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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;02 - 00;00;22;28
Unknown
All right, Mark, kick us off. What's going on with Iran and Trump and the war president went over to the NATO summit in Turkey this past week. I think he got back in the wee hours this morning. Wait, are you talking about turkey, a turkey? All the new pronunciations. Kiev. Not Kiev.
00;00;23;00 - 00;00;56;18
Unknown
And, you know, there there was more skirmish level activity, but there were some strikes on, ships in the strait from Iran. So we retaliated with. Yeah, as they, as the, as they've been talking, you know, kind of 20 times a year, one. And basically the Iranians that were part of the, you know, the negotiation delegation that ultimately resulted in the MOU and the cease fire are now very bad people.
00;00;56;20 - 00;01;28;08
Unknown
They're scum. They're. And so, I think we hit over 90 targets last night. You know, missile batteries and, and, ordnance depots, things like that. So, you know, crudes, crudes. I don't know if 67 to call it 73 issues a surge, but that's the way it's been characterized. And, you know, we're kind of back in this, you know, we hit them.
00;01;28;10 - 00;01;49;06
Unknown
And I think you said on the plane last night on the way back, the Iranians called immediately. They want to they want to talk. We're where have we heard this before? You know, what's wild is I've never thought I would say this, but I'll go ahead and say it. The voice of reason on this whole war situation has been Hunter Biden.
00;01;49;06 - 00;02;20;13
Unknown
I mean, and he's done it with appropriate level snark on this. He, he nominated President Trump for the Nobel Peace Prize for having solve this war 38 times and he would he would drew the nomination Tuesday morning, given that the war wasn't over. So they, I, you know, big picture thoughts on this. We truly had to do something to the conventional forces that Iran had built.
00;02;20;13 - 00;02;47;18
Unknown
The Navy, the missile defense and all that, because that truly is the shield you could build the nuclear bomb behind. So we had to decimate that. You don't want to have a land war in Iran. I mean, that's the last thing anybody wants. But to the extent we had to, we would go in there much easier today versus, you know, pre-war time.
00;02;47;18 - 00;03;16;05
Unknown
So I do think we had, we had to do what we've had to do because you cannot have a North Korea situation where Iran has a bomb because the Kim Young, you, old family. Yeah. They enjoy the attention. Would they ever shoot it off? Maybe. But the Iranians would. I mean, Israel would get hit if they could get the missile technology to the point, Europe would would get hit.
00;03;16;05 - 00;03;39;04
Unknown
So I do think we had to take steps that, that, that we took. But, you know, unfortunately, like with most things war, there's, there's just not a lot of good that comes out of it. It's more necessary evil type stuff. But, Chuck, why are we the one? I mean, just playing devil's advocate for a second. Why is anyone else saying this?
00;03;39;06 - 00;03;57;22
Unknown
Why are we the ones are like, oh, we have to do something. Same thing could have been said about the Nazis in World War Two. Hey, that's Europe's problem. You know, at the end of the day, we are the big dog. We don't do kind of. I think de you mean that's not a fair comparison, but I'll give it to you.
00;03;57;24 - 00;04;22;19
Unknown
Well, I mean, a a a nuclear bomb going off in the Middle East could rival, destruction that the Nazis did. I mean, particularly if multiple of them went off. So, I, I grant you, it was a bit of a stretch on the analogy. We're just the big dog. We're the world power. China's not going to do anything about it.
00;04;22;19 - 00;04;43;08
Unknown
Russia's not going to do anything about it. If we don't step up and take care of problems like this, the world's going to be a worse place. But it is unfair. I mean, people should, should get off the sidelines and quit just sniping at us for doing this stuff and either say thank, say thank you or help.
00;04;43;10 - 00;05;30;04
Unknown
It does feel like that. The narrative that was dominant at the outset, you know, being an explicit movement, mentions of a partnership with Israel, a coalition, you hear less of that today. And that may be a subtle difference, but, you know, I do think that, you know, one of the complications here and there was this, you know, breaking news on on I think I read it on Fox, his website this morning about, you know, the all the, negotiation that's taken place might reflect one faction of the Iranian leaders and decision makers.
