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In the Energy News Beat – Conversation in Energy with Stuart Turley interviews Dan Romito, Managing Director at Pickering Energy Partners, discussing the current state of energy, including the role of fossil fuels, the inefficiencies and challenges of renewable energy, and the importance of natural gas and nuclear power in reducing CO2 emissions. They emphasize the need for data-driven decisions in energy policy, criticize the political handling of LNG exports, and highlight the global implications of energy choices, particularly with regard to China and developing economies. The conversation also touches on technological advancements and the future of energy efficiency.
Dan, thank you for stopping by the podcast, and I look forward to more discussions with you soon! – Stu.
Please follow Dan on his LinkedIn Here: https://www.linkedin.com/in/daniel-romito-0041834/
Find out more about Pickering Energy Partners Here: https://www.pickeringenergypartners.com/
Highlights of the Podcast
00:00 – Intro
00:56 – Pickering Energy Partners Overview
01:52 – Energy Transition vs. Expansion
02:50 – Electricity & Energy Misconceptions
05:27 – Capital Discipline in Energy
08:49 – U.S. CO2 Emissions Reduction
12:02 – China’s Energy Strategy
15:17 – Global Natural Gas Trends
17:00 – Environmental Impact of Renewables
20:26 – Natural Gas in Energy Mix
22:07 – LNG Export Challenges
29:29 – AI and Energy Demand
34:13 – Nuclear Energy Potential
36:32 – California’s Energy Policies
37:55 – Methane Intensity & ESG Future
42:25 – Advances in Methane Monitoring
42:44 – Environmental NGOs & Regulation
45:14 – Conclusion & Contact Info
Full Transcript automated transcript. We disavow any errors unless they make us sound or look better:
Stuart Turley [00:00:06] Hello, everybody. Welcome to the Energy News Beat podcast. My name is Stu Turley, president and CEO of the Sandstone Group. There is so much going on in the world of energy right now. Where do we get the truth? Do we get the truth from social media? Do we get the truth from industry experts? I happen to have one of them stopped by that I happen to trust. I’ll tell you what. I’ve got Dan Romito and he is with Pickering Energy Partners. And I mean, I absolutely love them. They’ve got great research and he’s a managing director over there. Did I get that right?
Dan Romito [00:00:41] That sounds pretty good. I don’t know about the trust part. Mrs. Romito might have something to say about that, but. Yeah. Yeah, that’s. That sounds pretty good to me.
Dan Romito [00:00:48] All right. I’ll tell you what. You and I have a little bit of a background with some other folks from the Pickering crew, and he was on the podcast not too long ago.
Dan Romito [00:00:56] Yeah, yeah. Dan, Dan loves his podcast. I mean, look, the guy has been doing. He’ll kill me for saying this. I don’t want to say 40 years, but it might be in that, that neighborhood. So when it comes to things energy like clearly Pickering has established themselves as himself. Excuse me, as one of the experts in the space, I mean, just he’s always on CNBC, rightfully so. His analysis is incredibly thoughtful when it comes to this notion of the energy transition or the energy expansion. You know it. To his credit, he is a traditional fossil fuels guy. He he understands that there’s a there’s an inflection in the marketplace. And, you know, one of the things that we pride ourselves at the firm, primarily because of him is the data, is the data, the math is the math. Regardless of what you want to happen, you have to follow what the objective conclusion from the analysis, from your thoughtful analysis. What does that what does that tell you? Well, in that respect, it is what it is.
Stuart Turley [00:01:52] Oh, absolutely. And and when you take a look, I believe Mr. Bobby Tudor to. Correct.
Dan Romito [00:01:58] Yeah. So the way with a little bit of the history lesson like obviously there’s Tudor Pickering Hall. When I was bored, Dan spun out Pickering Energy Partners. And whereas to us traditionally, you know, formulated for, for the shale days the way that we think about energy Pickering Energy Partners partnership is it’s basically in all of the above set of considerations. Now, that’s not to say we rely entirely on fossil fuels and ignore renewables. Right. But it’s certainly not acknowledging that we just go all renewables and leave fossil fuels at the side. You know, the market will all the way that it wants. And we should figure out what the optimal balance within the energy mix is.
Stuart Turley [00:02:36] It’s a little hard to make a iPhone from a windmill.
Dan Romito [00:02:40] It’s impossible.
Stuart Turley [00:02:42] Little hard to possibly. Thanks for bringing that painful memory. If you didn’t, that kind of funny. Well, isn’t that what you hear sometimes when people say, let’s just go 100% renewables?
Dan Romito [00:02:51] Yeah, I mean, look, there’s there’s so much noise in just rhetoric and frankly, just shenanigans in the, in the market right now. You know what? What we have fallen what the public has fallen into the trap of is we want something so bad to happen. Right? We utilize this exercise of just pinpointing data points from here and there to validate what we want to happen. And obviously it should be the reverse. It’s what is the lay of the land. What are the technical technological capabilities? You know, it feels like we’ve thrown the laws of economics and physics right out the door. And obviously that’s a conversation for another day. But yeah, you know, I there is a learning curve that has to be overcome within the general public as to how we get our energy. And in part, I mean, that’s that’s one of the the founding premises of our firm. Right? You know, I’ve done I’ve done plenty of talks and this has happened enough times where very educated people, you know, I will ask them and I’ve said this before in other podcast, but it’s worth repeating. It’s like, well, where does electricity come from? I’ve had multiple people tell me it’s like, oh, electricity. It’s like electricity is not come from electricity. So when you have that degree of educated professionals, right. That and and they hold true to that. Like clearly we have we have a misunderstanding problem here.
