Mounting speculation surrounds a potential BP-Shell mega merger and the growing likelihood that one or both oil giants may relocate to the U.S. amid hostile UK energy policies. With the UK conducting an oil war like California’s Gavin Newsom, will BP and Shell merge? Or will they both move to the United States? This is a huge national security issue for the UK, and could potentially be a win for the U.S.
You won’t want to miss this conversation with David Blackmon, Irina Slav, Tammy Nemeth, and Stu Turley.
Highlights of the Podcast
00:00 – Introductions
01:40 – BP-Shell Merger Rumors
06:43 – Strategic Value & Potential Relocation
09:35 – Potential U.S. Buyers & Synergies
14:30 – BP’s History of Setbacks
20:49 – Would BP Move HQ to the U.S.?
25:52 – Wrap-Up on Mergers
29:03 – Quebec ‘will not invest in Lion Electric,’ announces Minister Frechette
33:05 – US opposes ‘dangerous’ anti-fossil fuel policies at global summit
35:59 – Study: Extended Interconnection Queue Times Plague Wind, Solar
38:14 – One of Warren Buffett’s Last Big Bets Is Souring
41:02 – Oil prices post weekly gains on US-China trade talk optimism
42:54 – UK government okays solar PV farm in East Yorkshire
44:06 – TikTok vs defence: Europe faces a reckoning over the allocation of energy
47:04 – China approved 10 new nuclear reactors bringing their grid to 68 upon completion
48:57 – Can the UK avoid the Spain blackouts? or are they doomed?
54:00 – Final Thoughts & Humor
Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.
Irina Slav [00:00:11] Hello and welcome to the Energy Realities podcast with David Blackmon in Texas. Oh, no, he’s not in Texas today. Where are you today, David?
David Blackmon [00:00:21] I’m in a very dark hotel room in Las Vegas, Nevada, so it’s very early and the lighting isn’t good, so I look like a ghost, but that’s okay.
Irina Slav [00:00:31] No, you look just fine. And we have Tammy Nemeth, I think, in the UK. Yeah, I see your lights are still on, was the LED for blackouts?
Tammy Nemeth [00:00:44] Good question. I don’t know. It’s a little bit breezy today, so hopefully the power will stay on.
Irina Slav [00:00:52] Those wind turbines will be turning?
Tammy Nemeth [00:00:54] Wind turbines.
Irina Slav [00:00:54] Great. And Stu Turley in, where are you Stu?
Stuart Turley [00:01:01] I’m in Abilene, you gotta love a good Texas time, so. I like it. I like Texas. Yep. You get to see all the windmills as you drive into Abilene and the Stargate big data center coming in with its own power plant that would power 90,000 homes. That’s natural gas. It’s an amazing amount of construction going on in Abilene.
David Blackmon [00:01:29] Yeah, you got that nuclear plant going on online on Abilene Christian University campus, that small nuke. So yeah, a lot shaking in Abiline.
Irina Slav [00:01:40] Well done. But today we’re talking about big oil and mergers and acquisitions and more specifically about one potential mega merger between BP and Shell and I’d like to start by saying that you know the first rumors reports but I’m calling them rumors because you can’t trust the mainstream media about BP turning into a takeover target sometime towards the end of year after Bernard Looney. Resigned in disgrace and you know everyone realized what the losing bet the transition was for BP and then these reports began to come out more and more frequently and now we have reports that Shell is actually studying an acquisition of BP and it’s not just Shell a few other companies are also what was it doing the numbers David, what do you think about all this?
