Daily Energy Standup Episode #172 – Green Shift: Shipowners Invest $47 Billion in LNG Carriers, Canada Keeps Climate Promise, Wind Power Projects Face Crisis, and Chevron Surpasses Earnings Expectations!

Chevron Corp. reported second-quarter earnings of $6.01 billion, beating analyst estimates. The figures, while down 48% from the same period last year, topped the second-quarter profit of $5.5 billion expected by analysts in a Bloomberg survey. […]

Highlights of the Podcast

00:00 – Intro02:51 – Shipowners splash out 47 Billion for LNG carrier newbuilds in 18 months 06:47 – Canada fulfills Climate pledge to end fossil fuel subsidies10:56 – World’s Biggest Wind Power Projects are in Crisis when the World needs them most13:54 – Chevron Posts $6 Billion Quarterly Earnings, Beating Estimates16:07 – Market Updates20:35 – Outro

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

Michael tanner: [00:00:07] What is going on Everybody, Welcome to another edition of the Daily Energy News Beat Stand up here on this gorgeous Tuesday, July 25th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the Executive Producer of the show, the Purveyor of the show and the Director and Publisher of the world’s greatest website, EnergyNewsBeat.com, Stuart Turley, My man how we doing today? [00:00:31][24.3]

Stuart Turley: [00:00:32] It’s a Beautiful day in the Neighborhood. Hey, we’re just releasing out also, Tom Kirkland, he’s the guy with three over 3 million views on his LinkedIn channel. He’s a nut. Absolutely love me some Tom Kirkland. [00:00:45][13.5]

Michael tanner: [00:00:46] We love Tom Kirkman you could check out Stu’s longform podcast on the same channel as you’re hearing this so we appreciate everybody checking this out. But we have a packed lineup for you. Will keep it fairly light, But I think we’re going to dive into these stories probably more than usual. [00:01:00][14.3]

Michael tanner: [00:01:01] First up, Shipowners splash out 47 billion for LNG carrier newbuilds in 18 months. You know, it’s and I like to say what’s a couple billion between friends Stu will cover what’s going on in the carrier business. [00:01:14][13.3]

Michael tanner: [00:01:15] Next up Canada fulfills Climate Pledge to end Fossil Fuel Subsidies. Well, we’ll talk about what the Trudeau administration is doing up there. And then finally, The World’s Biggest Wind Power Projects are in Crisis just when the Worlds and the birds need them the Most. I added the birds and the whales in there myself. But Stu, there’s a really huge project going on right now that’s under dress, Stu will cover that. [00:01:44][29.7]

Michael tanner: [00:01:45] He’ll kick it over to me, I’ll we’ll have some fun talking about oil prices, guys. I mean, we’re 78,86 right now on time stands here about 5:40 as we record this on Monday night. So, you know, overnight action we’ll see what happens. [00:01:59][14.4]

Michael tanner: [00:01:59] But I think the sentiment is is extremely bullish, will cover some key technical indicators and then what happened with Chevron, they post big quarterly earnings beating expectations and we’ll kind of dive into another announcement that they made and then we’ll let you guys get on out of here. [00:02:14][14.9]

Michael tanner: [00:02:15] Before we do all that guys, remember, all the stories we’re about to cover are courtesy that World’s Greatest Website www.EnergyNewsBeat.comThe best place for all of your energy news. Stu does a great job of curating their website to make sure it stays up to speed. [00:02:30][14.6]

Michael tanner: [00:02:31] Dashboard.EnergyNewsBeat.com The best place for all of your energy and data combo. You can hit us up [email protected] or use the form in the description below. Where do you want to begin Stu? [00:02:43][12.5]

Stuart Turley: [00:02:44] Hey, let’s travel around the world here let me find my screen one out of ten screens here. Okay, Shipowners splash out 47 Billion for LNG carrier newbuilds in 18 months. Michael, this is a big story, especially when we consider what’s going to go on in the other stories, so I got kidneys up here for our podcast listeners I’m pointing to my head and saying, I got kidneys. [00:03:11][27.1]