Stuart Turley [00:04:09] Isn’t it funny how people just think it comes from the wall. But physics and fiscal responsibility don’t matter once it gets into the wall.
Dan Romito [00:04:18] Yeah. I mean, look, when you really have this debate, it’s like we’re talking about, you know, three different things. It’s everyone is so focused on generation. What usually falls to the wayside is transmission and distribution. You’re like, look, the part of the tenants of power. It’s let’s talk about transmission and distribution for a second generation. And I’m like, wait, wait, wait, what are you talking about? And say, what do you mean? And then that’s sort of the cue. That’s the indicator. It’s like, look, I’m, I’m arguing or debating with someone here who thinks they know what’s going on. And clearly, respectfully, they just don’t. Right. The tenants of power particularly, you know, everyone 99% of the time is generation, generation, generation. It doesn’t even leave room in the. Debate, right? How are we transmitting power? How are we distributing power? You know, we need to figure out. And I think we’re doing better as an industry. It’s not great, but it’s much better than what was five years ago. Just how this stuff actually works and how it impacts you, especially from an economic perspective. Because to your point, like the the way that we’ve gone about this from a federal level is just throw more money at it, and throwing more money at problems doesn’t fix the problems. In fact, it actually creates more problems.
Stuart Turley [00:05:28] You know, throwing money at it, bringing that up. I think it was, what, seven somewhat billion dollars? 7.59 billion or something like that. And we got 60 school busses from the Harris Biden camp this past year. And then we got how many? Eight, 7 or 8, maybe nine electric chargers for $8 billion. You can’t throw money at this.
Dan Romito [00:05:51] Yeah. There’s this quote that I use. So I mean just as a little bit more boring background. I’m a University of Chicago guy. And I bring that up because you’re beaten over the head with, you know, Milton Friedman, once you step foot on campus, that everything is Milton. I mean, so clearly there’s an inherent bias built into my thinking. But one of the quotes that he has that’s, you know, that’s perfectly appropriate for what we’re currently doing in energy. You know, one of the great mistakes is to judge policies and programs by their intentions rather than their results. Right. That is yeah, so true to how we’re we’re going about our energy. And to your point, like what’s what’s ironic is, you know, energy, learn their lesson the hard way from the old days because capital discipline was thrown right out the window, like you just took a boatload of money. You put some lighter fluid on it and you just saw it go up in flames. And today, like everything to the credit of the industry, especially on the public side, I mean, it’s across the board, but public issuers in particular are just, you know, beaten over the head with this mentality of capital, disciplined capital, disciplined capital discipline. So the the irony is, you know, to the cent it seems like everything is monitored in terms of ROI. And then when we talk about federal policy and government policy, particularly relating to energy, it’s like, yeah, just throw money out of it. And that that notion of capital discipline is thrown right out the window. Yet energy is portrayed as the bad guys when we’re the ones are like, okay, well, let’s just be smart and efficient with how we allocate very finite, finite levels of capital as opposed to like, yeah, just just throw money at it. Just it just doesn’t make any sense.
Stuart Turley [00:07:26] You know, when you take a look at all your reporting and your skill sets, you’ve got some fantastic slides that you sent over a little bit while we were just chit chatting before. And so when we talk about that, let me pull over here one of the slides and we take a look at the CO2 emissions. I mean, ESG, ESG actually did a great thing because we talked about the fiscal responsibility for M.P. operators was not all that good. The ESG and the government section, the MP operators have really taken heart, and they’re giving back and they’re doing great investments. I love my oil and gas investments. I love my my K1 have I’m I’m averaging about 30% of my money on oil and gas investment. But CO2 emissions have been brought down in the U.S. by the EIA. And they said it was because of a reduction in coal plants with the increasing of natural gas. Would love me some natural gas plants. Right. And in your chart, the fossil fuel, you’ve got chart number ten. I’m going to bring that up here. And I had the staff fly this in for our podcast listeners. The is U.S. CO2 emissions per capita have been cut by one third since 1990. And is was that attributed to mostly reduction in coal plants? What was the you know.
Dan Romito [00:08:49] Like this is one of the things that drives me absolutely insane is the narrative of America’s or the United States position in the in the emissions landscape at, on a global level. And everyone thinks that we’re this big, bad culprit. And, you know, I’m saying, well, we met the most. Well, it’s it’s that’s going to be the case. We are going to emit from an absolute level because we are the largest economy on the planet. But the better way of looking at it, in my opinion, is, is to normalize it. Right? So when you’re looking at the expansion GDP per capita, which is a great proxy for standard of living, and then you analyze the simultaneous impact on emissions per capita, you see that the United States has been decoupling for 40 years, as you pointed out, right. We’ve expanded GDP by roughly 40% in that time frame. And over the same time frame, we reduced emissions per capita about 30%. And you know that that slide, when I bring that up, I usually leave my presentations with that because CO2 emissions per capita, as you point out, have been drastically reduced. So but people not familiar with energy are like, wait, wait, what what are you talking about? And it has nothing to do with. Solely retiring coal plants. Right. And I would even make the argument that American coal is vastly different than.
