Week Recap: Chevron’s Texas Move & Global Power Demand Surge

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Weekly Daily Standup Top Stories

Global Power Demand Is Soaring, IEA Expects 4% Growth in ’24 & ‘25

Chevron Taking Its Headquarters To Texas

Highlights of the Podcast

00:00 – Intro

01:17 – Global Power Demand Is Soaring, IEA Expects 4% Growth in ’24 & ‘25

03:09 – Chevron Taking Its Headquarters To Texas

05:30 – Israel, Mideast Markets Fall on Iran Threat, Global Stock Plunge

07:27 – Shale Keeps Getting Leaner and Meaner

12:32 – Saudi Aramco Sees Oil Demand Rising by 1.6 Million Bpd in Second Half of 2024

14:29 – Biden Is Dumping Billions Of Tax Dollars Into ‘Green’ Projects Before Leaving Office

15:55 Court pulls permit for NextDecade’s US LNG export terminal

18:08 – Outro

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

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the August 10th, 2024 special weekly recap edition of the Daily Energy News Beat stand up. It’s been a long weeks. Still a lot of crazy stuff. [00:00:24][9.7]

Stuart Turley: [00:00:24] Unbelievable. I mean, you cannot buy this kind of government oversight in the energy space. [00:00:30][6.2]

Michael Tanner: [00:00:31] Oh, no, you have Batman. Lots of great stories this week. Stocks were all over the place. Oil prices all over the place. Lots of crazy stories. Teams going to pick out some great articles for us. As always, guys, we’ll just pay the bills real quick. Check us out dot energy news me.com. Go ahead and hit the description below. All the links to the types that links to the articles. And check out our friends over at Pecos Country Operating. We’ve partnering up with them in The Crude Truth to bring you a really awesome oil and gas investment opportunity that we’re we’re big fans of. If you’re ever interested in investing in oil and gas, hit that. Hit that link below in the description and we will get you connected with the with our friends over there to crew to to talk all about what they have going on over there. So go ahead and do that in that link below. But let’s go ahead and throw it up to the teams too. We’ll see you guys on Monday. All right. [00:01:17][45.9]

Stuart Turley: [00:01:17] Global power demand is soaring IEA expects 4% growth in 2024 and 2025. Electricity is the most important and fastest growing form of energy. More proof that assertion came a few days ago when the IEA released its electricity mid-year update. The Paris based agency expects global power demand grew by 4% this year. That’s the fastest growth since 2007. This is just crazy. This is from a great Substack article by Robert Bryce. Absolutely love River. Bryce. You must go follow his podcast. Follow him on his Substack. Follow him on his LinkedIn. He is just a national treasure. Over the last three years, China has been adding an average of roughly one Germany each year in terms of electricity demand. Holy smokes, that is amazing, especially when you consider the deindustrialization of Germany is happening because of the left leaning policy to green energy. And green energy is not sustainable in its current technology. You cannot support it. Listen to this. China dominates the global market for coal at a much greater degree than any other fuel, accounting for 58% of world demand. Wow. It’s going to flatten. It’s beginning to flatten in China. But coal still accounted for 60% of the energy supply in electrical generation. Wow. China’s coal investment in 2023 for about $110 billion. Wow. [00:03:08][111.0]

Stuart Turley: [00:03:09] Chevron taking its headquarters to Texas. This is an amazing story when you take a look at Elon. I love Elon Musk and his purchasing of X is rockets and everything else he’s picked up and he’s left. We’re watching the deindustrialization of New York and California following, just like the deindustrialization of Germany. And that is left wing. Woke energy policies and woke policies will cause companies to leave. And that is billions of tax revenue that Chevron’s taking with it. Chevron and its predecessor companies have a long history in the state, tracing back to 1879 the founding of the Coastal Oil Company, and in 1900, Pacific Coast was bought by John D Rockefeller’s Standard Oil, what they now call create Chevron was created in 1911 under the Standard Oil of California, and then with the breaking up with the Standard Oil monopoly. Chevron grew in great spurts in the past 40 years with big company mergers, and most recently, Chevron paid 13 billion to be an independent producer in noble energy during the depths of the 2020 pandemic, and then in October entered into a 53 billion all stock deal to merge with Hess. California’s leaders made it increasingly clear they no longer value oil and gas. And what’s funny, and it’s really sad that California is doing more harm to the world’s environment by buying all of the oil that they can from China, from the rainforest. California is 70% responsible for the death of the rainforest in the oil that they purchased. This is absolutely. Ocracy at its finest. You can’t buy that kind of. Hats off to Chevron. Hats off to the investors and well done. Go to Texas. Leave your your and all your thousands of high paying jobs that you’re bringing to Texas. Please leave your voting policies in California. [00:05:29][140.1]

