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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.
0:00 Hey, collide. Welcome to BDE in the week that saw landman back on the air. And I have great anticipation about watching landman season two episode one. Chuck at all, landman pro bro crew recap.
0:23 And I will just say this about the episode. It was campier than I expected the deep dive that nobody ever saw the real, the real actual premiere episode of season two. So Boer actually made a
0:37 really good point is we can nitpick it. We can call it campy. We can disagree. We finally have a story where the oil guy's a hero. You know, let's who cares. Yeah. Yeah. Exactly. Who cares?
0:49 I think I told you before we got started my, my son who's recovering from UCL surgery here and beautiful near downtown Memphis, but. Um, we decided to, to binge, uh, land man starting over,
1:07 which is only one season, but, um, I figured to be better with his, uh, somewhat loopy, but he was asking some really good questions. You know, is that, is that really how things work? And I,
1:20 I was very consistent in my response. I said, I don't care. Yeah. You're, you're entertained. Well, you're interested Boer had another good thing because, I mean, in the Shell revolution, it
1:32 takes you. You know, from, from drilling a well to completing it to flow back, you know, best case 30 days before you truly know, yeah, if you have even an inkling of a good well or not, you
1:46 know, and land man, it happened in 30 seconds with the baby out on the site and, you know, Matt's whole take was we're not going to sit there for 30 days on a TV show. So we just condensed it to
1:58 30 seconds, but you know, it's great. I did tell him my tongue and cheek joke when in season one where they make the snap decision to work over the 35 year old well. And all of a sudden trucks are
2:10 rolling. They're out there. They're rigging up. You know, it takes a phone call. I said, my quip was I didn't know workovers were on DoorDash. Oh, that's awesome But when they when they
2:22 brought the well back on, you know, they immediately knew that it was 250 barrels a day. But again, we don't care. This is, this has got you captivated. Thank you.
2:37 So it's good, it's good stuff. So I don't actually know the full connection to this. I need to go research it. But I believe our buddy Greg Beard is now at the DOE in charge of making loans.
2:55 I think so. I was looking on LinkedIn and he had the press release of the story we're about to
3:05 tell. So I'll let you tell the story and I'll look, Greg, up on LinkedIn and give us the evidence. But it says, you know, Greg Beard, Department of Energy, loan programs office. Yeah. So he
3:20 took the seat that was previously held by Jiggersha.
3:26 Maybe, maybe so. Yeah. It caught my attention this morning because, you know, at the height of the last year's election and leading up to the inauguration and then in the immediate aftermath,
3:40 there was a lot of testimony to the effect that looked, they did a big jam job in the short time, you know, just shoving. LPO and other DOE grant dollars and we've been fairly critical of loan
3:58 programming. I think for the casual observer, the big kind of black eye for the LPO, which has been around since 2005, it was part of the Clean Energy Policy Act. So it's been around for 20 years
4:13 and it's not something that's seemingly arcane, but Cylindra, which was
4:19 the big flame out in the Obama administration, is the thing everyone points to. Right. And this current story, we've got news of the administration through the LPO, granting constellation of1
4:33 billion LPO loan to facilitate the refurbishment and restart of three-mile island unit one It was the undamaged three-mile island, it's called the crane energy complex now, and that reactor that is
4:52 going to, or the nuclear power station that's going to be dedicated to Microsoft, providing 880 megawatts of power to its compute, to run its compute in Pennsylvania. So, you know, this is
5:08 something that I think, I've been guilty of. Look, we're just throwing money willingly at just about everything seemingly alternative and venture without a lot of due diligence and underwriting,
5:25 which is probably not mostly fair. But, you know, this is one of the recent examples that, you know, we're getting about addressing what's really critical and catching up on electric, both
5:41 generation and transmission infrastructure and using, you know,
5:47 an advantage loan program to do those things So.