Stuart Turley [00:10:06] Exactly.
Dan Romito [00:10:07] Australia or Southeast Asia. Like coal is not coal. There’s there’s a there’s a categorization of it.
Stuart Turley [00:10:12] Oh, well said I like because that is not often talked about.
Dan Romito [00:10:16] Not like I would I would make the argument that, you know, I’ve been, you know, let’s call it north eastern West Virginia, southeastern Pennsylvania, Ohio, even Kentucky. I think that that quality of coal, combined with just the general health and safety standards, that should be fueling third, third world and developing economies because they’re not moving off of coal, but they should use ours because it is the cleanest. It’s the most efficient to say this. But back to your question on, you know, why have we been able to to to achieve that reduction in CO2? It’s like you just have to look at a graph, right? You you look at just the emergence of natural gas.
Stuart Turley [00:10:53] Right?
Dan Romito [00:10:53] Natural gas now makes up a major proportion of our energy mix and as does nuclear. You know, I tell people, you know, I was born in Illinois. I was you know, I was raised on the north side of Chicago. And when I tell people from Illinois, like just buddies or whatever, it’s like, well, what percentage of the energy mix in Illinois do you think is nuclear? It’s like none like you get this aspect like a nuclear, which I don’t know why there’s such you. We can talk about that. But, you know, nuclear makes up anywhere between 20 and 30% of Illinois energy mix. So, you know, this, the technological advancement, mostly because of the investment that fossil fuel and energy companies have made over the last 40 years like that has resulted in very efficient natural gas, very efficient nuclear. I would make the argument that we’ve inherently placed a cap on nuclear just from a regulatory perspective. But yeah, we’re we’re getting we’re sunsetting coal. We’re not off the reliance of coal. It’s getting much better. No.
Stuart Turley [00:11:50] Yeah. In fact it’s kind of funny. Your slide number 13 global natural gas use up three and a half since 1975 with one glaring exception. What was the glaring exception?
Dan Romito [00:12:02] Yeah, the glaring exception is that our friends and in China don’t use natural gas. They love themselves some coal. And that’s one of the other things that drives me crazy is like, you’ll have this snarky argument that China’s going renewable because they immediately associate that with with the focus on emissions or environmental stewardship. And it’s like guys like, let’s just let’s just calm down and take a deep breath and, you know, go back to, to to reality. China does not care about environmental stewardship. What they care about is being a dominant economic force across the globe. And to do that, they need a ridiculous amount of energy, but their their country does not have, let’s call it what it is the blessing that the United States has. They’re very reliant on importing energy and they do not want that in place. Right. Because you are Bihar’s, you’re beholden to foreign powers. And you you are very you are controlled in that respect. So the push towards renewables is in part to fuel immense demand. So in that respect, it’s an energy expansion. Right. But also they they do not want to rely on other countries for their oil imports. Right. They have a good partnership with Russia. But Russia is continuously under sanctions. They probably have burned the bridge. Like we’re not going to give them any quality oil, at least in bulk in the in the near future. They realize that. So in the push for autonomy and economic power, right level like renewables plays into that strategy. They didn’t find environmental Jesus and all of a sudden said, let’s build us solar panels, right?
Stuart Turley [00:13:37] I like the way he said that. And and when you take a look at slide number 14, Mister Producer, if you can slide in that China is not going renewable and they barely utilize natural gas, that slide is a telltale Holy cow, Batman to me. Yeah.
Dan Romito [00:13:53] Like I love this stuff. And you know, this is all public data. This is not Dan’s proprietary database that he built right in his. I’m using my I’m talking about myself in third person. Like all this stuff is cited. It’s all right. Yeah, exactly. I mean, I’m with you. The only reason I got so fixated on energy, you know, I spent almost a decade at Nasdaq. People were talking about the energy transition, and they’re like, let’s get rid of fossil fuels. And to me, I’m like, all right, well, that sounds amazing, but let’s actually put in the work and let’s see if that’s a viable option. And in doing the work it’s not. And so one of these charts, we’ve been tracking this for quite some time because there is a pretty popular narrative on there, excuse me, that says China’s going renewable, China’s going renewable. And right. That’s just not the case. They’re increasing. They’re expanding their energy mix into solar and wind technology. But them of all people understand that there’s a shortcoming associated with solar because, you know, you don’t necessarily know when the sun is going to shine. You don’t know, you can’t necessarily forecast, right. The wind is going to blow. And they. Have this, this, this vast middle class that they now have to support. And this is what we put. You know, in, in the analysis, like China’s middle class is, I think, two times larger than the entire population of the United States. So they they are not going renewable. They just need more.
Stuart Turley [00:15:17] Power or more power. Correct. Right. Wow. And when you we take a look at this brings up a whole nother animal here because I get really tired of people saying China is going renewable. Well, I think it’s because they’re skimming off. They’re charging us all this extra for us, for them making all this stuff, and then they’re turning around and then they’re undercutting their prices internally and using that stuff. And I mean, the amount of waste and bad things that the renewable and solar and wind does to the environment is just makes me airsick. I mean, the poorer whales are just getting clobbered on the East Coast. I’m not.