00;05;30;06 - 00;05;57;25
Unknown
When we've been talking about the fact that the IRGC has got 31 autonomous units or cells, and so does anyone really surprised by this? And how much, how much of this is independent actors deciding where we're going to go strafe a couple of ships in the strait because we don't like what, you know, what was agreed to.
00;05;57;28 - 00;06;30;03
Unknown
And, you know, coming on the heels of the ayatollahs funeral, I think, you know, it's just a reassertion of of that reality of what we're dealing with in terms of who's the target, who's the enemy. The other crazy thing is, and it sort of first crept into warfare, during the Vietnam War, that you, in effect, had kind of independent actors, snipers, asymmetric, warfare.
00;06;30;03 - 00;06;59;05
Unknown
But, you know, drones are just hard, to do anything against because literally one man, one woman sitting there with 25 drones on, sitting on a shore can potentially wreak some havoc there where, you know, it's not like old school Geneva Convention war where you wear uniform, will wear uniform. And we know we wear each other arm. We can shoot at each other.
00;06;59;07 - 00;07;28;24
Unknown
What do you think? When Trump publicly mused about taking over our island like this was, did you notice this? And, what's interesting is Brant jumped 5%. But when the the United States casually discusses seizing a sovereign nations primary oil export terminal, which is what what is it? 90% of their oil comes out of that one island.
00;07;28;27 - 00;07;57;00
Unknown
At a NATO press conference, and the market only moves 5%. It's interesting how desensitized we've all become. Basically, that is the greatest tribute to shale oil in the United States. The the mark. The market's saying, hey, don't worry about it. We got this. I was trying to think of something snarky to say, and I want to be careful about this because war is a tragedy.
00;07;57;00 - 00;08;21;07
Unknown
And there 91 million people in Iran that that unfortunately, are going to suffer because of this. And we're going to have, have, troops that, unfortunately, will make the ultimate sacrifice. But the snarky line I did have is this is the first war in history where the oil traders got bored before the generals did. Well said, well said.
00;08;21;08 - 00;08;48;09
Unknown
But now, Chuck to on that note, you mentioned World War Two. So let's go back. Have y'all do y'all remember the movie Saving Private Ryan? Yeah. Oh, absolutely. Do you remember the German interpreter? Remember they let a German go. They took over this crow's nest. Some some, on the way to find Private Ryan. And they let that one German guy go.
00;08;48;11 - 00;09;18;07
Unknown
Q fast forward to the end of the movie. That German guy is basically killed the captain. He's killing everybody. And that German interpreter watched as that one German guy killed most of his true most of his crew. Do you remember that the weak German interpreter. Did he not look exactly like Christian Pulisic of the U.S. men's national soccer team?
00;09;18;10 - 00;09;45;02
Unknown
I I'm like, now I've seen I've seen that guy before. We found him. But I'm throwing shade at Pulisic. He deserves it. But I just had to throw in a a World Cup. I mention here because Chuck mentioned World War two. I thought of Saving Private Ryan when I watched it all comes together. I had no idea where you were going with that, but I'm glad I was in for it.
00;09;45;09 - 00;10;09;00
Unknown
That's the new Kevin Bacon having. Yeah, exactly. We just. We did it here. So the greatest thing was, was still the, the fake meme from, Trump going, all right, now we can go back to calling soccer lame again. Kirk's been all over it this past week. It's been fun to read and fun to watch. One other thing.
00;10;09;00 - 00;10;38;27
Unknown
And then, then we'll, we'll jump to the other war. But, I saw Art Berman tweeted out today that we're 19 million barrels away from bottom of the tank at the SPR. So kind of kind of overlay that and how oil's at $74 or wherever we are right now is pretty amazing. Yeah. And have your boss put out something comparing the, the Biden versus Trump SPR.
00;10;38;27 - 00;11;02;02
Unknown
I think we're at 172 million barrels in the draw over the period since we started the the emergency withdrawals, that is on the order of 1.4 million barrels a day, less severe of a pull than during the Biden kind of ATM days. The election days. And I mean, that's a dynamic that's at play in both of these right now.