5:52 That follows, I don't recall it precisely when, but AEP got a16 billion loan from the LPO for transmission line upgrades, which I think all agree is critical. Yeah. And it should be one of the
6:09 priority focus areas as this, you know, this power demand growth resumes at a level we haven't seen in a couple of decades, if ever Yeah, I go back to my grumpy libertarian self of the government
6:22 shouldn't be doing any of this stuff. The market ought to ought to be doing it, but the, the one thing I've kind of talked myself into, maybe. So if I've had two glasses of wine, I'll kind of
6:38 say, okay, maybe, you know, maybe the government should fund what I'll just call wild ass, experimental technology stuff, maybe the market wouldn't invest dollars on it but just kind of the mad
6:54 scientist type just because somebody's got to do it and it seems like stuff always comes out of that. I can maybe live with a tiny bit of that but just in a world with trillion dollar deficits. I
7:08 don't know why we're doing this stuff. No offense to my friend Greg Beard because I'm sure he'll do a good job of it It's a better framework, I would argue, without being able to kind of tear up
7:23 the hugely complex and convoluted like RTO structures that we've built over the decades where you've got
7:36 varying stakeholders with varying priorities across multi-state regions and transmission is the big one There is a lot of
7:47 collateral benefit to the work that's going to be done and is being done at Three Mile Island. So that's a little bit, that one's a little bit of a different animal because it's being restarted for
7:58 a single customer. Yeah, I mean, I can get into maybe some national security type stuff, you know, okay, you know, we need to throw some money at the energy infrastructure here 'cause if not,
8:10 we won't have an AI data center here because of whatever. So yeah, you know, begrudgingly, I
8:17 could probably get talked into that sort of stuff, but I'll, as a non-elected official bloviating podcaster, I'll just say that I'll pontificate that this is all evil, but
8:33 I can kind of see if I were Troy Nells in Congress and had to vote for some stuff, I could probably make an exception here or there. Having flown a lot lately on kind of last minute things that I
8:46 have had more than one thought about. privatizing things like the FAA and TSA, right? So, but there are, there are these things, especially transmission that fall into that kind of gray area or
9:02 fuzzy area of public good, which I remember from my Chicago public economy class that there's always a scarcity and there's always a competing priority. So if there is some level of normalization as
9:18 it relates to financing, that the government has to be involved with because it is a public good. I would argue that transmission, especially as part of the electrical system, is a quasi-public
9:31 good, but there are so many conflicting and competing priorities and we can get into what happens in New England and Massachusetts wanting to put more renewables and because of the way the RTO set up,
9:44 then cost for transmission to support that renewables allocated, pro-routed to states
9:52 in that group that don't benefit from it. So politically, it's a really sticky wicket. And I hate to insinuate stuff without having any evidence, but okay, I'll go ahead and kind of do this.
10:08 How much did Microsoft give to
10:12 the East Wing Ballroom?
10:15 And I don't think for a second, Greg Beard would be part of anything like that. So I don't mean to insinuate that, Greg. But you just hate kind of the appearance of that sort of stuff. Yeah,
10:28 that in
10:31 frighteningly coincidental with Bill Gates's essay.
10:37 Correct So there's some non-monetary things, perhaps that you're moving into tin foil hat territory, The one thing I'll say that surprised me, again, because of preconceived notions or biases that
10:56 have historically, at least for me, been kind of anti-LPO, is that I didn't realize that the default rate was only 33 percent
11:08 over the course of the history of the LPO. And one of the shining examples of that is that Tesla took an LPO loan back in 2010 They paid it off by 2013. We could actually make the case there of new
11:24 technology, domestic manufacturer, etc, and talk ourselves into that. But I'm still kind of in the camp of, eh, we shouldn't be doing that stuff. So I haven't read the Domburg piece yet, but I
11:42 do like the fact that Sure. I, yeah, I've been selling software. Uh, the, we can tell by the colored shirt. Yeah. Exactly. Exactly. Um, I think Brian Sheffield, we, uh, we went and made
11:57 a pitch to sell some software to form in Tara and I walked into Brian's office afterwards and he goes, I honestly have never seen you in a colored shirt. I was like, well, fair enough. One that
12:10 has long sleeves and buttons all the way up there. Yeah. And not ripped. But, um, the, um, I do love the fact Fisher tropes technology is, uh, making a, making a comeback. So tell us what's
