to do. And it kind of gives you a little bit of behind the scenes on a lot of what these, refineries are dealing with on the back end. [00:20:14][0.0][1194.5]

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