00;11;02;02 - 00;11;29;00
Unknown
So don't kid yourself. And he talked about, you know, during the the Biden era poll, we damaged two of the the salt caverns. And we're pulling harder now. What's the consequence of that going to be and will the rate be slower? These are salt caverns. I don't know how much potential there is to go in and create some more, but in these salt domes, you can't do that.
00;11;29;00 - 00;12;00;13
Unknown
It's just what do you do with the the the heavy brine as you as you create more storage space? And I, I don't know what the capacity is to do that, but what's been really entertaining to watch you, you talk about the traders getting bored the the the supply get oil bearish side of Twitter versus the you know the physicals are in dire straits and it's eventually going to hit, you know like terminal velocity into a brick wall.
00;12;00;15 - 00;12;25;02
Unknown
You know that that back and forth has been been really entertaining to watch. But Chuck, you mentioned that meanwhile in the other war, Russia yesterday announced that they were extending their export, bans to diesel. And if you look at what has happened, the crack spreads, they they've been mostly vertical here in the last little while. They went absolutely screaming vertical.
00;12;25;02 - 00;12;59;07
Unknown
Yesterday we had a, the settle on, Gulf Coast 3 to 1 of, I think, $62.18 for something that in on in a normalized level is about a third of that trades around 20. You know, that, oscillations and excursions above and below. But, you know, we are we are talking about something that I think is pretty striking evidence of the magnitude of damage that Ukraine has done to the Russian refining complex with its drones, primarily.
00;12;59;09 - 00;13;33;08
Unknown
I don't think Russia really thought Ukraine was going to put up as big a fight as they have. And the problem is, you just don't seem to have a way for Putin to save face here. So I don't even know what the Exxon is on on all of this. I mean, Zelenskyy probably justifiable, is encouraged to continue to fight because he's at least, you know, he's Rocky Balboa up against the Apollo Creed and he's he's going the 15 rounds.
00;13;33;11 - 00;14;11;07
Unknown
But I don't know how you get this. This to stop the ban is in effect until at least through the end of July. I didn't know this, but Russia accounts for 11% of global waterborne diesel, which in normal times maybe doesn't sound like it's as much, but it's a lot. And if you look at at least the US snapshot of the big four of inventories, and we'll post something that by some put out yesterday, you know, it's the the standard chart of the of the time series of where inventories have been.
00;14;11;07 - 00;14;44;04
Unknown
We're in the midst of the peak of summer driving season. And you've got a line, for the big four driven primarily by products that is just screaming down, we have the Spro refill. Eventually we've got restocking of commercial inventories, and then we have China, who has been, you know, modulating its demand to the tune of all of a sudden, you know, 5 million barrels a day, export number went away in the midst of this.
00;14;44;04 - 00;15;25;08
Unknown
And they they clearly are drawing down on their own domestic stocks as well, which, Chuck, you've mentioned that I don't know if they were prescient or just lucky, to go through the massive stock build that they did preceding the war. But at some point, the, particularly on the it in my mind, it's, it's kind of it's, it's products stupid and when we look at what's going on with diesel, that just has a kind of resilient impact on a lot of things in the economy and in the market and the implication for consumers.
00;15;25;08 - 00;15;51;07
Unknown
We're sitting here caterwauling about, you know, US gasoline prices not coming, coming down fast enough with this, this recent air pocket and crude. But if you look at that, really the the propagating economic impact of, skyrocketing diesel prices, I think that's, you know, that's something we hope gets alleviated pretty quickly. I, I just don't know how it happens.
00;15;51;10 - 00;16;28;10
Unknown
What's super interesting to me is that the world's second largest oil producer can't refine enough of its own crude to keep gas stations open. Yeah, it sounds like they have 1973 lines and and and Moscow. So, again, you know, human tragedy through the roof on this war or something that never should have happened. But thinking about the, the snarky line, to say with with that as a intro, it's kind of like Whataburger running out of beef, right?
00;16;28;12 - 00;16;58;00
Unknown
Yeah. Diesel does a lot of work in the global economy. If you look at the data and I haven't crunched it in a long time, oil, really, as the driver of inflation has significantly reduced from like the 1980s. Right? I mean, if you just just looked at it and that's a lot because cars became more efficient, transportation became more efficient kind of, etc..