12:24 going on in China. Well, it's not, it's not really making a comeback as far as China is concerned. Although I think it's been off the radar because, you know, the, the cold of liquids that
12:37 we've attempted here in the US have shown to be, look, if you contemplate large commercial scale. because of things like the abundance of domestic natural gas and the fact that we've got other
12:53 competing technologies that offer a better
12:59 cost solution, at least as it comes to power generation. And I'm mainly speaking to the natural gas that comes off the coal to liquids are as part of the derivative of the process. But this Dünberg
13:16 piece, which is called closed loop, was out this morning and it really tackles two things. It tackles what they're doing in coal to liquids and also tackles this new or alternative nuclear
13:29 technology, which is
13:32 Thoram molten salt reactor So we'll talk about the coal to liquids part first and they're doing it at already at fairly large scale up in the northwestern kind of autonomous intermungolia region with
13:49 plans to essentially double
13:53 what they've got online from today by 2030. And that'll, you know, if the
14:02 projections are even calculable, then we're talking about pretty significant displacement of both oil and natural gas because of the supply that's added from coal to liquids. And, you know,
14:17 that's on the order of, I think, 19 BCF. a day and about 12 or 13 million barrels of oil per day, not trivial amounts when we think about, you know, LNG moving from here to there or imports of
14:33 crude oil and refined product to China So it also points out that, you know, they've got very stable. long-term political and policy decision-making standpoints or landscapes, which is purely a
14:49 function of their authoritarian system and way of life, and pointing everyone 14 billion people on the same direction. But
15:02 it points out that
15:06 China, I think, has had a long-term foundational or fundamental view is we're not going to do things that
15:16 make our energy security, our national security, more vulnerable by seeding control of critical supply chains. Even if the economics of natural gas or LNG import are better, significantly better,
15:32 than than coal to liquids. We have the indigenous resource that we can use. And, you know, it's not certainly a market based, from a market based standpoint, it's not a rational solution, but
15:48 that doesn't matter because they've got the resources and the wherewithal to make it happen at scale. And as you pointed out at the start of the segment, it is a technology that is literally over a
15:59 century old. And Germany used it to a significant degree in World War II. Yeah. I mean, the one time an oil embargo might have actually worked in the world was when we shut the Nazis off and they
16:16 used fisher tropes because they did have coal. Supposedly, their tanks didn't operate as well
16:28 as on stuff refined from oil. But at the end of the day, they did run, you know, they were able to do it. And
16:36 this is not just kind of the transportation of the. the motor fuels or the natural gas for power generation, this is precursors and petrochemical finished products like plastics. And so if I
16:51 control all that, it may be from an unconventional stream of feedstocks, then that means that I'm more insulated from the whims of supply chain disruption, embargo sanctions like that. And
17:08 certainly the most prominent example of that, which has probably accelerated some things in China is the trade war that's being waged since the start of the Trump administration. But I don't think
17:22 this is the catalyst for that. I think it's been going on just in their mindset in terms of how they think about energy security And we've seen it because, you know, their cold numbers keep going
17:33 up. They're going to do what's best.
17:39 principally for energy and national security and everything else that we've spent a lot of time distracted with in the West
17:51 has
17:54 made me think, what have we been doing over the last 40 or 50 years in seeding all this
18:00 as a
18:03 constitutional Republican and certainly a capitalist leaning civilization where all of a sudden we look up and a lot of the things we critically depend on for manufacturing and other things are now
18:18 and
18:20 the things that we need to make that stuff or if it's made somewhere else to have it within your boundaries I think in the extreme is a really that's a
18:36 real strength advantage from a national security And we've talked about it with AI and chips and everything else. And I think this is just an interesting kind of detour into something like coldle
18:48 liquids, who even talks about that anymore? Well, here we are, and they're doing it at scale. Yeah, no, I mean, I used to be the biggest free trader on the planet, and then you go through a
