Subscribe
Share
Share
Embed
Welcome to Big Digital Energy with Chuck Yates, Mark Meyer and Kirk Coburn. Weekly news in energy covering oil and gas and cleantech.
00;00;00;00 - 00;00;23;22
Unknown
Well, the vote counting wasn't even finished last night when Republican Ken Paxton and the Democrat James Talarico started trading jabs already. The two, of course, now square off in November for a coveted seat from the state of Texas in the United States Senate. As our iron politics reporter Jack Fink explains now, Talarico admits to making some cringing comments in the past, but says Paxton is just trying to distract voters.
00;00;23;24 - 00;00;46;08
Unknown
My opponent is the most extreme radical the Democrats have ever nominated. Attorney General Ken Paxton didn't waste any time criticizing his Democratic rival for the U.S. Senate seat, James Taylor Rico. And in an interview with me today, Talarico fired back at Paxton, the most corrupt politician in America just became the Republican nominee for the United States Senate right here in Texas.
00;00;46;15 - 00;01;23;01
Unknown
Okay. Hold it. Jacob. I got to do this. My mom always told me when I was young. Be careful what you wish for, because you just might get it. The Republicans for years. You may disagree with their policy, but they have nominated these very honorable men. I mean, John McCain, Mitt Romney. The people at Bain Capital still talk in reverence about how Mitt Romney started Bain Capital, and he could have held on to a big slug of the equity of that firm for the rest of his life.
00;01;23;02 - 00;01;51;08
Unknown
But he stepped down over time. So the younger people doing more of the work could get ownership. And he's still married to his wife. I disagree with Romney on a lot of politics, but probably no more honorable a man. And what have the Democrats done to these people historically? They call them Nazis. We literally had Obama's number one political adviser giving us the Mitt's Krieg update.
00;01;51;09 - 00;02;14;18
Unknown
Remember throwing grandmother in the wheelchair off the, side of the mountain? And so guess what? Democrats, if you're going to take honorable people like that and call them Nazis, you're going to get ten packs and you're going to get Donald Trump. And I think the Republican Party's answer, unfortunately, is we don't give a shit. I'm out.
00;02;14;20 - 00;02;36;05
Unknown
I mean, Chuck, I will say that, that, what's says you, John McCain was part of the Keating Five, but let's just not let's ignore how he got it. And look, I've got beef with John McCain, but he got dragged into that so that there was one Republican in there. Come on. Hey, I need land men that hear this.
00;02;36;08 - 00;03;11;23
Unknown
The guy's running title, and Reeves County had the completions crews in the Delaware Basin. The guys. His forearms are 40% callus and 60% dried, glitchy dust. You need iron. The dietary con, the kind that comes inside of rib eye at 8 p.m. after a 14 hour shift and a 107 degree heat. This guy that the Democrats have nominated would like you to source that iron from, and I'm reading directly from his 2022 energy quote local vegan businesses.
00;03;11;25 - 00;03;37;21
Unknown
I looked at how many vegan businesses are currently operating in Loving County, who has a population of 64 people. I'll let you do the math. Ha ha ha ha. And and this is again, his his very strongly pronounced vegan campaign was back in 2022. He's attempting to walk that back. But, you know, come on. Texas is ground zero for smoked meat.
00;03;37;24 - 00;04;03;08
Unknown
I mean, the land ban, the roughnecks, the pumpers, the battery guys, the water haulers. They're going to eat. Yeah. What do they for? What can they eat for lunch now? Math. Well, and take it a step further. My mother. Good God, I don't want to tell my mom she can't have beef fajitas anymore. Good grief. So this is this is all of, this is all of Texas.
00;04;03;08 - 00;04;25;05
Unknown
And one thing I do want to note on my rant. I am not a Republican. I am a libertarian. So I am not sitting here defending the Republicans for Ken Paxton and Donald Trump and all. I am the neutral third party observer looking at the Democrats going, hey guys, if you're going to call everybody a Nazi, guess what?
00;04;25;06 - 00;04;47;17
Unknown
You're gonna get a freakin Nazi and you just have to live with that. If you want to raise the rhetoric and and and and be gentle men and gentle women and have a discussion, then great. You can throw that stone. But if you're going to call Mitt Romney a Nazi and don't tell me that Obama didn't do it because Obama is the number one political advisor did it.
00;04;47;17 - 00;05;09;04
Unknown
And it's chickenshit if you send your people out to do it and you don't correct them. Both campaigns also released new digital ads, with Talarico using news clips recalling Paxton's impeachment by the Republican majority in the Texas House three years ago. Passion is a repugnant character. A majority of Texas House Republicans voted to impeach one of their own.