Stuart Turley: [00:03:12] So okay, Spending Listen to this. Spending on new LNG carriers since the beginning of 2022 represents 27% of new shipbuilding investment and more than any other, including container ships. That’s pretty amazing In 18 months 47 billion. [00:03:35][22.7]

Michael tanner: [00:03:36] Yeah. Considering that that what normally was happening was you know, in year, you know, it was much, much lower than that. I think the idea that LNG is going to be plentiful and is going to be seen as a bridge fuel between crude oil and whatever this this this holy grail of renewable energy is, it’s definitely going to be a bridge fuel. [00:03:57][20.5]

Michael tanner: [00:03:57] We’ve covered last week and we’ve covered on the show at nice Long term LNG contracts signed by both China with Saudi Arabia and the UAE and Qatar have come out and signed large deals around the world so you’ve been covering. [00:04:11][14.4]

Stuart Turley: [00:04:12] India. [00:04:12][0.0]

Michael tanner: [00:04:12] This investment comes at the right time because they’re needed in order to achieve these products. [00:04:17][5.0]

Stuart Turley: [00:04:19] Oh, and this is huge to the US because we can’t ship out our great products yet because we don’t have any tankers. [00:04:26][7.9]

Michael tanner: [00:04:27] So, yeah, you know, they know that, you know, this rising LNG demand in Asia, you know, and the role of relatively clean hydrocarbon in the energy transition are both underlying growth drivers. [00:04:39][11.3]

Stuart Turley: [00:04:40] You nailed it and Asia has picked up where the rest of the world is and they’re rolling out LNG far superior than Canada or the U.S. So yeah, I got to hand it to them. Let me throw this at you. Here’s some other numbers. [00:04:58][18.5]

Stuart Turley: [00:05:00] Despite dramatically higher new ship prices up 211 million for a standard 174,000 cubic meter vessel starting at 2022 to $261 million today. LNG owners are still pinning down the few remaining slots that are available between now and late 2027. Think about that’s just as bad as in your day job drilling wells and going from a $7 million well to a look in about the ballpark there, probably about a $14 million well. Right?. [00:05:48][47.8]

Michael tanner: [00:05:48] Now that’s a double this is not a 50% increase this is somewhere around a 20% increase you’re talking going from somewhere around 7 to $10 million. I’m with you. It’s going to keep going up. What I want to know is how do we get our hands on one of these 331 vessels? I vote Energy News Beat crowd sources our own LNG tanker. [00:06:07][19.0]

Stuart Turley: [00:06:08] I think we should and we owe it to ourselves to become a skipper you know, the three was it they went out for a three hour cruise. You and I could do podcast from that. [00:06:19][10.7]

Michael tanner: [00:06:20] Exactly. Well, Captain, the ship, you just fill it up we’ll drive you get us for 6 hours. So, yeah, we’ll, but seriously, maybe we’ll give them some Energy News Beat tokens, you think they take Energy News Beat tokens instead of dollars? [00:06:33][13.9]

Stuart Turley: [00:06:34] Oh, oh. [00:06:36][1.6]

Michael tanner: [00:06:36] All right. What’s next? Let’s talk, let’s talk about Canada. [00:06:40][3.7]

Stuart Turley: [00:06:41] Oh, oh. Got to love some Canadians stuff you can’t buy this kind of entertainment. Canada fulfills Climate pledge to end fossil fuel subsidies. Michael, what’s wrong with saying the words fossil fuel subsidies? [00:06:58][17.3]

Michael tanner: [00:07:00] I don’t know if they directly exist. Right? They don’t. [00:07:05][5.0]

Stuart Turley: [00:07:06] Now, when you talk about subsidies, it is something that does not exist in the U.S. for subsidies. The Government of Canada is committed to investing in a strong, sustainable economic future that will deliver good middle class jobs, clean air and energy security for generations to come. That’s why they’ve canceled all the LNG projects. Anyway. Just sorry, I thought I’d throw that in there. [00:07:37][31.6]

Stuart Turley: [00:07:39] When you take a look at Steven Guilbeault, Minister of Environmental and Climate Change, released the inefficient fossil fuel subsidies Government of Canada Self Review Assessment. Tell me that in a bunch of fun, I got to read this I got to get me my hands on this just for some real fun. [00:08:02][23.4]