18:59 pandemic where you can't get toilet paper. And there's actually probably some of this stuff we need to be more thoughtful about And I'm planning about again, kind of libertarian in me hates the
19:14 brute force of the federal government, but the constitution should not be a death pact, you know? And so,
19:24 kind of thinking through things like, should we have a Fischer-Tropes plant somewhere that could operate in case of an embargo,
19:35 whatever, We probably ought to be more thoughtful. about that. I wish Trump were more surgical with his tariffs and actually had some reasoning behind kind of each one and all, but I've gone from
19:54 literally Milton Friedman level free trader to somewhere a little closer, but not quite there in terms of what I'll call very, very moderate protectionism. Speaking of tariffs, it's been fun to
20:13 watch the game of Twister, you and I are old enough to remember
20:19 the contortions that they've gone through from just a public relations and press conference standpoint, when the very straightforward and pointed questions are, okay, we're going to make exceptions
20:34 now, or we're going to exempt certain things in the in the category, things like coffee and beef where people are getting still beat up pretty hard on ultimate consumer pricing. But how does that
20:49 square with the thesis that the exporting countries pay the tariffs? Well, where I think the distinction lies and somebody in the Trump administration, I do think appreciates this and I wish they
21:06 would articulate it If I have a factory that has a lot of fixed costs to it, I built a factory that costs100 million and it costs me a million dollars a year to employ the people to actually build
21:23 the widgets. There are periods of time where I will run that factory making revenue of a million dollars a year. And so I think, you know, I think if that factory is running, at75 million a year
21:41 of revenue, and we throw a tariff on it, let's say we throw a 20 million to tariff on it, guess what? That factory will take55 million to keep running. And that's different than somebody that
21:57 grows a coffee bean and sells it. And if they're making a lot of money and we slap a tariff on it, they'll charge less. But if my sense is with farmers and agricultural type stuff, there's always
22:12 enough in the way of competition that that's trending towards cost to capital. And
22:20 so, again, everybody that's saying, tariff always leads to higher prices is not right. And Trump's saying, they all pay the tariff in every situation. It's not right. That's why I want him to
22:33 be somewhere in the middle. And I'd want him to be somewhat surgical about it because. You can definitely have the factory run for a million dollars a year for a while, but at some point that stops
22:45 too. And then lack of supply leads to higher prices. Yeah, and I think that's a non insignificant driving culprit here is the influence on origin source of supply. And so there's less of it. And
22:55 there's some other exogenous things like in the case of coffee,
23:05 you know, maybe weather And I haven't kept up with kind of the agricultural commodities as closely as maybe I should have. But there's, back to, sorry, I went off on that detour, but back to one
23:17 other element of kind of alternatives the Chinese are pursuing is pointed out in this Dunberg piece. They talked about
23:28 thorium molten salt reactor technology. And why is that interesting? Well, because it's not fundamentally dependent on uranium one. So you don't have the same type of, I think, overblown nuclear
23:44 waste concerns. Two, thorium is a pretty significant waste product as it relates to rare earth mining processes. So the Chinese have a lot of it.
23:59 Now, there are some consequences or trade-offs that you make with, I guess, ultimately disposing of the spent thorium molten salt fuel. I think there's some fairly active gamma ray stuff going on,
24:14 so it may not be uranium, but it's still evidently pretty nasty stuff. But I found it interesting that they're kind of targeting that maybe we're gonna use this in terms of marine propulsion. And
24:31 they talk about a container ship that from a capacity standpoint would be equivalent to a ship that can haul 14, 000 container units was pretty large and a TMSR reactor prime mover that would
24:50 ultimately generate something equivalent to what we do in our sea wolf class of submarines, which is about 200 megawatts. Again, not that uranium is all that hard to come by. I think China is
25:05 cited as a 10 world, you know, they consume 10
25:12 fairly, I guess, import dependent. But the fact that, okay, we got a lot of thorium laying around from all our rare earth mining. And if we can make this work, you know, the established
25:24 technology is something that we ought to be throwing a lot more money at. There's no need, I think, for breakthroughs because of the performance and the reliability of uranium-based reactors.