Stuart Turley: [00:05:30] Israel. Mideast markets fall on Iran threat. Global stock plan. This was really, really wild. This morning I woke up and the Japan index was just totally at the bunkers at the bottom. [00:05:43][12.8]

Stuart Turley: [00:05:43] The Saudi dead wall index and Egypt’s Hermes benchmark both went down 3.7% and 5.8%. Turkey’s Basra and in the bold 100 index was the hardest hit at 7%. Unbelievable. Folks are just sitting there kind of going, wait a minute, you don’t have aircraft carriers cruising around over there for no reason? [00:06:07][23.9]

Michael Tanner: [00:06:08] Yeah, I mean, it’s what’s going on in the Middle East right now is is kind of the backdrop to what’s going on in the markets right now. And really it’s kind of, you know, the tale of two storylines when it comes to where prices are. But I, I’m nervous. That’s all I’ll say. I have I’m very nervous that there’s that there’s going to be a massive escalation. I did see Saudi Arabia just came out and said, they’re not going to allow Iran to use their airspace, which it gets go. Iran and Saudi aren’t necessarily friends. They did specifically say, though, this is to protect themselves and not necessarily Israel. You know, Saudi and Israel aren’t necessarily friends, so it’s a whole geopolitical mess. [00:06:43][35.3]

Stuart Turley: [00:06:44] Oh, Russia has dropped in more advanced weaponry in the last few days into Tehran than I’ve ever seen. It is unbelievable the amount of armament that is coming in. I’m afraid that they’re sending in. I don’t know this, but some of the aircraft that have landed in Tehran are known for carrying high and Russian munitions. This is hypersonic missiles. This is their electronic warfare equipment. The stuff that is out there that is going on is frightening. I have never seen this kind of activity going on. [00:07:23][39.1]

Michael Tanner: [00:07:23] Yeah, extremely, extremely, extremely frightening. [00:07:26][2.9]

Stuart Turley: [00:07:27] Shell. There’s no spellcheck in a crayon. Did you know that shale keeps getting leaner and meaner? I love our great US shale producers. Absolutely love them. Wood Mackenzie, analyst, reported this week cost in the shale patch could decline by 10% this year, which would be fantastic. We need that back into the profits of the great EMP operators. But he sees cost peaking in 2023 and beginning to fall, with the decline set to continue more efficient operations. Michael, and I want to ask you, based on your crayon math and everything else, there was a number in here. Let me try to find it. More efficient operations are helping an MPs drill and compete wells faster cutting cost. At the same time, oilfield service firms are utilizing more efficient kit and workflows. Sustained. There is a number hang on when customers combine and then hang on. It was a really big number I wanted to ask you on because I didn’t believe it to be true. [00:08:27][59.9]

Michael Tanner: [00:08:27] Well, I think the big thing that you’re seeing in this is. [00:08:32][4.3]

Stuart Turley: [00:08:32] Oh yes, here it is. Sorry, Michael. According to Wood Mackenzie, the rig count in the US shale patch is set for an increase over the next year. But because this increase will not be as substantial as it might have been in the past cycles due to the drilling efficiency gains. Here’s the catch these research firms would eliminate the need for 28 rigs. Are our efficiencies that good? [00:08:57][25.1]