David Blackmon [00:02:44] Well, the numbers for BP just have gotten so much smaller now than before the Macondo blowout in the Gulf of Mexico in 2010. Its market cap is less than half of Shell’s now at the time of the condo blow out. They were roughly the same size company. And rumors about Shell and BP emerging have been a frequent thing for a long, long time. I worked at Shell 20 years ago and rumors were rampant then that there was an imminent merger between the two companies with Shell being the surviving company. That didn’t happen. Things changed. The economics of it changed. And it didn’t go through, but I was told at that time that these two companies have been sniffing around each other for a century. So it really said shortly after they were both founded. And there’s a lot of ins and outs to merger of that size, but when you have one company that is pretty healthy financial shape, which is Shell. And another that is pretty financially distressed at this point, at least as far as their major investors and board of directors is concerned, MVP, the rumors become stronger. And apparently there’s some reality to it or you wouldn’t have so many in the British media running with the story now. And, you know, it makes some kind of sense. They’re both European countries. Companies. They both have to deal with the windfall profit tax levied by the British government now and a lot of heavy restrictions on the way they do business in the UK. And so trying to get bigger so you can take advantage of economies of scale and, you know, which usually happen in a merger of that size and magnitude. But it’s incredibly complex, because in any merger, you have to do due diligence of all the business operations. And when you look at those two companies, they’re in dozens of countries. They are fully integrated companies, so they have all manner of assets, all the way to retail, from upstream to retail. And that just becomes an incredibly complex thing. That will take a long time for the acquiring company to scope out, and then you have the added pressure for BP with this big stake that Elliot, this activist investor group took in the company stock and I guess it was announced in January. And that is, you know, a real factor in all of this because Elliot is looking for ways to make. Real radical changes in the way that company is run and looking for a buyer would be one of those radical things. Elliott is probably advocating for us. It wouldn’t surprise me a bit if this becomes the time that these two companies end up in a merger. And then, you know, even after that, and we’ll talk about it in the show, the potential for one or both of these companies or a merged company to leave the UK entirely and move to the United States. So it’s an interesting situation, you now. It’s kind of fun to watch if you’re not involved in it. If you’re in one of these company, it’s no fun at all. And if you’re in the upper management, it’s an incredibly busy and risky time for them personally. So I wish both of these companies the best.
Irina Slav [00:06:43] Tammy, do you think a merger would make sense for either or both companies at this point? In light of what David said.
Tammy Nemeth [00:06:53] Yeah, that I’m glad that that David mentioned the Elliott management percentage, I think they purchased 5%. I think that was the number. And it’s interesting, because when these rumors started coming out, particularly in the last, I would say, few weeks or so, BP shares rose. So it’s like, You know, their shares weren’t doing so well, it was kind of low. And then all these talks about mergers somehow that that increased their share price. And, you know, it was, I think about 18 months ago in Chevron was, name was bandied about as potentially looking at BP. The Abu Dhabi National Oil Company or ADNOC was also. In the rumor mail of of considering a potential takeover and if you look at, you know BP’s operations globally, they have a lot in the Middle East and You know a big chunk in the UK bunch in the Gulf of Mexico Gulf of America And and some other but a lot of it is you know, good assets. And so then it becomes, is it just a matter of the company not having been gaging things properly? And is it a management issue? Was it just poorly run? Does that then make it a good opportunity for a better run company to take it over to gain those assets? I don’t know. One of the interesting things in the UK is that BP has invested significantly so far. In a carbon capture project as that the UK government has really been promoting and with Elliott management there, I don’t know, will they continue with that? Will they be getting some sort of subsidies from the UK Government in order to make this happen? It’s an interesting time and I don’t know if prices stay low, will there be this move to consolidate a bunch of different companies, it’s a good possibility and it could very well mean that they, with all of these new climate rules in the European Union and the UK and everything, maybe they would be better off, they might make that calculation to move the headquarters to the United States or a jurisdiction that doesn’t have to do all of this different sort of climate accounting. So, time will tell, it’s interesting.
Irina Slav [00:09:35] Yeah, very interesting. Stu, will they move to the US?
Stuart Turley [00:09:41] Um, if I was running it, I would be out of the UK in about 15 minutes. Uh, this is absolutely hilarious. When you sit back and look at the windfall profit taxes in 2022, shell paid 178 million pounds in the UK windfall taxes, that’s robbery for profits when you’re sitting there trying to take a look. They’ve also already paid their normal taxes. I mean, the billions that they normally pay, that’s above and beyond that. So when you’re sitting there thinking as a business owner looking at the bottom line, I’m going to work to give 70% of my profits to the UK government. Hmm, I think I’d be out of there in about, like I said, 15 minutes. So I think we’re going to see actually BP move to the US first to make it more attractive because if it moves to the U.S. And is listed in the U S stock exchange, all of a sudden Exxon mobile becomes interested or Chevron or other avenues and it could open it up for that area. But this brings up a larger question that I want to put this back to you all. And that is based on the incompetence of the UK management in energy. Uh, this is a frightening aspect, uh, because I actually wrote an article. What, what would it take for the UK grid to not have a Spain power outage? And I was shocked. By the amount of research that came back and the billions of dollars and the glooming look for the UK grid is not good. So when you have energy policies in the UK and taxing going on like that, as a oil gas executive, I would move out. Because I would make more money if Chevron or ExxonMobil bought me in the US rather than wait for Shell to buy me.
Irina Slav [00:12:12] I think the name was among those doing the numbers.
Stuart Turley [00:12:19] Do what?