00;05;09;10 - 00;05;34;03
Unknown
He was acquitted of all impeachment articles in his trial. Paxton's ad featured some clips of Talarico past statements that have sparked controversy. There are many more than two. Biological sex is, in fact, there are six. It is now existential that we try to reduce our meat consumption. I am proud to say that our campaign has officially become a non-meat campaign.
00;05;34;05 - 00;05;59;20
Unknown
You know, that's four year old symbolism. He's wearing a mask. Talking about, you know, the existential threat related to climate change. So we need to stop eating meat. That's, you know, that is going to be portrayed in reasonably and fairly so in this back and forth. But, you know, this whole thing is going to devolve into something freakier than we saw the last time.
00;05;59;22 - 00;06;28;03
Unknown
But a squared off against Ted Cruz. It is the politics of personal destruction. And what you just commented on, Chuck, is just clearly taken to another level. In fairness, Mark, like I tell Ricos, is a train wreck. And I mean, I will say, in fairness to Ken Paxton, his 2023 impeachment was a hit job. I mean, the Republicans controlled the House.
00;06;28;05 - 00;06;55;00
Unknown
David Thielen, who is not a disinterested party, pushed through the articles of impeachment. It was a hit job because the Senate completely cleared him of every one of the articles that were, rose against him. However, we're talking about a guy who allegedly had multiple affairs. He had a security fraud settlement. He had burner phones and the attorney general's office.
00;06;55;01 - 00;07;21;16
Unknown
So I think the question to both of you, man, is, would you want to have a bourbon with either one of these guys? No. I mean, look, there was a thread that I saw your your significant other commented on this morning, Kirk, which basically said the choice is really between two imperfect humans and just pick your imperfections.
00;07;21;16 - 00;08;03;21
Unknown
I want an instrument to go to the Senate or whatever office of power and execute my policy preferences. That's that's the bottom line. We've got so much baggage and skeletons in the closet and, you know, just all kinds of of political turmoil and, you know, you can say that the corruption that was ostensibly the reason for the articles of impeachment in the first place was successfully adjudicated in Paxton's favor because he was acquitted of all of the articles of impeachment.
00;08;03;24 - 00;08;22;06
Unknown
You know, would that stand up to kind of a true legal test? Not sure. I would like to go get a bourbon with, Paxton's lawyer, Tony Buzbee. I actually like Tony. I hung out with them one night. Me and Lee majors went with Tony to the UFC fights and, hung out with Dana White. It was a good time.
00;08;22;11 - 00;08;48;15
Unknown
You both know and recall Maxine Messinger, who was the, society columnist, long time society columnist for the Houston Chronicle. And I'm going to invoke one of her, most familiar and most famous lead lines into segments of her writing, which was the soft thud of name dropping. Hey. Oh. Hold on, Kirk, let me do this.
00;08;48;18 - 00;09;15;09
Unknown
Brother Bobby's birth was in Maxine's column back in the day. So take that mark. Damn, man. I BuzzFeed was a neighbor, so, there's nothing like having a neon sign on the boulevard. If you know what I mean. So. Yeah. Exactly, exactly. All right, man, let's jump to Beatty. Hey, everybody, welcome to d e Kirk. What's up behind your head?
00;09;15;16 - 00;09;38;10
Unknown
Can you just second so I can read it? I'll turn it off. There you go. I love it when the signs on it's bourbon time. It's off. It's off because it's still 942 in the morning, I love that. There you go, Mark. What part of the world you am? I am still in Memphis, Tennessee. I've got two comments that I just wanted to kick off.
00;09;38;10 - 00;09;57;06
Unknown
Since we're in the summer mode. One is Guy rolls up, he's a friend of ours, rolls up to Nantucket in his jeep, has been driving all night from Florida to get his son here because his son starting a job working at the local golf course. And I'm like, how you doing, Pat? He's like, man, I am freaking exhausted.
00;09;57;06 - 00;10;17;17
Unknown
I'm like, why? He's like, well, you know Patty, his son, he's like, man, he's been playing baseball in college. It's like, damn, dude, I get excited. I show up on Friday night and by Sunday, man, it's just like, I feel like I'm in a in a washing machine. I was like, I know a guy that reminds me of this.
00;10;17;17 - 00;10;45;26
Unknown
That's Mark Meyer, who's been following his son's baseball career. Mark, how do you feel on a Sunday night? Well, this has been a, a different season since it was a red shirt, so not not quite through, the super cycle on the wash washing machine. Although all the things that have gone on in conjunction with, getting back to play after a major surgery or, or in some ways, no less stressful.