25:37 Again, maybe I'm adding two and two and getting 20, but I think the point of the piece was, look, we're gonna be self-sufficient in this area. And whether it's
25:50 thorium technology, nuclear reactors generating power on land or using it as a ship
25:60 prime mover technology, it's just we're laser focused on this and we're gonna make it happen. And I think the driving motivation again is, we're going to be self-contained and self-sufficient
26:14 across all the critical supply chains and value chains. I just, yeah, thought it was an interesting piece and I think aptly titled as closed loop. No, and there's a lot to be said for that. I
26:28 mean, if we talked closed loop You know, we had to include Canada. We had to include Mexico in that. I could probably get comfortable doing that. But we, particularly when we start thinking
26:42 about rare earth minerals and stuff. We're not gonna be closely with them. Yeah, we've, you know, we cut a deal with Australia and they've got a lot of that stuff. And hopefully the
26:54 environmentalists there will let them mind. But at the end of the day, we need to be doing a lot more of that stuff at home I mean, so. Yeah, and the notion, even with, you know, all things
27:11 pointing in our direction or in our favor, how many years or decades does it take to affect that reset? And it's a decades-long timeline And I think, you know, just giving the way. we think about
27:30 the world versus the way maybe China thinks about the world is we're not going to get distracted by social and political issues. We have a mission and an objective not to say that's a regime that I
27:44 don't want to be a citizen of. But unfortunately, you know, it always with the United States, we don't do day to day very well, but nobody does a catastrophe better than we do. Nobody just, you
27:58 know, take down the Nazis. Don't worry. We got this, you know. So I do think if the proverbial doo doo doo hit the fan, we could mobilize and make it happen. But I just hate putting ourselves
28:14 in that position time and time again. So I am going to go through my phone and find my picture of me in Al Gore. And I'll get it to Jacob so we can have it here for our next story. which is
28:31 Bloomberg Green, which is a daily. It's one of the free ones that they didn't put behind the paywall. I used to read the energy newsletter every day, but I don't subscribe to Bloomberg after
28:42 curing my 20 year addiction to Bloomberg professional. But it was just a gushing piece about his arrival at COP 30 and Brazil started off with, for many, the clock doesn't start ticking until Al
29:01 Gore arrives, receiving rock star type treatment. And so I think it's just some, and we talked about Kirk and I talked about COP last week, and we've, I think we've had some traffic out there on
29:16 social media about some of the silly things that are coming out of there, like the delegates complaining, or the UN complaining to the Brazilian government that their conditioning sucks.
29:30 and whatnot, but
29:33 there's a clear
29:37 dinosaur moment, I guess, if you will, if you think about how long Al Gore's been, the rock star and the champion of really extreme climate catastrophism. And
29:48 it just seems so incongruous with where we've come over the last - think back to five years ago, what was caught? It was center stays The US isn't even there in any significant way. And he's kind
30:02 of taken the
30:06 stage to, I guess, basking in old glory. And so I almost considered making this a finger of the week. But it's become too tragic and pathetic of a story, in my mind, to even
30:24 have any kind of consternation about it So yeah, no, yeah. in the year in which Ozzy Osbourne died, and Tipper Gore back in the day had gone after Ozzy for his lyrics, and
30:40 maybe rightfully so. I won't throw that stone, but good grief. Can Al Gore just go away? I mean, how many pictures do we have to see of him getting on a private jet? His, I mean, how many
30:56 square feet is his mansion in Nashville? It's like, I just, I can't fathom how we let this guy get away with this. Now, what's the current AUM of his fund or funds? That's a big number. Yeah,
31:17 well, and here's the picture. I'll send it to Jacob. Backstage at U2 in Nashville I attached one.
31:28 clip from or a picture from the long ago South Park Man Bear Pig episode. You met Man Bear Pig. I'm serial. I'm serial. I'm really serial. Do you know that that is the only parody, political
31:46 parody for which Matt and Trey have actually backpedaled and apologized? Really? Yeah Yeah, I don't think in this current run, which has been heavily thrown in a pretty
32:05 shocking way. I don't know if you've seen any of season 27 and 28. It's out there. Yeah, I've seen a little too much of it, I think. But
32:17 yeah, no, I've always said if they come after me, I'm just gonna gut it up and say it's funny and appreciate I'm going to do a Charlie Kirk good, you know, and just. Hey, that was funny. I am
32:30 a master debater, you know.