00;16;58;00 - 00;17;24;29
Unknown
But it's going to be something to watch with all of these dynamics happening and getting a better sense of where the world stands, what what part of oil and the refined products contribute to inflation. Because at the end of the day, inflation and cost of living is the number one issue in the United States. It's going to drive the midterm elections.
00;17;24;29 - 00;17;49;14
Unknown
It's going to drive the next presidential, elections. And so I think I think this is this bears watching really closely and studying a lot of data on to just figure out how sensitive we truly are to, to refined products. Well, if you're thinking about diesel just from an egg standpoint, it's, it's absolutely primary, both farming and ranching.
00;17;49;16 - 00;18;12;06
Unknown
And it shows up in your in your produce and your meat because it is such a significant part of the, the, the cost structure. I mean, I was just thinking about this, when we were, I was sort of reading the run a show. Mark Russia. And I was doing a little bit of homework. Russia accounts for 11% of global waterborne diesel exports.
00;18;12;09 - 00;18;43;02
Unknown
That's gone zero. So bad. Until what? After July 31st and probably longer, given the scope of the refinery damage there. Seaborne diesel. How long does it take to, repair and restart a drone damaged roof? Russian refinery? You just throw. I mean, just send a few contractors and a big deal there. Seaborne diesel exports already collapsed 39% month over month in June before the ban.
00;18;43;04 - 00;19;25;25
Unknown
Now layer this on top of Hormuz. You've got Iranian crude off line, Russian diesel off line, Qatari LNG disrupted and Israeli gas shut in. So we're not looking at one supply disruption we're looking at for simultaneous disruptions across three continents, which is unprecedented. By the way, the 1973 embargo was one product, one region. This is crude diesel, LNG, natural gas across the Middle East, eastern Europe and the Mediterranean.
00;19;25;27 - 00;19;51;23
Unknown
So our global energy system has never experienced this level of synchronized stressed. So it'll be super interesting to see what happens. Now as as Chuck said, we have West Texas. Maybe they can come to the rescue for United States. But that's what's so interesting about what we're seeing. So I think you're right on about prices and the impacts.
00;19;51;26 - 00;20;25;11
Unknown
And let's put this layer on top of this kind of the lens to look through what you just said. All of this havoc is basically being, bought, brought to you by weapons that cost less than a Ford F 250 or 150. And, can be directed by a single person and can literally fly, you know, a thousand miles in and hit a refinery and then get out.
00;20;25;11 - 00;21;00;12
Unknown
So, I mean, in terms of all of this destruction and imbalance of the market and it it's all being driven by stuff we could do in a warehouse with a soldering iron. Yep. I just had a vision of I'm sure you've all seen the shingles bit where he talks about the US going up against what he calls the monkey bars guys, and when they, you know, randomly have success firing a shoulder mounted missile and doing some damage, they all, you know, go crazy and start dancing around.
00;21;00;14 - 00;21;20;22
Unknown
But that's yeah. You know anybody can do it. And almost unlimited shots on goal two. And it's the whole George Bush line about terrorism. We've got to be right 100 out of 100 times. They just have to be right. One out of 100. Yep. You know so all right. Hey, Mark, I may steal your thunder here and take the next.
00;21;20;25 - 00;21;57;24
Unknown
Let's close it out here. And the run a show was constructed with that in mind. So far away. Okeydoke. So Palantir's CEO Alex Carr went on CNBC last week. And it's 20 minutes that everybody interested in AI ought to listen to. It's fascinating that and his basically basic take was ChatGPT and anthropic are the devil. These big, huge foundational models are basically just going to suck out all your data, steal all your alpha, from a company.
00;21;57;24 - 00;22;30;05
Unknown
And he gave examples of it's already happening. So there was a palantir, I mean, a anthropic employee on the board of Figma resigns three days later. You've got Claude Design, which competes against Figma. And now Figma. Stock's down 80%. You've got cursor basically helping people code. And all of a sudden you come out with clawed code. And cursor has rebounded nicely with Elon Musk.