00;10;46;03 - 00;11;10;23
Unknown
And on another note, in sports, I, you know, I follow these guys on Twitter, and I saw this tweet the other day about how this guy's making a gazillion dollars because he wrote in Claude to, like, pick stocks for me. And so I was like, sounds like a no. You know, whenever, whenever something's too good to be true, I had to go investigate.
00;11;10;23 - 00;11;39;15
Unknown
So I investigated and Claude, I said, Claude, this is what this guy's claiming. He's like, this is bullshit. Like Claude, like this is totally a lie. This is not real. So I was like, well, I love what he's doing. So I'm going to build in Claude a lab, a trading lab, and the labs going to research all these different trading strategies and figure out figure out what's the best trades to make with a risk adjusted return.
00;11;39;17 - 00;12;07;20
Unknown
And it's quite it's using quant quant math. And and I had it. I've said in all the data from the Renaissance etc.. Well it picked one yesterday and this is super interesting sports long shots were underpriced not overpriced. The the thesis is fans overpay for unlikely sports lens on poorly market. So we should say them effectively. That did not happen.
00;12;07;23 - 00;12;36;03
Unknown
The data said the opposite. Cheap long shot contracts tended to win more often than their entry price implied. The market was not charging too much for them. If anything, it was charging too little. Long shots resolved above implied mid by a gap of 8%. So basically on average, actual outcomes were 17% points higher than that implied probability. I was like, damn, that's a fun little insight.
00;12;36;05 - 00;13;04;20
Unknown
So that is really cool. And when I was in business school, we actually got all the data for Vegas and the point spread, and we had all the NFL games for like 25 years. And theoretically, if you added up all the point differentials across all the games, it should equal the spread. Right? And if it didn't, if it didn't, that meant that something was mispriced.
00;13;04;22 - 00;13;28;15
Unknown
We ran every single strategy. You could always bet on the home underdog bet on the Dallas Cowboys at 3 p.m. or, you know, whatever. We ran them. We ran them all. We found none were within the bid. Our spread of kind of the 10% vig on the loss. None of them except one. Do you know what that one strategy was?
00;13;28;18 - 00;14;04;26
Unknown
Barry Sanders, on a Thanksgiving knife? No. But that probably would have made money doing that. We didn't test that one. There was a slight bias and very slight meaning. Just statistically significant, but not by much in favor of Southern California teams. And the theory we had is because we got our data from Vegas. LA is a three hour car drive away, so people would drive to Vegas to place their bets for the weekend.
00;14;04;29 - 00;14;35;10
Unknown
And so they were favoring the LA teams. So they over bet LA and that that was that was the one thing we found 30 years ago and in, in business school. That's awesome. Chuck, I'm going to run that through my lab. So where we go, okay, based on the day, well, theoretically, now you have a net, you got a national market, so maybe you shouldn't see that bias, but I saw on the news this morning that they're trying to lock Poly Market down a sports betting.
00;14;35;12 - 00;15;02;03
Unknown
These predictive markets. Because my stepson is starting a new role at one of the largest sports betting and predictive markets. But but but Congress is starting to talk about like an end around the sports betting. I'm like, well, you know, I don't I hopefully they don't they don't fact I think everybody should be legal. Right. Chuck your libertarian I mean, let people decide what they want to do.
00;15;02;03 - 00;15;30;20
Unknown
So keep it voluntary exchanges. So, you know, the only thing I can think of more electric than that is Ercot. Mark, what's happening at Ercot? Great transition chart. That was absolutely brilliant. So I, I picked up a piece that talks about, you know, how big is Ercot interconnection to today. Well, it's up 25 to 27 times over what it was just a mere four years ago.
00;15;30;20 - 00;16;29;01
Unknown
It currently stands at 410GW. Okay, that sounds like a lot because it is, but it's all kind of dreams and heads and somewhat on paper, 87% of that 410 gigawatt is drum roll data center related. But what's looming is the implementation, Senate Bill six and what's called the July gating mechanism. And really what that means is you gotta have your shit together as a sponsor, not only in terms of all of the technical detail and the modeling to include things like harmonics, load profile, etc. you got to prove through title, deed, committed lease agreement, whatever that you've got the site locked up for at least five years past peak demand, whatever that is
00;16;29;01 - 00;17;10;28
Unknown
at that site, that 410GW. Just as a reference point, Texas Ercot has seen a peak, a contemporary peak of like 80, 86GW. I forget what the sum total is of generation if you add up all the monthly available capacity, but it's, you know, it's in 140 to 150 range. We're talking about kind of a massive dream, backlog interconnect erstwhile project sponsors that are responding to what they see as, you know, step change type growth and demand.