Michael tanner: [00:08:03] Well, the interesting part is they’re going to have a how do you how do you differentiate unless you’re explicit about oil and gas, which is if that’s what the new if that’s what they’re going to do, that’s fine. But the problem is there’s no direct subsidy for oil and gas. There are subsidies for capital, high capital expenditure products, manufacturing. You know, mining,. [00:08:28][25.0]

Stuart Turley: [00:08:29] Right? [00:08:29][0.0]

Michael tanner: [00:08:29] All part of it. How do you how were they going to interpret those rules? Are they going to apply it all? Are they going to scope it only to oil and gas? That’s how the industry that’s how the industry to play it. . [00:08:40][11.0]

Michael tanner: [00:08:41] It’s a lie to say there are no subsidies for oil and gas there’s a lied and it’s a lie to say there are subsidies for oil and gas the truth is always somewhere in the middle. There are subsidies for cabotage you know, there’s Stu we work with a lot of different funds and what do we offer and what do these funds offer? Tax benefits. Why? Because they’re spending money on capital. [00:09:01][19.8]

Michael tanner: [00:09:01] It doesn’t matter if they were spending money on capital to do Solar, Wind, Pipelines, Oil and Gas. You would get the tax write off and that’s what they’re going to go for. So are they going to apply that to a lithium mine that’s really being used to help wean us off foreign slave lithium? are they going to exempt that? [00:09:23][21.8]

Michael tanner: [00:09:23] Because you would think under rules of ESG, you should probably do that. So we’ll be interesting to see how they’ll how they’ll frame this. And yes, I want to read the report because, you know, they’re going to be stretching to find some stuff. [00:09:36][13.0]

Stuart Turley: [00:09:37] Oh, absolutely. And here’s the one I really enjoyed, Michael. The assessment framework, the first transparently published methodology worldwide, will be used to determine which tax and non-tax measures constitute inefficient fuel subsidy. [00:09:55][17.7]

Michael tanner: [00:09:56] Perfect non tax measures [00:09:57][1.1]

Stuart Turley: [00:09:59] Right. Huh. So anyway, I got really tickled of that there’s more in here, but when you sit back and think about it, if it were not for the tax. Tax not credits but tax deductions. There’s a difference between tax credits, tax deductions and subsidies. Tax? [00:10:21][22.1]

Michael tanner: [00:10:22] Absolutely. [00:10:22][0.0]

Stuart Turley: [00:10:23] Tax deductions is a check somebody is going to write that is not a subsidy that is a tax. [00:10:29][6.8]

Michael tanner: [00:10:30] And that’s and that’s where the war of words comes back to everything lives. You know, the answer always lives in the middle of what everybody’s saying. [00:10:38][7.5]

Stuart Turley: [00:10:38] Oh, absolutely. And try to talk to an IRS agent about tax deductions. You can’t you know, they you know. Yeah. Especially the 87,000. Yeah, they’re all what happen to the Second Amendment on IRS agents. [00:10:54][15.3]

Stuart Turley: [00:10:54] Okay, Next story here, World’s Biggest Wind Power Projects are in Crisis when the World needs them most. This follows along with that article as you’re banging your head on your desk for our podcast listeners. Michael’s just having a go I got to sit through another Podcast with Stu oh my gosh, I feel so sorry about three years of having to put up with me on the Podcast oh my gosh. [00:11:20][25.7]

Stuart Turley: [00:11:21] This one is also a very good litmus test we kind of teased this up yesterday, Michael. I am tired of everybody saying wind is free, wind is getting cheaper and solar is getting cheaper when the exact opposite is happening. [00:11:39][17.7]

Stuart Turley: [00:11:40] Offshore wind farm project developers stumble and inflation is hitting. Governments want green energy to cut costs and carbon, it’s not happening. And so this one Energy coming from this project is desperately needed, says Helene Bistrom, head of Vattenfall wind business, said on an earnings call this week with new market conditions, it doesn’t make sense to continue. [00:12:09][29.4]