00;22;30;05 - 00;22;56;08
Unknown
But at the same time in effect was the biggest customer of Claude and now is a direct competitor. And he walked it back through history. You know, Google started off with where search will send customers to your website. Now, less than 50% of Google searches leave Google properties. And so Google walks in and says, hey, you got a host on our system.
00;22;56;15 - 00;23;24;11
Unknown
And in effect, you know, asks for ransom on that and then go all the way back to Microsoft. They created the operating system and they partnered with word, WordStar, WordPerfect, Lotus one, two, three, nobody, nobody. Watching this podcast remembers any of that because now it's Microsoft Word, Microsoft Excel. And, so his take is you need me at Palantir, kind of the Jack Nicholson.
00;23;24;11 - 00;23;56;17
Unknown
You need me on that wall, you know, to defend you. And, anyway, it brought up, it brought up a couple of interesting points for, for me doing what we're doing. At collide, I do feel like the value to a client is at that application level that the, the foundational models are getting pretty commoditized. And so being able to create applications, knowledge graphs, context for your clients with their data is really important.
00;23;56;17 - 00;24;18;00
Unknown
So I think he's right about that. I also was talking to somebody in the know, basically a big wig consultant who said, yeah, all my clients are mad at anthropic and chat. GPT like Alex says, they're also pissed at Alex because he's tried to do nothing but for the last 2 or 3 years, steal all our data too.
00;24;18;00 - 00;24;59;00
Unknown
So anyway, it's it's it's interesting to, to watch how all of this is, going to shake out because at the end of the day, I really do think we're going to a wild world of stratification on models. So enterprises will literally have simple open source models trained for specific use cases within their organizations. Then the model size and capability will fit whatever project it's doing, and there will be certain type decisions that need to run through the most advanced foundational models.
00;24;59;00 - 00;25;25;29
Unknown
But, it's going to be interesting to watch how companies navigate this because, you know, you have an enterprise contract with one of the big foundational models and they say, hey, we do not store your data, we do not train with your data. But if I'm a big oil and gas company and one of my competitors started doing something that was secret sauce to me, I'd have to think about it and worry about it.
00;25;25;29 - 00;26;00;06
Unknown
Yeah. I mean, look, as far as big and industrial signals, I think it was almost simultaneous with the car. It's been characterizes everything from a rant to a diatribe to a manifesto or anything in between. But anthropic came out and said, we're going to embark on new drug discovery. What are the models and and the data required to do that, you know, is that is that a direct competitive threat to Pfizer at all?
00;26;00;09 - 00;26;26;17
Unknown
I don't know, how how did they arrive at that, at that as a kind of new business line for anthropic? Yeah. Dario's always been, kind of had a health care wanting to save the world from disease bent to him. So if you talk to anthropic, they'll say, look, we're building the greatest foundational model out there. We want you to use it.
00;26;26;17 - 00;27;10;08
Unknown
And we're, you know, guys like you, Clyde, you're a partner. Not. We're we're never going to be a competitor to you, except where we will mess around with. That is in health care just because of Dario's personal, personal interests there. But anyway, it's, it's going to be interesting to, to watch because on kind of the open model, front, Nvidia came out and said, hey, we've got, an open model, open source model here that our clients can use, and I think they're even giving it away for free if you're buying chips from them.
00;27;10;10 - 00;27;33;07
Unknown
And so and then, you know, the US is definitely behind China, when it comes to these open source models. But you grab the open source model from China, you put it on prem at your shop, you check it. Are there back doors out to China? Maybe. But you should be able to catch that in the code.
00;27;33;07 - 00;27;58;21
Unknown
So I don't know that I'm in the camp of banning the Chinese models, but anyway, it's something to something to think about and something to watch through all this because at the at the end of the day, you just gotta feel like token charges are going to go up because all these companies are losing a ton of money, and no entity is more famous for IP theft over decades than China.
00;27;58;23 - 00;28;28;08
Unknown
And so the safeguards that need in the guardrails that need to be built around that, I just think there's a lot of realization, realization of cynicism here on the part of business leaders who are now having to deal with the frustration of of paying more and more for tokens, for example. And we've seen high profile examples where people have shut shut down their use of foundational models.