00;17;11;00 - 00;17;40;07
Unknown
But really, what this means is if you don't meet the gating requirements middle of July, which is barely a month and a half away, you're going to get dropped out of the queue. Not not not not to be certain on when the next kind of next batch, as they call them by zero Mark real quick, just to interject here for a little bit of level setting.
00;17;40;09 - 00;18;11;08
Unknown
Ercot was unique in its approach to new generation, being added historically. The big picture was you can add generation anywhere you want. We have the right to turn you off. Contrast that with other, Ferc regions where you would do a study. Is demand necessary here? And kind of the top down approach to adding, power generation to the grid.
00;18;11;10 - 00;18;32;21
Unknown
And so this does feel like a baby step or maybe even bigger than baby steps, more towards central planning of the grid. So we're not going to we're not going to tell you you can't lock down your site. But boy, you better have your ducks in a row. Yeah. We're not we're not gonna let you just cowboy it up.
00;18;32;27 - 00;19;01;04
Unknown
And of that 410, 302 of that 410 fall into what Ercot Co calls the no studies submitted category, well, if you don't have your studies submitted by now, you better hurry up by July 15th. And there there are a lot of technical and regulatory hurdles that you've got to get over and demonstrate within all of that paperwork submission.
00;19;01;06 - 00;19;30;03
Unknown
And so, you know, can't build it. Then. Can't power it, I guess. So I think this is, you know, just a symptom or maybe an aggravating factor of what we talked about last week. Kirk, which is, you know, we talked a little bit about, Microsoft canceling cloud licenses and Uber spending its entire AI budget and four months, for this year.
00;19;30;06 - 00;19;57;06
Unknown
The you know what? What's the resolution? This is interesting because we're talking about the mission and you just talked about were 300. How many was it 302GW or submissions from basically somebody typing into a form and not submitting with a study. So there was a been a bunch of applications that really had no substance behind it, or at least they didn't file for substance.
00;19;57;06 - 00;20;29;08
Unknown
And Ercot is saying we need to see it all your engineering plans, etc. by July 15th. So you're out. I went back and looked and what I found is the approval rate tells the whole story. Over the trailing 12 months ending in March 2026, Ercot added 144GW of new large load interconnection requests over the same 12 months. Ercot formally approved 2.2GW to energize that is 1.5% approval rate.
00;20;29;11 - 00;21;01;06
Unknown
So the queue growth is 65 times ahead of approvals, so Ercot can't process them fast enough. They're not processing fast enough. So that's a huge bottleneck. But there is a workaround. Probably the most important factor or requirement that I failed to mention is you now have to post $50,000 per megawatt in financial security. And if you withdraw the project, they keep 40,000 of that 50,000.
00;21;01;08 - 00;21;30;25
Unknown
So you'll lose 80% of your financial security deposit. And you know, when you start talking about several hundred megawatts to gigawatt plus, that's that's kind of a real gut check decision point. I mean, if you need an interconnection or you're you're screwed because Ercot can't process fast enough. So there's a major grid problem if you're a data center in Texas, but there is a workaround.
00;21;30;28 - 00;22;04;19
Unknown
So the fascinating side note here, specific energy's GW Ranch and Pecos County, they have 7650MW of gas fired generation permitted by someone. I've had a fight with the Texas Commission on Environmental Quality, the TCE. Q the largest single power generation air permit ever issued in the US. It sits entirely outside of Ercot reach because it does not require an Ercot interconnection at all.
00;22;04;21 - 00;22;29;10
Unknown
It's a direct service industrial load set up. So they're going straight to the data center, which is a way to bypass this whole issue. And we've been saying on here for years that you're going to build it off grid. I am hedging that just a little bit because I've spent some time with some IP guys and all this.
00;22;29;13 - 00;22;54;19
Unknown
It's freaking really hard to build off the grid because you're in effect, building a utility, and you got moving equipment and you got to balance load and all all that. I, I think I romanticized in my mind that you could literally go get, you know, a power genset, hook it up and boom, you're, you're running computers on it.
00;22;54;22 - 00;23;27;08
Unknown
It's a lot harder than that. But generally speaking, in the world, when things are hard, engineering wise, we usually get them done. But I'm hedging a little bit. You have things to contend with in West Texas, like elevation and obviously ambient temperature, particularly in the summertime, and the fact that we've never seen this kind of variable load that really has direct collateral impact on what kind of generation machinery you choose as well.