Stuart Turley: [00:12:12] Why is BlackRock also investing in oil and gas? Why is Shell moving over away from renewables? Why is this young lady Helene saying, Hey, wait a minute, we can’t continue because these are not viable projects even with tax credits, crash tax subsidies how do you want to face it because after eight years, none of them make sense. [00:12:45][32.8]

Stuart Turley: [00:12:46] Let’s go down here, The jettisoned projects are the latest signs of stress for offshore wind farms that use turbines larger than skyscrapers to harvest power from the sea air kill whales, kill seagulls and on land, they kill eagles, sea eagles. Hmm. [00:13:07][21.0]

Michael tanner: [00:13:08] Yeah. I mean, I think what’s interesting is the paragraph down here, While some project could still go ahead in the future, they would need to be able to secure higher power projects or higher power prices to make investments viable. [00:13:20][12.0]

Michael tanner: [00:13:21] Sounds like high quality, sounds like a couple of high quality drilling locations to me that’s what that sounds like 500 quality drilling locations. [00:13:31][9.7]

Stuart Turley: [00:13:32] This person must be our Person of the Year, because. [00:13:35][3.1]

Michael tanner: [00:13:36] Absolutely. [00:13:36][0.0]

Stuart Turley: [00:13:37] The consumers want Michael to quit getting it in the drive thru. The consumers are paying higher and higher electric electricity prices, so they’re getting in the drive thru, dude. So let’s go to my next favorite one here. Chevron posts 6 billion quarterly earnings we’re talking billions a lot today, aren’t we? Beating estimates. What are your thoughts on Chevron’s earnings? [00:14:06][29.1]

Michael tanner: [00:14:07] So, I mean, two things. One, they come in at about $6.1 billion for second quarter earnings, beating analysts expectations. You know, I think you’re going to read o down 48% year over year. You realize that it does top second quarter profit per 5.5 billion, which was expected by analysts in a Bloomberg survey. [00:14:29][22.0]

Michael tanner: [00:14:29] I think the interesting note that Chevron dropped on on a Sunday night was that they produced 772,000 BOE out of the Permian during quarter three which or second quarter which is an absolute record, which is truly incredible. [00:14:45][15.3]

Michael tanner: [00:14:45] To give you guys an idea they gave away dividends of about 2.8 billion and did about $4.4 billion of share repurchasing. They also announced that they’re doing some senior restructuring CFO is retiring, bringing in somebody else so got to love that. I mean, Chevron continues to be a beast Stu it is what it is. I mean, when you’re when you’re doing 700,000 barrels of oil out of the Permian, you’re going to be just fine. [00:15:14][29.0]

Stuart Turley: [00:15:16] Oh, yeah. [00:15:16][0.2]

Michael tanner: [00:15:18] Just fine. [00:15:18][0.3]

Stuart Turley: [00:15:19] Well, do you think he’ll ever get invited over to Jennifer Granholm’s house for dinner? [00:15:24][5.2]

Michael tanner: [00:15:25] Probably not but you should appreciate that he the more he invests, the more he lowers prices. [00:15:30][5.1]

Stuart Turley: [00:15:31] Oh, yeah. Hey, wait a minute aren’t most oh nevermind, I was thinking about insider trading. Maybe Nancy Pelosi knows about this one. [00:15:42][11.2]

Michael tanner: [00:15:44] Well, get here. Get her a ball Nancy Pelosi. [00:15:46][1.6]

Stuart Turley: [00:15:47] Hey, Nancy, if you’re listening to this Podcast, we’d love to interview you [00:15:49][2.9]

Michael tanner: [00:15:52] Yeah, that’ll be a good one that’ll be a good one. That’ll be a good one. [00:15:56][4.0]

Stuart Turley: [00:15:56] So I’d fly out to interview her [00:15:58][1.9]

Michael tanner: [00:15:59] Yeah. Yeah. I don’t. Yeah. Same here if that ever happened same here, Stu. Same here. All right, let’s quickly cover oil prices here, if only because we’ve got great new guys. We were up 2% day over day, meaning we’re about three month highs, mainly off some, you know, projected tight supply. [00:16:20][21.1]

Michael tanner: [00:16:21] We also are seeing some stimulus in China but again, mainly reason here is is is is oil and gas prices popping today, 78,85 for the WTI that’s current right now at about 5:54 Brant settling at about 82,74 which is absolutely unbelievable. [00:16:40][19.2]