Irina Slav [00:12:20] Exxon, I think, was one of the companies that were doing the numbers on the evening.
David Blackmon [00:12:26] That doesn’t surprise me, yeah, because in this low price environment, there’s already a lot of talk about a ramp up in new deals related to Permian Basin producers. But the problem there is that the companies that really wanted to be sold have mostly been sold. There’s not a lot big prospects. I mean, so many of the independent producers, the big ones like Noble and Adarco have already been gobbled up, but you still have Devon Energy out there. You still have Diamondback Energy, but those two companies are not necessarily for sale at this point. They’re both wildly profitable and very successful and may not be interested in being locked, and so that makes it a takeover a lot harder. So eggs are mobile with so much cash on there. You talk about an oil company that’s in a great financial position to move on acquisitions. I mean, they’ve just been piling up cash forever and have had record profits in what was it, 2023. I think they had all time record profits and still had strong profits in a lower price environment last year. And it wouldn’t surprise me a bit if they’re looking at a big acquisition like BP.
Irina Slav [00:13:52] And they already did one mega deal.
David Blackmon [00:13:56] Yes. Yeah. With Pioneer Natural Resources, then we’re still absorbing and rationalizing that. That was a $52 billion by a $56 billion. And BP’s market cap right now is somewhere in the $90 billion range, which makes it, again, half the size of Shell and significantly smaller than ConocoPhillips. People don’t realize Conoco Phillips is much bigger in terms of market cap the BP is. It’s still out there.
Stuart Turley [00:14:30] Let me go through some of these synergies because BP has over 700 leases in the Gulf of America America is the way we say it here in Texas America and You have 700 Leases there. They have the Thunder Horse, which is outside of New Orleans in 6050 feet of water they have Atlantis med dog too. They are also up in Alaska Uh, and in Canada, there is a lot of synergies for BP to be an American company. Um, but they also have Trinidad and Tobago, Brazil, Mexico. Um, But the North sea, uh, they do also have a lot of the, uh things up in there. And quite honestly, uh there’s a lot of talk of oil and gas exploration company. Wanting to leave the North Sea because of the UK’s management. And there’s no reason to do business in the North Sea. So again, you want to go sell your product where it’s where you were just wanted. It’s very much like New York. Why would you want do business? In New York as an oil and gas company when they’re going to be law you to death. And so law bearing you to death is the same thing. I would say as a oil and gas company, why would you want to do business there?
David Blackmon [00:16:05] Companies have always wanted to have an office there, you know, Shell, BP, and all these big oil companies maintain strong office presence in New York because it’s the financial centers where all the investors and banks are. And so that’s the reason why. But very few of those companies, in fact, I can’t think of one that’s actually headquartered in New York City. They’re all headquarter in much friendlier states like Texas. The U.S. Company and Houston in particular, so, but yeah, you do keep an office.
Stuart Turley [00:16:42] There’s more financial. Houston is becoming the financial center and people are moving out of New York because of theirs. This is an interesting comment from Richard Branard. UK North Sea is the Dead Sea now.
David Blackmon [00:17:03] Well, it’s not quite certainly limping.
Irina Slav [00:17:07] There’s a
Stuart Turley [00:17:11] Oh, no, that was…
Irina Slav [00:17:13] About BP, I was just checking about BP’s stake in Rosneft, which it quit in 2022, but I see now that it has an option to return to it. I don’t know if you remember, but Rosnefte had started doing a huge new oil and gas development in Eastern Siberia, where the new fields are, the undeveloped fields. And JP Morgan Casanova recently apparently upgraded BP stock on the possibility of a ceasefire and end of the war and to the sanctions, which would allow BP to return to Russia. This could be, you know, a sort of an incentive in a world where oil demand is dying, you know, and we’re going to be oil and gas free in a few short years.
David Blackmon [00:18:13] Oh, mercy.
Tammy Nemeth [00:18:14] Yeah, I’m glad you brought that up about Russia, because I was thinking about that, how, you know, all the European companies or whatever had pulled out in the wake of the Russian attack on Ukraine. And BP has this mixed history in Russia, where they have put a lot of investment in there and then things get nationalized or they sell or things are expropriated or whatever. But I also wanted to just clarify that. My understanding is that BP exited Alaska, that they sold their state. Or something?
Irina Slav [00:18:52] I thought the next is in Canada, but apparently have access there.
Tammy Nemeth [00:18:58] They have one which is Bay du Nord which is on the east coast. It’s an offshore field there. But they did exit most of the other things that they had in western Canada. So they have one offshore. I don’t know if it’s been developed yet. There’s lots of talk about it. It got expedited approvals. Can’t get anything built on land, but somehow, off the coast of Newfoundland, there was an accelerated approval process. The fact that there was a Liberal cabinet minister who was from that region, I’m sure had nothing with it.