00;23;27;08 - 00;23;58;23
Unknown
Right? I mean, if you're dropping 30 to 50% of a load in milliseconds, how do you how do you balance that? Well, you know, batteries, capacitors, flywheels, all those things. But your point is it's a lot more technically complex because of that. I think largely because of that factor. It's it's not an easy thing to to deliver continuous clean power that these high performance computing sites require.
00;23;58;25 - 00;24;33;23
Unknown
You know, by the way, if you're having to modulate your gas usage, then how do you do that on on some kind of interruptible basis with whoever is supplying the gas? So there's all kinds of technical, operational and kind of risk management choreography that has to go into this. It's not unless you, you know, can burn field gas and you have all the capacitor and transformer capability, you know, can you just go out and hook up to, you know, to a field gas offtake point?
00;24;33;25 - 00;24;55;17
Unknown
So there's, there's a lot that goes into it. And I think you're wise to kind of moderate your, your position, Chuck. That being said, if there were any group of cowboys out there that could go figure it out, it's the oil and gas business because we're we're crazy enough to do it. We've got enough geeky engineers that ultimately understand it.
00;24;55;19 - 00;25;22;28
Unknown
And there's gold on them. There are hills right there. And that usually what, drives us. So. Hey, and I and I'm sitting here having to wear earplugs at night and keep the air conditioner turned down because of all the heat and the buzz that's being generated by Colossus. One in Colossians two, which is about a sand wedge away from where I sit there, get it done at scale, burning a lot of gas, never mind the permits, right.
00;25;23;00 - 00;25;52;22
Unknown
But it can be done. Combination of off grid. You know, the utility around here has been accommodated, Colossus one on throwbacks, and they're taking the full 220,000, GPU capacity in Colossus one. And meanwhile, x I is coming down at Colossus two on I think we mentioned last week as well, 46, temporary turbines down across the border in Mississippi so it can be done.
00;25;52;25 - 00;26;27;18
Unknown
And there's not an MP involved in this. I mean, you've got tech entrepreneur Elon, and you've got West Texas wildcatters. I think they're kind of cut from the same cloth. But we're moving on to one of my favorite stories. Mark, BP has done it again. Again. And industry not exactly famous for corporate stability. BP has somehow made the rest of the oil past look like a well governed Swiss bank.
00;26;27;21 - 00;26;55;05
Unknown
I'm talking about West Texas independence run like a Swiss bank, the company that's fired its CEO for lying about personal relationships. The company that has spent years trying to become a renewables company Beyond Petroleum, and then pivoted back to oil. The company that somehow managed to have the worst stock performance of any super major for six consecutive years.
00;26;55;08 - 00;27;26;17
Unknown
That company has now fired its chairman after eight months. This is so good. This is so good. I and Chuck go ahead and tell us everyone you know at BP. I know if you die, it goes without saying, goes without saying, but what does ATF guys what is going on? Well, a little background on manifold. He was a CEO, an Irish construction materials conglomerate.
00;27;26;17 - 00;27;50;09
Unknown
I don't know if it's a conglomerate, but CHF was the name is the name of the company. He led a pretty significant transformation there. One of the things that he did was release the company in the US. Something we've been talking about. Maybe the Euro majors are moving closer to. But what happened here? You know, Elliott came in.
00;27;50;09 - 00;28;17;29
Unknown
It's got a 5% stake in the company. It ultimately I think certainly was the catalyst or one of the catalysts for auction class, being being forced to to leave the company or at least leave the CEO seat just a few months ago. And then they appointed Meg O'Neill, who has taken over since April. Manifold was essentially cracking the whip between kind of Mark and force and O'Neill.
00;28;17;29 - 00;28;45;06
Unknown
And I think wanting much more urgent and or aggressive responses. Now it's it's it's heartening to see that the new CEO is come, come back with the brilliant reshaping of BP's model and to two simplified functions defined as upstream and downstream. I know nothing. I mean, I originally saw the headline and I was like, good grief, BP, what scandal is that?
00;28;45;09 - 00;29;11;22
Unknown
I've been watching Twitter or X on all this. I haven't seen anything other than manifold supposedly wanting to cut costs, etc. and he was getting pushback. I do like his response. And I'm going to quote I sought to accelerate cost reductions, simplify the portfolio, strengthen the balance sheet where I saw unnecessary or excessive expenditure. I called it out.