32:34 Yeah, well, you know, it's not surprising that there's this, I don't know, maybe it's a blazer glory thing for him, but, you know, suggesting that, and maybe we are, we've, we've, we could
32:48 be past peak Trump, and so it's time for you, other countries in leadership, to stiffen your spine, and push back on the United States. And ostensibly saying this as one of the higher profile,
33:06 political representatives of the US, you know, we had Newsome to talk about last week, and now we've got, you know, the other, I don't even know what to call them anymore, because it's a bit of
33:18 an outdated term. And then you've got, you know, major news outlets like Bloomberg, just, it's, it's. It's beyond sycophantic in terms of how they're characterizing his presence and his aura
33:37 and Brazil, but it just seems so out of step and outdated relative to what cop has become and what's happened here in the last year or two with some pretty big reversals, Gates.
33:53 The most significant example of that and the fact that the US has said, we're just not gonna be there and we're gonna pull out of Paris. I think that's right. I did go on Groc and I said, give me
34:02 an Al Gore joke. What does Al Gore put on his pancakes? Global warming because he invented syrup too. That's not even funny. Yeah. I bet it anyway. Well, one thing I picked up on this and I
34:19 just kind of randomly attached it is, there was a piece out in the New York Post yesterday today talking about the collapse of the Gulf Stream. which ironically,
34:33 if it goes as the MIT models predict or forecast or scenario, I should say, let's not get into the
34:43 loose interchangeability of scenarios and forecasts like the IEA has been guilty of. See how it's not getting an IEA on you there. But essentially it's saying that because of the Greenland melt,
34:58 we're causing a stagnation. So there's this circulating flow that the Gulf Stream plays a pretty significant role. And if there's a stagnation, then we have too much of the cold influence from the
35:12 Arctic. In fact, one of the examples was cited that Europe could see temperatures that are 60 degrees Fahrenheit lower than they are now, which would basically make Europe akin to the Canadian
35:25 Arctic So kind of which is it. So global warming is causing the next ice age. And anyway, I'm not. I'm surprised he didn't even latch onto it. Maybe he did in some plenary session as they like to
35:40 call them and they're very. My question I always like to ask is, tell me the weather patterns that we see that disproves climate change. And they can never tell you that. And I'm like, well, if
35:52 you can't give me one that disproves it, how can a weather pattern prove it?
35:58 Yeah, it doesn't seem to work. So, well. We're per. Enough of, like we said in the 90s, enough of Al Gore.
36:10 Don't know where Kirk was. I thought he was supposed to join us. Didn't he investigate this? I think he kind of did. So anyway, well, good seeing you. Glad you were. Good to see you. Sons
36:23 surgery went well, we'll keep our fingers crossed of seeing him back on the mound.
36:29 When can he throw, nine months? He'll start throwing probably somewhere between three and four months post-surgery. So he had what's called
36:41 an owner brace, which means they didn't have to do a reconstruction. So no graft. And the practices and procedures have really advanced. And so relative to the type of tear he had and where it was
36:54 located, I've done a lot of research and querying over the last few weeks as this was unfolded. I can imagine that the repair procedures relatively new, so its sample size is smaller than
37:03 traditional Tommy John or reconstruction. But some of the
37:16 results and some of the data, particularly as it relates to just fundamental ligament strength favors slightly, but it's in the,
37:29 kind of 90 plus percent confidence interval. It actually favors the repair. I always looked at it as look. You take a tendon and replace a ligament, which is just inherently weaker tissue 'cause
37:39 you can't condition and strengthen a ligament. You can tendons and muscles. So, well, let's just put something with greater tensile strength and replace that weak length. It doesn't work that way
37:51 because you have to go through this, like, have trouble saying it Ligamentization process, which is part of the graft adaptation to performing as a ligament. And that inherently takes longer. So,
38:06 you know, we're kind of hoping nine months. And that's been shown to be pretty reasonable. So, you know, miss the spring season, but be back for a push into his final year.
38:21 But he does get a red shirt So we'll see about your five. Yeah, I was about to say a good luck on that tuition check, man. Yeah. Not insignificant. Exactly, exactly. All right, Mark, good
38:37 seeing you. And if you like today's show, make sure you share it with a friend. Leave us some comments. Remember, I'm very delicate. So don't say anything mean. You're gonna say mean stuff,
38:47 say it about Mark. And watchLandman and then more importantly, watch theLandman recap of each episode throughout the season. It's Chuck Yates, got a job. It's must-see TV. Must-see TV, that's
39:04 funny. All right, peace out. See ya.