Michael tanner: [00:16:41] I think the key thing to note here is we’ve moved above our 200 day moving average, which according to our Bob Wager, Director of Energy Futures over at Mizuno Bank you know, generally this stops out speculative shorts and attracts traders looking for new entry points. What does that mean in layman’s terms basically. [00:16:58][17.4]

Michael tanner: [00:17:00] The 200 day moving average signifies the long term trend of what oil is doing and now that we moved above that line, that signals the people who play more of the Warren Buffett style game buy and hold, see what happens. They feel like there is now an established trend of bullishness. [00:17:14][14.9]

Michael tanner: [00:17:15] So, you know, for everybody hoping 80 is around the corner, it probably is you know again I what’s it going to be like at the end of the week? Probably we’re going to see 80 at this point. I mean, if I had to go out to you know, I should have. [00:17:26][10.7]

Michael tanner: [00:17:26] You know, I talk I asked you yesterday, Stu, you couldn’t put a pin on it. I thought we might have a chance to see 80 this week. I’m even more confident about that now, if only because we had some great price action today. Again, you know, coming back to what’s going on in China, it looks like they’re going to come out not. I’m teasing. [00:17:43][17.3]

Michael tanner: [00:17:44] I mean, the only thing is, is that Jerome Powell could you know, he’s probably going to come up and do 25 basis points this week, we have that on Wednesday. Right? We find out. [00:17:55][10.7]

Stuart Turley: [00:17:55] It is Wednesday the market went kind of wishy washy because of that. Do you what are you going to say? Is he going to say this is the last one or do you think he’s got one more? That’s what the market’s. [00:18:05][10.3]

Michael tanner: [00:18:06] Hes got one more, if only because we’ve had some ironically good labor data. And that I mean, not to get me on a whole side point here, but the funny Fed in order to stop inflation the goal of the Fed is to raise the unemployment rate. It just seems like the incentives are misaligned and he has free markets and we can talk about it. [00:18:30][24.1]

Michael tanner: [00:18:30] And yes, you know, I get why I’ve a masters degree in economics people no need to explain it to me. But what I’m saying is it just feels wrong that the only way we have to curb inflation is to put Stu out of a job. [00:18:42][11.8]

Michael tanner: [00:18:43] Now, that’s easy that’s pretty easy, considering what, Stu got going on but I’m just kidding I’m just kidding. But but you know what I mean, Stu It feels like it feels that the only the Fed’s only job here is to to put us out of business you know what I mean? [00:19:00][17.0]

Stuart Turley: [00:19:01] It’s absolutely ludicrous and when we consider. [00:19:03][2.6]

Michael tanner: [00:19:05] We need more tools,. [00:19:05][0.1]

Stuart Turley: [00:19:06] Absolutely I could Michael, you just hit it right out of the park a little inside baseball. When we were talking COVID all the time, I got tired of hearing the word unprecedented. So I’m going to go throw up and then I’m going to use that word again. [00:19:24][18.0]

Stuart Turley: [00:19:25] We are in unprecedented, stupid times for financial issues revolving around the inability for people to fix inflation. I have said it once, I’ve said it twice and before I throw up and say it’s unprecedented, it again, it is and we need to lower the energy price and then lower the interest rate to stimulate money those are the only real two things. [00:19:56][31.7]

Michael tanner: [00:19:57] Quantitative easing stu loves it print more money. [00:20:02][4.7]

Stuart Turley: [00:20:03] No, you don’t print more money lower the interest rate and fix the energy problem. That’s not printing money. [00:20:11][7.8]

Michael tanner: [00:20:12] Okay. Okay. [00:20:12][0.4]

Stuart Turley: [00:20:13] Is that fair enough? [00:20:13][0.5]

Michael tanner: [00:20:14] We need a nominate you for Fed Chair well, we’ll cover it another time Stu, Well, let these fine people get out of here we appreciate you guys checking us out here on this gorgeous Tuesday. For Stuart Turley, I’m Michael Tanner. We will see you Tomorrow, Folks! [00:20:14][0.0]

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