00;29;11;25 - 00;29;57;21
Unknown
I had no interest in having a dedicated, chauffeur driven limousine at my beck and call on all occasions, like when I was in London. I, like most people, walked, took taxis, trains. I had no interest in taking private aviation, nor in availing myself of corporate tickets for sporting events. So there you go. That's the response. They picked the stereotypical Notre Dame mascot of the Fighting Irish and and and and, you know, stepping on toes and pushing people hard, recognizing the urgency, you know, did did he reinforce the stereotype of the of the pugilistic Irishman and the proper Englishman couldn't take it?
00;29;57;23 - 00;30;23;07
Unknown
So for sources with knowledge of the matter told Reuters that manifold, it acted aggressively with different colleagues across the company. The board received a whistleblower report, which, by the way, I also received a whistleblower report against me at shell. And I'll we can dig into what that means. Anytime someone says, hey, wait a minute, there's bullshit happening in this corporate world.
00;30;23;09 - 00;30;58;02
Unknown
Guess what the guilty do they call whistleblower report on you? So. So let me translate the British corporate understatement here. He allegedly yelled at people, went around the board and mishandled sensitive information in Ireland. They call that a Tuesday. In West Texas we call it Wednesday. So yes, they, they, Yeah, all I can, all I can think of is the BP board dealing with this whistleblower thing and wondering what they should do.
00;30;58;02 - 00;31;31;20
Unknown
And I know the first take out, it was we're going to write him a strongly worded letter. Yeah. We I'm sure we've all encountered in some capacity working with or for more aggressive or activist oriented hedge funds. It's never not an uncomfortable exchange in terms of talking about really bluntly, the issues that need to be addressed. And so.
00;31;31;23 - 00;31;58;00
Unknown
Even even though I don't believe Elliott has commented on this ouster, which, by the way, took place with immediate effect in the official statement. That was just such a shock to the system, which is a little surprising given the, kind of dire straits that BP has found itself in over the last 5 to 10 years, at least on a relative performance basis.
00;31;58;00 - 00;32;28;25
Unknown
Although they they have had some, you know, resurgence on a relative basis again, throughout the midst of this, last few months. But, you know, the the initial reaction by the market was not favorable because the stock was down, I think about 10% intraday. After this news was announced. And, and while it's doing today. But, I mean, BP is less of an oil company at this point and more of an ongoing governance seminar with oil assets attached.
00;32;28;28 - 00;32;50;22
Unknown
I mean, I've seen what seen more stable leadership. You soccer organizations. And at some point you have to ask, is it the people or is it the building? I haven't seen the movies, but I just characterize this as a sequel to Mean Girls. And to think they used, they used to run an empire. What?
00;32;50;22 - 00;33;12;00
Unknown
Your safe harbor on BP, Chuck. Go ahead. Just give it, never, never interacted with somebody that used to work at BP. That I'm not just thoroughly impressed. Starting with Jane Stricker on down one of my best management teams, all ex BP. Amazing people. I have no idea how it becomes such a shit show when they all get together.
00;33;12;07 - 00;33;45;11
Unknown
Well, it sounds like the good people were the operators, man. Well, and maybe the good people all left because in fairness, I met them post BP. But, sounds like collide could help BP. Maybe serve they, sounds like, we should, talking about, Messrs. We should go to Iran. Yeah. The latest mouse was, you know, some ordnance exchange over the the wee hours, I guess I woke up to the news that, you know, we'd we'd struck some.
00;33;45;13 - 00;34;24;15
Unknown
We'd had some strikes near bond or a boss on on missile sites. The Iranians responded with some drone attacks, in the Strait of Hormuz and then lobbed a missile in it, toward the American base in Kuwait, which was intercepted. And, oh, the in the first in the first phase of the cease fire, one thing or maybe the first phase of the first extension, whatever you want to call it, I, I did chuckle at the notion that after one little skirmish, Rory Johnson said, doesn't seem very cease firing missiles in Kuwait, drones at the strait.
00;34;24;18 - 00;34;54;04
Unknown
I love it that they they basically call a cease fire, but continue to shoot at each other. It's brilliant. So the rhetoric over the holiday weekend was, you know, to the to the general news consumer or the general consumer of hydrocarbons, retail, gasoline, whatever it was pointed at, a feeling as if, you know, we're there there's there's a couple of final deal points.
00;34;54;07 - 00;35;18;19
Unknown
We're going back and forth. And here we are back to kind of tense exchanges. And, you know, there's bets on one side that say, you know, Trump is running out of time because the the midterms are hurtling towards us. The other is we're continuing to ramp up the economic squeeze. And there's ultimately going to be a capitulate, capitulation.
00;35;18;19 - 00;35;41;20
Unknown
But the one thing in my mind that Trump cannot walk back as an objective is the nuclear objective. And so, you know, continuing to to dig in around that, I think is is really the reality. And if that's not something that is cleanly on the table in an agreement, you know, I think this lasts for a while. Yeah.