Dan Romito [00:15:56] Laughing at the whales, but yeah, I mean, look and so just just to be perfectly clear, like I do think there is a place for wind and solar, I just don’t.
Stuart Turley [00:16:05] I agree.
Dan Romito [00:16:06] Dominant energy mix that we should rely upon. And it’s very it’s regionally contingent. Like I live in Florida like we have 320 days of sunshine like that in some ways makes much more sense than like I’m not picking on Pittsburgh, but you know, look, they get 50 days of sunshine and that’s that’s probably right watching it. But and in any event, not to put on my tinfoil hat and sound like a conspiracy theorist, it’s, you know, the fossil fuel industry is, for the most part, generally speaking, a supply chain that the US dominates, right? We we dominate that inherent supply chain. Right. When you talk about the renewables supply chain, not only is it like ridiculously complex, it’s also incredibly controversial and and somewhat corrupt. Because what do you need? You need copper, nickel, lithium, cobalt, graphite. The vast majority of those of rare earth minerals are in China, Indonesia, Russia, Congo.
Stuart Turley [00:17:00] La.
Dan Romito [00:17:01] Congo and China is increasingly gaining more control over those governments, namely through pretty bad debt, but also just geopolitical influence. So once again, the cynic in me, but I also think there’s a realistic aspect to it, says what can China control? Well, they can’t control what we do for oil and gas domestically that is completely out of their hands, but they do control the vast majority, if not all, the supply chain associated with wind and solar. And oh, by the way, like the other thing that drives me nuts is, you know, wind and solar is not green, right? You’re you’re essentially trading back end emissions for front end emissions because you still need massive diesel machinery to extract the rare earth minerals, and then you have to transport them, which requires diesel. And oh, by the way, you know, if a solar panel breaks and leaks like you’re talking about contamination. So once again, I’m I don’t like the argument. I think it’s intellectually dishonest when you say, well, wind and solar is green, it might be renewable, but it’s certainly not green.
Stuart Turley [00:18:09] I don’t even like the word renewable with a I like wind and solar and and Nan, I’m in my place up here. I’ve got four buildings and in the four buildings I have a twin propane generator. I have batteries coming in to each house. I have solar on each house, and then I’ve got a microgrid set up. So I like. But affording it and putting it in or two different things. I mean, it is absolutely not cheap to put in a microgrid in for a neighborhood.
Dan Romito [00:18:43] Will cost is an important consideration too. If you look at developing economies like one of the things that everyone agrees upon and, you know, even if they didn’t, they’d be laughed out of the room is what does a developing economy aspire to be? It’s a developed economy, right? They want to be a developed economy. They want the nice things that we, for the most part, for granted in the United States. And then if you just look at it purely from a mathematical perspective, there is a direct mathematical correlation between GDP per capita and electricity consumption. So in other words, as you read, I’m going to quote richer. You’re utilizing more electricity. The caveat to that is all these developing economies like for example, India, you know, their median household income I think is like $12,000 U.S.. Right? Right. That’s that’s yes.
Stuart Turley [00:19:35] We’re in.
Dan Romito [00:19:35] Poverty here in the United States. So affordability becomes a massive consideration. No one is going to go out of their way to pay. And so for the time being at least, what does that mean? They’re gonna pay for the cheapest available source which is coal. So you run.
Stuart Turley [00:19:50] This. Yeah. They’ve they’ve been sorry. They I get excited because this I’m on a roll there you are in here or you’re rolling here and then and India has imported. Thousand percent more Russian oil since the beginning of the Ukraine war, even outside of sanctions, because it’s cheaper, they’re buying it less than the $65 sanction price. Modi has actually done a great job getting all forms of energy to his people. He they like him for what he’s doing there, and I applaud him for getting all forms of energy. Yeah.
Dan Romito [00:20:26] I mean, what do you expect him to do? Like as a as a leader of any country, like you have to, at least in theory.
Stuart Turley [00:20:32] Do this first and say, hey, we’re sick.
Dan Romito [00:20:36] And tired of living in, you know, poverty, which is totally reasonable, like we need electricity. You know, there’s even a stat like, I think 40% of Africa is without electricity. And yes, I have this joke. I’m like, if I turned off once again, I live in Florida, you know, turn off the AC in the middle of August. You know, Mrs. Romeo is looking for those divorce papers. She’s googling divorce, right? Like we just we just, for whatever reason, cannot connect the dots on that. So countries are going to do whatever they’re going to do to to satisfy the demands of their respective citizens. And for states to say you don’t have the right. So to take like the moral high ground and say, no, no, no, we have like this environmental or this climate crisis that we have to be mindful of. First of all, we’re going to say you guys are the largest economy in the world. Don’t boss us around. Like get lost. The second thing they’re going to do is, just as you point out, they’re going to go look to someone who’s going to say someone will supply it. And the argument that we have is because natural gas is the best of both worlds. It’s cheap, it’s reliable, but also from an environmental perspective, it does, allowing emissions profile to decrease like we should be running point. The United States should be running point on providing natural gas to the world. We have enough of it. Like we don’t need all of it. And then when we allow other countries, whether it’s Russia or Venezuela or Iran or Iraq, to to provide it, we are essentially funding regimes that inherently go against the standards and the ethics and the morals of the United States. Like you, I can’t wrap my head around that argument.