Michael Tanner: [00:08:58] Well, everyone’s moving to you know, if if you’ve listened at all to the deal spotlight, which we know you’re a religious listener of, you would know that all the rage right now in all these deals is the move and the push, the three mile lateral, the same thing that happened in 2014 when we moved from the one mile lateral to the, you know, proverbial two mile lateral, which is all what we see now as you move to longer and longer laterals, the need for more rigs goes down because you’re getting more lateral foot in your individual wells. This also leads to higher costs, but not on not on the margin, which is on a per foot basis. You’re actually seeing costs go down on a gross basis. You’re seeing everything go up. Wow. [00:09:36][37.6]

Stuart Turley: [00:09:36] But let me, let me I. [00:09:37][1.1]

Michael Tanner: [00:09:38] Love this quote from that from the Dallas Energy Fed survey. Too many equipment providers are chasing too few empty customers. Without consolidation within the service or equipment providers, it will be a race towards the bottom for pricing. That is one of that’s a very, very sober quote if you’re in the service business, because consolidation is great for upstream. We you know, you know, companies, you know, private equity firms like Cambridge, they’re, you know, been pounding the table for consolidation over the past five, ten years. Well that helps guys like them. It. Helps. It helps investors. It helps stakeholders, shareholders. Whatever you want to call them. Who does it hurt though? Well, it hurts employees who get laid off via synergies. And two service providers. Now all of a sudden you have your two biggest companies merge. Well they’re not going to just now all of a sudden pay you invoices for both. They’re going to probably only pay you 150%, which means you just took a 50% cut to do it due two to your contract revenue here. Yeah. Wow. So it really is a idea. You really is a catch 22. Everybody on the upstream side loves to talk about efficiency. Everybody on the downstream or the service side. It can be spicy because you know where exactly is you know where exactly are these efficiency gains coming from. Well they’re asking their service providers to cut costs. It does you know, it does point out you know, that it is. Again, and I think this article points out I’ll read this last last paragraph here. As usual, the biggest players, both EMP and oilfield service, will be the winners. They have resources to withstand the current oilfield service situation and seal long term service deals with big MPs, which in term have the resources to commit to such deals that are mutually beneficial. So it’s it’s the bigger as always the bigger one survive. The smaller ones get eaten alive. [00:11:24][106.0]

Stuart Turley: [00:11:24] Right? But the smaller ones that use the work over rigs and different rig technology to enhance existing well is going to play in at a certain point. [00:11:36][11.8]

Michael Tanner: [00:11:37] Disagree. I just think at some point, at some point, the smaller guys are the first ones to stop drilling. Think about it. If you have if you if you’re running a one rig program, you are much more sensitive to future price of oil. You can see what’s going on behind me. It’s a it’s all read on the stock tickers today. [00:11:53][16.8]

Stuart Turley: [00:11:54] All I see is a guy on a commercial with his head bobbing around. [00:11:57][2.8]

Michael Tanner: [00:11:57] But we all point to that being is the larger companies, as it mentions in this article, who have a 1015 rig program. Well, they’ll trim to seven rigs, but they’re still running seven rigs. You have one. You’re doing a one rig program. Well, you you you may be much more sensitive to where prices go and your future forecasted and the future forecast of where the economy’s going to go relative to that contract. Then you are these larger ones. So I would expect to see a lot more oilfield service consolidation in, in, in not just the coming months, but really I think in 2025 that’s going to be a big theme. [00:12:31][33.4]