David Blackmon [00:19:35] I’m sure. Perish the thought.
Tammy Nemeth [00:19:40] Perish the thought
David Blackmon [00:19:42] Yeah, and they also sold a bunch of their most, if not all of their Northwest New Mexico stuff to Hill Corp as well. They used to be a big producer. People will remember veterans of the oil and gas industry like me. I remember that BP bought out Amoco, which was operating thousands of wells in the San Juan Basin of Northwest New Mexico, a huge. Natural gas producing region for a long time, and BP sold that to Hill Corp as well several years ago. Yeah, BP’s, you know, they’ve had hard times. In the United States, really, they have had a lot of safety-related issues even before. The Macondo disaster. What’s, what’s, the, what the other word name people call it something horizon.
Tammy Nemeth [00:20:47] Deepwater Horizon.
David Blackmon [00:20:49] Yeah, Deepwater Horizon, that’s the more common name. I’ve always called it Macondo, but Deepwater horizon. They had had a major pipeline leak in on the North slope on their Alaska operations back in like 2007 timeframe. They’d had an enormous explosion that killed several people. I think eight people at the refinery. I believe it was the one they bought from Amaco located outside of Houston. A little while later and then the Macondo thing happened and you know that company was hit with something like 80 billion dollars in fines and penalty by the federal government alone due to the Macondos spill and the clean up operations after that costed tens of billions more and that is still you know the company really still hasn’t fully recovered you know It’s like that And then, I mean, somebody mentioned their adventures into green energy under Lumni. Were just loony investments and not profitable. And, you know, he was there for four years and almost just ran the company completely, you know and home to the beach. And luckily they ran him off after that scandal. And the new guy has been, you now, he’s been making changes, but it’s such a hard process to do and takes a while. And so now you have this activist investor. Coming in to this already distressed company. And it’s just, it’s a really difficult, it’s hard to see to me, just as an outside observer, it’s really hard for me to see how this company survives in its current form. Without really major changes through the end of this year. I just, it’s just not a stable situation.
Stuart Turley [00:22:58] Don’t you think, David, that listing in the US stock exchange would make it more viable or the stock price more attractive for folks so that you’d have multiple buyers?
David Blackmon [00:23:14] I mean, they’re trading.
Stuart Turley [00:23:15] I understand, but if they moved their headquarters to Texas, it would make them worth more.
David Blackmon [00:23:23] Well, it would, and it’s such a more attractive tax environment in the United States, and other general business regulatory environment than it is in the UK. And it’s, you know, as much as we complained about the four years of Biden, still as bad as it got under Biden, it’s still a far more attractive business environment than in England. And, you know, but they’re. What I’m not clear on is whether the British government could extract any penalties for BP leaving the country. And I just don’t know if they still have any sorts of, despite the fact that the government doesn’t own a position in the company anymore. I just wonder if there may be some sort of constraints that the government could put on that in terms of penalties and lines for leaving.
Tammy Nemeth [00:24:22] A lot of politics involved in that.
Irina Slav [00:24:26] Can you really penalize a company for leaving?
David Blackmon [00:24:30] It would depend on what their separation agreement was when the UK gave up its stake in the company.
Irina Slav [00:24:38] Okay.
David Blackmon [00:24:39] And I just don’t know if there’s anything like that or not. That would be one thing that, that could make, uh, and then the other thing you have to think about too is, is, well, so many of BP’s employees are there in London, in the UK, how many would be willing to make that move? And these are very senior people, a lot of them. And so there would also be the problem with just, I mean, talent on staff, how much you would lose. I remember. Company I worked for, we had 300 people in an office in Denver and consolidated the Denver operations into our Midland office in the desert of West Texas. And of those 300 people, only about 25 were willing to make that move. So you had this period of time where you had to rebuild your staff and that can be very tough when you’re talking about, you know, that was just a district operations office. You’re talking about the company’s headquarters, and if you lose half your people making a move like that, that can be a really hard, hard thing to manage.
Stuart Turley [00:25:52] I want to give Sean Strawbridge a shout out. I’ve interviewed Sean, I believe, two or three times and he is just a cool cat. He is a absolutely love Sean and he is now moving LNG around. I have interviewed him last year, I think sometime. And I miss the Texas independence in their entrepreneurial approach to EMP. Perhaps this creates opportunities. I think you are spot on. And I’m not sure who this is, who owns Hibernia, Offshore in Newfoundland these days. I recall Chevron Canada and Exxon partnered in their first oil back in the late 1990s, but it fell off his radar. I do not know the answer to that. But also the non-op that BP owns currently, they still own 34% of a non-up in Alaska. So they did not sell a hundred percent.