Stuart Turley [00:22:07] You woke up a big sleeping giant on me right here and here. Part of the problem is the Biden administration’s ban on LNG is nothing more than regulatory prosecution of our great natural gas, LNG export facilities and capabilities. I wouldn’t want to do business with the United States in this current administration. I mean, you you’ve got to look at the long term contracts of LNG. They’re in the ability of getting that to market out there in the greatness of our manufacturing of LNG and the cheapness of it.
Dan Romito [00:22:42] Yeah, I yeah, I just I mean, once again, we’re we’re conflating the our the Venn diagram here. You know I think the LNG lover is an easy political score to satisfy people who are against LNG because it’s a fossil fuel. Right. That is a that is a quick score. But what that does is it’s so foolish over the long term because to your point, it makes it look like we don’t know what we’re doing. It also upsets countries that are our allies. So they’re like, what are you guys doing? But it also like this is a zero sum game in the sense that if they can’t get it from us.
Stuart Turley [00:23:21] They’re going to get it from.
Dan Romito [00:23:22] Somebody.
Stuart Turley [00:23:23] The Arctic to the Russian Arctic to has has had two shipments go out this week that are sanctioned LNG. The LNG dark fleet from Russia is increasing. There’s 5 to 700 dark fleet folks that are avoiding sanctions in tankers using crude oil around the world. The darkly everybody said, oh, LNG tankers are so expensive. I’ve been tracking it. It is a line. It is real. And they had two shipments roll out and it’s amazing who’s still buying Russian LNG off the grid. Amer well, it’s just.
Dan Romito [00:23:58] Like I mean, so the same people that are applauding the LNG in many cases are the same people that will argue that like flaring is out of control or, you know, we need these environmental mitigation things. And look, conceptually, they’re correct. Like, you shouldn’t be flaring just for the sake of flaring. There’s there’s reasons for that. But just pragmatically speaking, there’s basically five places on Earth that you really can get natural gas. Right? It’s it’s the US, it’s Russia, Iran, China. And then I’ll even throw Canada in there. Although they’re, they’re they’re relatively slower. Like Canada aside, if you look at the, the the flaring and the emissions profile of Russia, Iran and China between those three countries. And I’ll throw Venezuela in there just to make my math correct. You’re talking about three quarters of flaring on the globe. So like once again back to that zero sum. The United States, for as much.
Stuart Turley [00:24:54] As a lot of Bitcoin miners would be happy if they had that.
Dan Romito [00:24:57] Yeah, 100% like you know. For as much natural gas. And I’ll have this the specific number off the top of my head. But the US only accounts for less than 7% of all global flaring. Russia, Iran, Iraq, Venezuela combined account for three quarters. So if we’re so damn concerned with environmental stewardship, why would you place production in the hands of those who are responsible for it? That logic, once again, it’s like straight out of the no dotfiles for me. People make that argument, say, wait, you’re not you’re open to different things.
Stuart Turley [00:25:30] Why do we allow the Department of Energy to give right whale death certificates to all the windmill folks so they can kill more right whales than are actually in an existence?
Dan Romito [00:25:42] Yeah, yeah. I mean, look, I’ll I’ll give you another one. It’s talking about, you know, data. Like one thing I could do this all day, but one of the other stats that I throw out. So like natural gas, like you’re talking about, five countries are essentially responsible for half the oil production on the globe. And once again, like oil was not going anywhere only because of the reliance said the global economy has on the derivatives of oil. Like once again, right, six refrigeration roads, asphalt, tire like, the list goes on anyway. So those five countries US, Saudi Arabia, Russia, Canada and Iraq and sort of the same, same idea is like with the exception of Canada, like those other countries don’t share like the same set of morals and social norms, but the people who are usually against get rid of oil have a very, in most cases, distinct social agenda, which in Saudi Arabia or Russia or definitely Iraq, you’d be imprisoned for saying that like.
Stuart Turley [00:26:40] Yeah, well.
Dan Romito [00:26:41] Guys, come on, like.
Stuart Turley [00:26:43] I don’t understand, you know? And you know what? I what gets me, Dan and I know that our great EMP operators in the U.S. do such a great job. And you and I mentioned the ESG. They’ve taken heart. Yeah, I mean, the our guys do great. But here’s the energy. Hypocrisy drives me nuts. Yeah. Why does California import in 70% of the oil that China drills out of the rainforest in their hypocrisy, shutting down our great EMP operators in California and not letting them drill?
Dan Romito [00:27:20] Yeah, I mean, well, California generally speaking should be the model for how not to run anything, right? Like logic is just not incorporated to any decision that they put in place.
Stuart Turley [00:27:31] Like we should put a border wall up on this side of don’t worry. Is that what you do?
Dan Romito [00:27:37] So I you know, it’s I California is just perpetual head scratcher and I don’t get it. It’s. Yeah. Like when we talk we I’ve had conversations with, you know their pension fund managers with their regulators. Right. To be fair, there are people that inherently get it and that are think about this stuff in a pretty practical and reasonable manner. But they’re such an outlier. Like the bulk the the the the bell curve is just absolutely lost. Their mind is entirely more focused on getting likes on Facebook as opposed to like, doing the work. But where I’m going with this is, you know, we think of, we think of like the outliers and we and we think that that is the norm, right. What California is doing is so detrimental, not necessarily just to the US energy space, but the global energy space. Because because to your point, it’s.