Stuart Turley: [00:12:31] Okay, cool. Saudi Aramco sees oil demand rising by 1.6 million barrels per day in the second half of 2024. There’s a little more to this story than just the sound of the title. If you take a look, Miss Producer, if you could bring up the chart, EIA, OPEC and EIA, the IEA, the OPEC and the IEA, all three of these energy agencies actually have different numbers of what global demand is going to be. Saudi Aramco CEO has a forecast of a strong increase in global demand for the second half of the year, ranging from 1.6 to 2 million barrels per day. Aramco’s outlook contrasts with the most cautious forecast from the IEA, which is predicted a lower demand growth. The recent decline in oil prices due to recession fears has been dismissed by Aramco CEO as an overcorrection to the market sentiment. I’ve been now looking around at some other trusted folks that are in the energy space, and there’s been a huge drop in oil storage, so I believe we will see some price hikes here in in the short near term. Aramco’s Nassir said today that the market has overreacted to the bearish demand signals in the market, and my view is overreacting to the fundamentals do not support the drop in the prices we’re witnessing today, and I tend to lean and agree with him. Saudi Aramco’s Nasser more than I do with either the EIA or the IEA, either one of those two organizations I do not. I trust as far as I would trust OPEC with numbers. So OPEC is and Saudi Aramco, both of those organizations I would trust more with their numbers. Hey we keep just bringing out the truth here. Biden is dumping billions of tax dollars into green projects before leaving office. Holy smokes. With its July 22nd announcement of his dispersing 4.3 billion in taxpayer funded grants for an assortment of climate projects around the country, the EPA secured loot for a very grateful recipients. How come we didn’t get any? Michael, I we need to talk to accounting on this. [00:14:57][146.1]

Michael Tanner: [00:14:58] Yeah, unfortunately I’m accounting, so we didn’t get any. Trust me. Yes. [00:15:01][3.5]

Stuart Turley: [00:15:02] There are 1.7 to 11 factories to help finance the manufacture of electric vehicles in their components. Did anybody tell them that the. Electric vehicle market is failing. And like Intel, God, I believe it was $18 billion to build out of the Chips act and they just laid off 80,000 employees, whatever the number was. I mean, it was unbelievable. Number of employees, 15,000 employees at Intel. Wow. Yeah. This is just money being thrown away. [00:15:33][30.8]

Michael Tanner: [00:15:33] No, it it really is. You know, I mean, this is what happens in a lame duck administration. They start now pushing through everything they really wanted to but couldn’t because they were going for reelection. So as I mentioned in the open, you are going to see a lot more of this. [00:15:47][13.4]

Stuart Turley: [00:15:47] This is scary. And when you take a look at Ford losing over $100,000 on each EV sold. [00:15:53][5.8]

Michael Tanner: [00:15:54] Yeah. [00:15:54][0.0]

Stuart Turley: [00:15:54] Oh my gawd. Court permit for next decades U.S. LNG export terminal. Here’s where this story gets dicey. The Chevron deference Supreme Court ruling ruled that their ban, his ban, Biden’s ban, which Harris has inherited, was actually illegal and it should not be enforced. Well, in this case, the they went back and they said it is now the case in front of the by the Sierra Club, the city of Port Isabel. There’s some other folks listed in the thing, sued the FARC for what they claim was failed to adequately consider the environmental impact and greenhouse emissions of the project is registered by the National Environmental Protection Agency Act. This is absolutely ludicrous. Here you have an investor from Saudi Aramco, biggest oil company in the world. They’re producing. They’re out there supplying things. Michael. We supply 24% of the natural gas and LNG to the EU. We have got to be a trading partner with our folks. If we’re not a trading partner, why do business with the US? [00:17:11][76.9]

Michael Tanner: [00:17:12] Yeah, I I’m, I’m completely there with you. It’s it’s it’s pretty incredible. Even though the fact that the, you know permit ban was or LNG ban was overturned. Now they’re just, you know, now they’re just going after it with Ferc. I mean, that I mean, it was an obvious next step. I can’t believe I didn’t see it coming when it originally happened. City manager of port city of Port Isabel, Jared Hawke. Quote. We are very pleased that the court has agreed with our position. The development of these LNG fills with adversely affect our community by bringing jobs and money. No, no, he didn’t say that. And the impacts of these adverse effects have not been adequately considered in the fact the courts found that the permits for these services were issued despite first recognition of these impacts. [00:17:50][38.4]

Stuart Turley: [00:17:51] Unbelievable. You can’t buy this kind of oh you stupid. [00:17:54][3.1]

Michael Tanner: [00:17:55] No, I mean, they they don’t want jobs and money in my opinion. [00:17:57][2.5]

Stuart Turley: [00:17:58] No they really don’t. And we’ve got to be a good trading partner to everyone around the world period. [00:18:05][6.7]

Michael Tanner: [00:18:05] No we absolutely need to. So. [00:18:05][0.0][1052.9]

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