00;35;41;20 - 00;36;13;05
Unknown
So the, the latest, you know, I've been sitting there scrolling X while we've been talking. Supposedly the latest is there is a memorandum of understanding that has been agreed to gives a 60 day window to, negotiate the, the nuclear material and how to get it out and all that stuff, which feels very much like animal House. We were engaged to be engaged.
00;36;13;07 - 00;36;45;17
Unknown
But I will say this, we've talked a lot of on BD about it. I do have a lot of confidence and, Secretary of State Rubio to get things done. And supposedly he has been put in charge of this over the last couple of weeks. And so I hope it doesn't go to this, but you're you're either going to see a deal and we move on or the Marines, the Navy Seals are going in and going to grab the, nuclear material.
00;36;45;19 - 00;37;12;02
Unknown
I mean, I think those those are your two outcomes. The initial draft of the MOU, which provides for a 60 day negotiation window, you know, does that 60 days give them more time to play hide the ball? What's the difference between the two stocks and what's referred to as nuclear dust or radioactive dust or whatever you call it, right.
00;37;12;04 - 00;37;40;07
Unknown
What have you heard this whole psyop angle, the Wuhan University study? Let's close with that. But, well, we got to go to the SPR mark, because we talked about this last week. Yeah. The SPR, you know, APIs were out yesterday, were a day later in the week. EIA should be out here in a little bit. But directionally those those two reports in terms of US inventories have been pretty consistently aligned.
00;37;40;07 - 00;38;15;09
Unknown
Magnitude on the line items is differed. But if you look at the API's we had another 2.9 million barrels of crude stocks drawn 9.1 million barrels out of the SPR. And the thing that was really interesting to me is that we drew Cushing almost 3 million barrels from call it 25 and changed. And if you think back to this whole heightened discussion of what are the operational minimums at Cushing, it's somewhere around 20 million barrels a day, which we haven't seen since 2014, 2015.
00;38;15;09 - 00;38;50;26
Unknown
So you get down to call it 22 and change after this, this most recent report, because it was 25 and change the week before. You have another draw of a couple of million barrels. You're you're getting close to there. And what's the issue is it's really the operational, aspect of the floating, tank, tank roofs. But also you're getting into problematic kind of tank bottoms from, you know, basic sediment and water and, and all of those issues that, that you have to deal with in storage.
00;38;50;26 - 00;39;32;26
Unknown
So we're pretty close to a contemporary historical low, on Cushing. And it does bear watching. I'm the strategic reserve is doing the work of actual supply, though, right. That's what we need to be watching. And week on week, well, the actual supplies pass in the Gulf, you know, waiting for a real ceasefire. We have to get all those loaded vessels out to their destinations and have empty vessel show up to start loading before we can start, you know, restoring production in, oh, by the way, the baked in demand over a longer period of time that is going to necessitate refilling those stocks that we've drawn down.
00;39;32;28 - 00;40;09;08
Unknown
You know, at the end of this, is it one and a half? Is it 2 billion barrels? It's a lot. And so there's a lot of of kind of of baked in demand related to stock refill. And I did see a piece right before we started that, not surprisingly, because having worked there many years ago, Pakistan is 90% dependent upon its LNG and oil supplies on, you know, straight traffic, straight import traffic.
00;40;09;10 - 00;40;36;07
Unknown
They have zero effectively zero strategic reserves in-country. And we saw this back in, you know, 2021, of 21 or 22 Ukraine. And the severe winter when they had they had bid for a number of spot LNG cargoes but got outbid by the Europeans. And the reason they haven't been able to put, strategic storage. Well, there's a lot of reasons for it.
00;40;36;08 - 00;41;10;00
Unknown
You know, they've they've got a lot of undeveloped gas in the country. I'm still convinced the reason they haven't been able to, To build storage over time and are now rethinking this is, you know, primarily related to the the lending terms they have with the IMF. And so a country that is fundamentally, I think, advantaged in resource potential has for decades under developed that resource.
00;41;10;03 - 00;41;30;26
Unknown
It is the fifth most populous country on the face of the planet, behind China, India, the US and Indonesia. And it's growing pretty rapidly. You'd think the Indians would know that that weak spot. Well, they had a gas field that was a world class gas field was discovered in the 50s called Sui gas field. It's up in Baluchistan.
00;41;30;29 - 00;42;05;18
Unknown
It was actually discovered and drilled on the surface feature an anticline and produced as much I think is as late as the the late 80s to early 90s, it provided 56% of the country's gas supply, and it's now down to single digits and producing far less than BCF a day. I think they have just under a TCF left, apparently, but there's been no capital and no incentive to go in and and develop those those, indigenous resources.