Stuart Turley [00:28:32] That’s an outstanding I don’t mean to give you a compliment, and I am so sorry, but that is an outstanding way to say that California is detrimental to the global energy market. I’ve never heard it phrased that way. And how critically well phrased.
Dan Romito [00:28:48] Yeah, it’s just they, they there’s there’s this problem where we are, we are pandering to an echo chamber that has made up their mind, and no data point or argument or debate well, will change their mind. Yet we continually just try to convince them. And I into some respects I understand or I get it. I don’t obviously agree with it. But you know, if you look at sort of where the puck is headed and I think this is where you’re going, if not just just cut me off is the next sort of economic opportunity, much like the.com right of the turn of the century. That’s generative AI, right? Generative AI will inherently change the balance of power in the global economy, you know, for the next 100 years. And the one thing and the one thing that people don’t realize. So in other words, you’ll say something like, well, what’s the next economic prowess that’s going to take place? And they’re like generative AI. And you like, do you like it? I love it, I love ChatGPT, I love copilot. Awesome. Do you like fossil fuels? I hate it like, you know, we gotta get rid of fossil fuels. And it’s like, no, no, no. Like, you don’t understand the amount of electricity that AI is going to. Corner right at a bare minimum. We’re going to have to have double the electricity that’s being Uber conservative.
Stuart Turley [00:30:06] So people don’t understand that AI takes three and four times for a surge. The amount of power the data centers. And I single handedly killed net zero. Any hope for net zero? It’s gone.
Dan Romito [00:30:20] Yeah. We’re not. We’re net zero is a pipe dream like. And I’ve been I’m very clear on this too. Is like I think the pursuit of net zero is something that we should aspire to achieve. I think settling for anything less than absolute net zero is just setting yourself up for failure.
Stuart Turley [00:30:38] I like the idea though, then, of aspiring for less pollution. Yeah, because after interviewing Doctor Patrick Moore, the founder of Greenpeace, in two different podcasts, he is one cool cat. Is is sewer, is CO2 actually plant food or is it, you know, good for the environment? Why is the world greener now and then? What gets me is the data that is being manipulated. I also interviewed a bunch of folks on the the on the global warming trend right now is just totally out to lunch. It is being yeah, I mean we manipulated. Yeah. There’s so much now that we’re solving the problems.
Dan Romito [00:31:21] Yeah, yeah. Like for me it’s like I that’s not my expertise. And so like I’ve heard it both ways. And so I think everyone that can agree on that something is going on. And yes.
Stuart Turley [00:31:34] Rhineland.
Dan Romito [00:31:34] Is like okay, that’s something it probably is not great. So when you have that in place, what does that mean? You have to be much more efficient, right? We’re not in a position where we can eliminate we have the technology where we can expand. The question is how do you become more efficient? And this goes back to the AI point. So, you know, MIT does fascinating work on electricity demand. And, you know, to your point that you brought up earlier is they make they make the the parallel that one data center uses the same amount of electricity as 50,000 homes. Yep. So you think about that and then you’re like, well, why do they need all that electricity? And and it’s sort of stating the obvious. But to put a data point behind it is 40% of that electricity is allocated to just cooling. Right. So once again you think about these parallels. You know, I, I live in Florida, right? We use air conditioning all the time. And so when you look at daily natural gas, electricity in the lower 48, like the chart over the seasons, over the year it goes, it’s it’s up, down, up down, up, down. Why is that? It’s because in July and August, people crank their AC like it’s going out of style. And because natural gas is the best of both worlds, the affordability and the reliability, the grid becomes inherently more reliant on natural gas. Right. More power demand. It’s it’s it’s it’s almost mathematical. It is mathematical actually. It’s like, all right, we’re going to have the surge in demand. What are we doing. All right. Natural gas. So if you think about all right I the vast majority of it goes towards cooling. Right 40%. Right. And when tough when times get tough, we rely inherently on natural gas. Doesn’t it makes sense that we should have an energy mix that has more natural gas? And the answer to that is yes. Right. Yeah. If we look at what’s going on, excuse me. In Virginia, Virginia has this this small area outside of DC called data center Ali data Center Ali, by far is the greatest concentration in cluster of data centers. It’s for obvious reasons, it’s outside DC. So like NSA, CIA, like all the government agencies data, you know, all the above grid, their energy, they get ready for this. Like this is the least climatic statement of all time. Their energy mix is 60% natural gas, 30% nuclear. The US average energy mix is 40% natural gas and 20% nuclear. So you have all these like like you were like the Sherlock Holmes of energy mix, right? You have all these, you know, all this evidence that leads to what solves problems. Okay. Natural gas right now you can fit in renewables.
Stuart Turley [00:34:13] But we have zero nuclear, new nuclear plants being built right now. We have small modular. We have three small modular reactors that are in process right now but know zero full sized ones in process.