00;28;28;10 - 00;28;55;15
Unknown
I'm the first person to throw a rocket China. But let's let's think about this for a second. Who is the best at IP theft? Well, Silicon Valley is notorious for this. Look at down. I mean, look at Emil. I mean, these guys were steal and IP left and right. Apple stole from Xerox. And then when windows stole from Apple, Bill gates, his line is, hey, you stole it first.
00;28;55;15 - 00;29;30;15
Unknown
We just stole it from you. Open AI. They are absolutely thieves and stealing their. That's what these open models are doing. So them competing is no different than what Amazon has been doing. Hey, we've built a store. You can sell your products on Amazon. Amazon gets the benefit of seeing what millions of people are searching for. Then Amazon goes and develops their own line of products and compete against their own customers, who have forced a lot of those customers out of business.
00;29;30;15 - 00;29;55;08
Unknown
So Amazon is guilty of doing this, but that's the whole problem. Everyone's on these platforms and they're getting all the data and they're competing against is like my CPA competing against me, saying that they're not going to use my tax returns, but they're using all of my secret data to compete. I think that's the concern. And it's Silicon Valley I'm looking at, not China.
00;29;55;10 - 00;30;21;15
Unknown
It's been going on in the oil field forever. I mean, you're drilling completion design and I get wheeled over to the to the next customer. Good point. Good point. The one bit of, thing I will add here for any kind of CEO or board member thinking about this, the data you have today, and I'll just talk about an oil and gas company because I'm familiar with that.
00;30;21;15 - 00;30;51;14
Unknown
What was the pressure in stage 57 of the frack? You know, how long did the the the frack go? That type data that you have today, it is really important. It's valuable. And being able to mine that data to figure things out is great. I truly believe the tribal knowledge that is in your employees heads. So you know the guy that can walk up to the machine, listen to it, and go, here's what's wrong with it.
00;30;51;16 - 00;31;30;00
Unknown
The way you operate a gas plant during cold weather or hot weather or whatever, the way you, you, you navigate drilling well, etc. all of that tribal knowledge that today walks out the door every day, every day at 5:00 and goes on vacation for two weeks capturing that data, making that data, part of your source of record, I think, is going to be worth 10 to 15 x the data you have today and so as I'm thinking through AI strategies, if I'm a CEO one, I'm figuring out how to capture all that data.
00;31;30;07 - 00;31;52;21
Unknown
And that's the data that I am like guarding with my life, because that's going to be the true game changer on all these things. What was your analogy for the an old Man coffee for the I guess what oil and gas data is? Oh, I was talking about we at at collide. We internally built what we call the deep brain.
00;31;52;21 - 00;32;28;05
Unknown
We connected all of our internal communication. We record every meeting we have around here, and we hooked up our git hub and git hubs, basically the record of every bit of software code we've ever written, every ticket we've opened on building stuff. And so what we've been able to do, just figuring out better ways of creating software for our clients, I could see the the, the analogy for me is hook up your well files so that use the agent to go figure out best practices, find correlations.
00;32;28;05 - 00;32;53;03
Unknown
You don't realize exist. And it's it's going to be a stunning game changer. Yeah I stole that from you Chuck. Thanks for sending I'm doing implementing that in my business. So I really appreciate that any time, boys, as always, good to, see you guys. I'm off to, go sell some software. Maybe, maybe next time we do this, I'll give you a big update on, how the house renovations going.
00;32;53;06 - 00;33;17;22
Unknown
Really think, special remote live video sometime in the September time frame. Is is a really good idea. They claim they're going to be ready, Labor Day, maybe. Maybe Halloween is my best guess. We'll see what happens, but we'll definitely do it from either the disco room that I'm building or the Van Halen wallpaper workout room.
00;33;17;22 - 00;33;32;16
Unknown
So it'll be the, three and one birthday celebration. I'm spending the night out. Yeah, exactly. We'll we'll, we'll definitely do a slumber party. All right. Great seeing you guys. Cheers. Over years.