00;42;05;20 - 00;42;52;05
Unknown
The crazy thing for me sitting here is literally in six years, so six years ago and change, maybe a month, six years and a month, you literally had to pay somebody at Cushing to take your barrel of oil. I mean, look at where we've come. And just six years and that's just it's stunning for, for for non oil and gas people out there to literally go from having to pay to take this barrel of oil to, we have now taken out so much that the system may collapse on itself is just stunning.
00;42;52;05 - 00;43;18;00
Unknown
Unbelievable. But the one thing I will say is the world will not will not spin into chaos over oil because of the resiliency of the oil and gas folks. And we will go pump more oil because we always do it. We will figure out how to solve this. I have a lot of confidence in that. I'm here on the patriotic music rolling right now.
00;43;18;02 - 00;43;44;05
Unknown
I see Bruce Willis go into the comment, you know, send in the oil and gas guys to save the world. They, you know, it might be, it might be, time for the, I forgot who did it. Was it Brad Olsen? I think Brad Olsen on the energy policy draft, said the US government ought to just loan 100% of the CapEx of drilling each.
00;43;44;05 - 00;44;09;26
Unknown
Well, at 2%. Just give it to the industry and let it go. And meanwhile, still have the ITC deduction. Exactly. Once in a blue moon, I, I still get in my inbox, the, the free Bloomberg kind of sector notes. And to always want more you've got to hit read more. And then it you know pops up a subscription blocker which I don't do.
00;44;09;26 - 00;45;03;03
Unknown
But this one is related to really the pollution that was caused by you guys. Remember the the strikes near Tehran? Tehran. I think there were Israeli strikes on the oil terminals mainly generated some spectacular video. Mushroom clouds, lots of fireballs and flames. Well, apparently there's recent research that has been published, which this Bloomberg Green newsletter, was about that quantifies the sulfur dioxide threat that resulted from that based on satellite imaging, a couple of satellites, they detected a plume that was over 300,000km², which is larger than Italy.
00;45;03;05 - 00;45;25;22
Unknown
And sulfur dioxide, as you guys know, is kind of a natural part of a volcanic eruption. It it is an irritant, to respiratory systems of humans and others. But I found the most interesting piece of this down in the article is that the research was published out of Wuhan University.
00;45;25;25 - 00;45;55;01
Unknown
In China is as maybe a subtle kind of, I don't know, science. Probably too strong of a word. But now, you know, we ran the risk or the the allies, if we can think about it that way, ran the risk of turning a supportive Iranian populace against us because, well, we've got a little temporary pollution thing to deal with because Israel struck some, some oil tanks, you know, significant but short lived types of effects.
00;45;55;01 - 00;46;29;08
Unknown
But first of all, why are the Chinese any Chinese academic publishing research on somebody else's pollution problem when they are by far the largest emitter of greenhouse gases in the world, primarily due to their kind of voracious coal appetite. I mean, by a factor of roughly two to the United States and it's well documented. The country blanketed Southeast Asia in industrial sulfur dioxide every winter.
00;46;29;10 - 00;47;00;08
Unknown
And these are the same people that published a paper about American air strikes creating sulfur dioxide plume over Iran. The audacity. Unbelievable. It's so good. Not to mention the fact that it was from Wuhan. Well, and we've been talking, you know, just in the culture that, you know, cancel culture is dead, nobody cares anymore. And a lot of credit is given to Donald Trump on that of defeating it.
00;47;00;11 - 00;47;29;00
Unknown
I actually think a lot of the credit on getting rid of cancel culture should go to John Stuart. When he went on Stephen Colbert and actually said that Wuhan leaked the virus because it's in the name of the lab that I think went a long way to ending the hypocrisy of cancel culture. When one of the liberals stood up and said, that's freaking stupid.
00;47;29;06 - 00;47;55;10
Unknown
Have you seen his numbers relative to Trevor Noah? No. Oh, they're multiples. Now that Stewart's back, he's doing much better. I, I've always said, like, I think Stewart and I don't agree on politics, but I think he's pretty intellectually honest, about things. And I've always been a fan. He makes me laugh. I'll tell you who is intellectually honest and fun to watch is Spencer Pratt.
00;47;55;13 - 00;48;13;14
Unknown
Yeah. Spencer Pratt's been great. I mean, he's he's just crushing it. I hope he wins there. That's awesome. Oh, boy. Good seeing you. I'm going to go try to, sell some software later.