Dan Romito [00:34:29] I don’t care, I don’t get it. You know, Two Mile Island and you know, Chernobyl. Like I know people saw the HBO special. Great, right? You know, the thing about nuclear that drives me crazy is that’s a military technology like you. And if you ever want to impress someone, you introduce them to a nuclear submarine commander. Like. Right. Wow. Right. What does he do? He’s like a nuclear submarine commander. The people, they fall on, all of the guy and and rightfully so. But like, I’m I’ve never been in the military. I don’t. Not going to pretend that I know a lot about the military, but I will make the crazy statement that the military isn’t knowingly going to put a technology on a submarine that is going to hurt their, their, the people on it. So if the Navy has figured out how to implement nuclear technology, doesn’t that make sense that we can scale this? Like almost every technology that we utilize today is has started out with the military. Like whether it’s the internet, like we these things start in a military incubator and then we figured out a way to scale. This point.
Stuart Turley [00:35:29] Is phenomenal.
Dan Romito [00:35:31] Yeah. So it’s like the nuclear thing, I just I don’t get and the fact that it’s wrapped in bureaucratic tape is just another indication.
Stuart Turley [00:35:39] I mean, like Russia, Russia can’t build anything safely. And they’ve got six nuclear icebreakers running around all the time on the Arctic. And they, they they’re doing fantastic. Yeah. If they if Russia can do it, we ought to be able to do it. Yeah.
Dan Romito [00:35:55] And like look I think I mean once again going back to Milton Friedman, I am, you know, a free market economics guy. You know, I think the idealism in sort of the rhetoric will and being wishful thinking on this one, I think that will eventually crumble and be like, look, you know, we already have 5000 data centers in the United States. We already have rolling blackouts in in a lot of states, namely California. There’s only so much that people in business will tolerate. Now, I’m going to contradict myself a little bit, like you’re seeing this mass exodus out of California, and they’re coming to Texas. They’re coming to Florida and leave.
Stuart Turley [00:36:33] Hello?
Dan Romito [00:36:33] Yeah. And they just.
Stuart Turley [00:36:34] Need all of you folks that are moving and using U-Haul. Please leave your voting policies at the border. Do not go to Florida or Texas. I do not want your voting policies. Thank you.
Dan Romito [00:36:49] One of the funniest things in Florida. So, like where I live, I live in Northeast Florida. One of the the, one of the funniest things is like when new people move in and they move all the time, like 800 people a day. Moving to Florida like the the moms in particular will grill respectfully, but will grill the, the the newbies and like, why did you move here? And if they and if you ask why did you move there? And if they lead with we really like the weather. They’re like, no, we can’t hang out. No, no, no. The right answer is.
Stuart Turley [00:37:21] I love.
Dan Romito [00:37:22] Illinois, I love California, I love Pennsylvania, I love Connecticut, and you’re like, okay, we can we can hang out, we can have drinks. But if they lead with all of that, we really love the weather in Florida. It’s like a no no gift basket for you, dude.
Stuart Turley [00:37:35] And no, you’re. That’s funny. I, in the words of Larry the Cable Guy, that’s funny no matter who you are.
Dan Romito [00:37:42] Yeah, exactly.
Stuart Turley [00:37:43] I’ll tell you what. This is exciting. And, Dan, I just really appreciate your time. But at Pickering Energy, when you guys take a look at these technologies and stuff, what is important to your customers? What are you seeing coming around the corner?
Dan Romito [00:37:55] Yeah, I mean, all things now are methane, right? I think, you know, running this full circle. You know, everyone acknowledges at least in private, you know, even the most ardent fossil fuel detractors will say, yeah, we can’t really go in that zero for the for the reasons that we just laid out the compromise that we see emerging in the marketplace are investors, regulators, policymakers. And believe it or not, insurers are all converging on this thought that the broader oil and gas base can attain a 0.2% methane intensity. And so, for context, you know, we’re probably collectively right around, you know, point three. Everyone think you can move to 0.2, but there is this arms race for technology because right now everything is like estimates. It’s a lot of spreadsheet math. And part of that compromise, at least amongst the reasonable policymakers, is that point two has to be point to. So in other words, you have to empirically prove it. You have to quantify it and it has to be validated. It probably moves to a place where it’s assured. Yeah. And so whereas 2 or 3 years ago the ability to quantify at scale was just not economically possible. Right? It was, you know, that was basically like, you know, you have be the equivalent you, you, you have, you know, I don’t know, your toilet is in, you know, the toilet is running. And instead of just turning off the water supply, you burn down the house. Today, there’s technologies in place that are very affordable, incredibly efficient. And so we we see the market, we see the issue. We’re beginning to adopt or implement more technology and more of these capabilities to empirically measure and to quantify. And that’s sort of been you know, it’s been fascinating because like I said five years ago, it’s like, welcome to the wonderful world of ESG. We like the environment, like social stuff is cool, and we have a bunch of governance. And it was really that it’s like, here’s how our emissions are trending. Here’s where we’re going to be in five years. That’s cool. Here’s where we see vulnerabilities in the data, and here’s what we’re doing to ta ta ta ta. To eliminate those variabilities or to address those memorability. So it’s much more tactical and it’s much more operationally focused as opposed to like in the day. I was like kind of telling like a not a fairy tale, but it was telling a story. It was almost like, I’m right.
Stuart Turley [00:40:13] And the new technology that I’ve seen through satellite imagery and being able to actually track progress is huge. Dan, I’m sure you’ve got to be able to be happy about that.
Dan Romito [00:40:25] Yeah. So I mean, it’s to be honest with you, it’s bittersweet. So it brings up another good point. Like, you know, the, the the compromise has actually it’s it’s a win in my opinion because it’s it’s reasonable. It’s practical, it’s achievable. But for the detractors out there like the Environmental Defense Fund or Climate Works or the, you know, there’s a variety of them. It’s actually a little bit counterproductive because it’s act as this lightning rod for fundraising. Right. These environmental NGOs utilize this compromise as as a lightning rod for fundraising. And the vast majority of that fundraising is going towards advanced technologies like satellite, like methane. Sad. Others carbon mapper. Right. So one of the things and and maybe in the long run, like I want to be an optimist. Maybe in the long run it’ll be a good thing. But the space is increasingly monitored by a group of well-funded, very aggressive, very motivated individuals that would love to see nothing other than the fossil fuel industry go bankrupt. And so it is a double edged sword, right. Like these technologies now are scalable. They’re they’re very impressive, but they’re also utilized by groups that don’t really like us. So it is imperative, like if the PSA, the moral of the story is you have to put yourself in a position to where you can counter work, you can counter what they’re inevitably going to accuse you of. And, you know, once again, tinfoil hat Dan, when you when you look at the perimeter program through the revised EPA rulings, one of the sneaky little tricks is the EPA now has a group of deputized environmental NGOs that essentially do their dirty work. So when people are like, hey, this is going away, or it’s going to be wiped out, no, no, no. Like the these environmental NGOs operate outside the purview of your standard regulatory infrastructure. Right. And they’re very influential with regulators, policymakers, insurers, investors. We had an insurer, you know, like we we’re talking to them. You know, we’re just like, what do you see? And what do you observe? And the woman who runs point for the insurance company you’re talking to super smart. She’s like, you know, we get like 3 or 4 calls a week from environmental NGOs that are ratting out who they think are egregious offenders. So, like Big Brother, it’s creepy, but they are watching and they are ratting out and they definitely have the technology and do so.
Stuart Turley [00:42:45] That’s amazing. I’ll tell you what I know.
Dan Romito [00:42:47] Like I just told you, I’m sorry, ma’am.
Stuart Turley [00:42:49] And how do people find you there, Dan yeah.
Dan Romito [00:42:51] So the best way to find me is either on LinkedIn, it’s just Dan Remedio or our website, Pickering Energy Partners. You know, not to give the commercial, but we we’ve written extensively on all these topics. You know, the running joke in the office, which is totally warranted, is I have the distinct inability to write like a 3 or 4 page paper. It’s always like these behemoth 20 pages, but it’s because we just load it with data and charts.
Stuart Turley [00:43:17] It makes a difference. You guys have got it.
Dan Romito [00:43:19] It makes a huge difference.
Stuart Turley [00:43:21] You guys have a great reputation and you’ve got a great history. And so I, Michael Tanner and I always say great numbers, great management means good numbers. And so you guys do do meet that requirement.
Dan Romito [00:43:35] No I appreciate that. Like I said, I mean the vast majority of our emphasis on the consulting side is, you know, we we are advocates for the space. Like we we are very aggressive because we feel that the math and the physics and the law of economics are on our side. But, you know, we are we are very data focused, meaning that we want all our clients to up their game with the data capabilities because it’s an easy story to tell. Right? It’s, you know, if, if I could, you know, run a two minute mile, I wouldn’t keep it to myself. I’d be bragging, but I can run a mile, you know. You know, if you look at back to your point earlier about the aggregated collective emissions profile of the United States, the emissions CO2 per emissions down 30% in 40 years, we’ve increased GDP per capita, as I said, 40% in the last 40 years. If you look at flaring, you know, we only account for six, 6.5% of global big numbers. Yeah, like especially within context too, given our size, you know, no one is going to sacrifice standard of living. Anyone’s at like, oh, you know, the, the you know, I think there’s a movement called the growth of, you know, let’s eliminate air conditioning and go down on refrigeration. That’s never going to happen. Like at least at scale. It’s not going to happen. You might have 1 or 2 weirdos here and there that will do it right. You get likes on Facebook, by the way. A cynic goes that sound, but you’re never going to get broader society to do those things. So it becomes an efficiency game. And that means advancements in technology. The efficient utilization and allocation of capital. Thinking about things strategically as opposed to just knee jerk. So all our clients are doing fantastic things and, you know, we push them lovingly to get that story out there because there’s a huge narrative that just doesn’t have it right.
Stuart Turley [00:45:14] You know, what’s fun is that you you like what you do, and I want to have you back because I think I have scratched the surface on about 19 other topics.
Dan Romito [00:45:24] Oh, man, I was so nervous. Like doing this. I’m like, oh God, we’re probably going to do 45 minutes to an hour. How do I condensed 20 hours of commentary? And just.
Stuart Turley [00:45:32] One. Let’s, let’s I.
Dan Romito [00:45:33] Would love to come back, man.
Stuart Turley [00:45:34] Yeah. We’ve still I’ve still got about 19,000 questions for you. So you know we’re going to table this right here. We’ll have all the slides that we talked about in the show notes. We’ll have your contact information in there as well. And I look forward to visiting with you again. So thank you. Yeah I.
Dan Romito [00:45:52] Appreciate it. This was awesome. Thank you so much. And like I said looking forward to doing in the not too distant future.
Stuart Turley [00:45:57] Hey thanks.
Dan Romito [00:45:57] Perfect
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