Tammy Nemeth [00:26:53] Uh, you know, I, the last kind of news I have about Hibernia is from like 2016. And it was, um, there’d been lots of different assets being sold or whatever. It was ExxonMobil and I think the Canadian government. Um, I’m not sure that to me, that seems to be what it is.
David Blackmon [00:27:17] I just Googled it. Exxon has a third. Chevron has 27 percent. Suncor 20 percent. Murphy Oil, Equinor have smaller states. What do we ever do without Google?
David Blackmon [00:27:37] Even though it is a criminal organization, but that’s another topic for another.
Irina Slav [00:27:48] Did we cover everything?
David Blackmon [00:27:51] Well, I think we’ve come to the conclusion that we don’t know if anybody’s moving or merging.
David Blackmon [00:27:56] The environment is certainly receptive to it. I think that’s what we’ve done.
Irina Slav [00:28:00] It’s very interesting to watch, yeah, definitely, especially as you said, if you have no stake, no interest in any of the companies involved. Well, shall we move on to the headlines?
Stuart Turley [00:28:15] I think it brings up a bigger question of energy policies in your government. If incompetence reeks through energy policies, the citizens will pay for it.
Irina Slav [00:28:30] Yeah, and the government will pay for it too because businesses will leave.
Stuart Turley [00:28:36] Yes, and regimes change
Irina Slav [00:28:39] Decline and regimes will change.
David Blackmon [00:28:46] That will happen.
Stuart Turley [00:28:49] I think these were the old stories, Tammy. I hope I got the right ones.
Tammy Nemeth [00:28:54] Yes. So. The first one is on the right, and it’s Lion Electric, which develops electric school busses. And the Quebec government had invested quite a lot of money and the federal government in Canada. And so the headline is, Quebec will not reinvest in Lion Electric announces Minister Frachette. And basically Lion Electric is in receivership. And it’s looking for someone to bail them out. And I think it was like, I forget how much money, but it was tens of millions. I thought at one point it was $140 million that the Quebec government had put in over a period of time for these electric school busses. And so now there’s a sort of white knight consortium that says, okay, we will buy Lion Electric, but we need some, some confirmation that the Quebec government will add more money to keep it afloat. Right. So, and the Quebec governments said, yeah, you know what, I think we’ve put in enough. And if it’s not, if it can’t make it, it’s I’m not going to do it.
Irina Slav [00:30:15] Why is the company in receivership?
Tammy Nemeth [00:30:20] Oh, good question. I mean, it’s electric school busses. And then it turns out that in Canada, in winter, they’re not very reliable.
Irina Slav [00:30:30] NOOOOO.
David Blackmon [00:30:34] Who could have seen that coming?
Tammy Nemeth [00:30:37] You know where they couldn’t keep the heat on because the battery would dry would drain so fast and the kids are like freezing and then sometimes they would just stop working you know in the middle of a route and it’s okay well that’s not good. So, the government, the provincial government had… You know, paid for X amount of school busses, a certain number were delivered and then there were troubles. So. I thought that was just, and it was sort of related to the data from Ford. How much, David, do you remember how much has Ford lost since 2020 on EVs?
David Blackmon [00:31:24] Well, they, they lost combined in 23 and 24. They lost a combined 10 billion. They lost another 900 and something million in the first quarter of this year. Uh, overall they’ve lost somewhere north of $15 billion so far in their EV division, General Motors has lost tons of money too, but they don’t separate their financials in a way that you can really track it. So there you go. They chose to try to hide it all rather than be transparent like pork.
Tammy Nemeth [00:31:58] Right, yeah. So, I mean, that’s what I thought was so interesting, because here Ford, which is an amazing company, by all intents and purposes, can’t make a go of electric vehicles. And then here we have this electric school bus company, which also couldn’t make a go with it, except with lots and lots of government investment.
David Blackmon [00:32:25] And by the way, Lion has saddled a lot of school districts in the United States with those faulty busses that no one knows how to fix now without that company being in business. So all these school districts are just so well.
Tammy Nemeth [00:32:42] Yeah, which is why, you know, you had Kamala Harris going around, I love electric school busses and singing her song, which was.
Stuart Turley [00:32:52] You do a much better imitation of her than I do.
Tammy Nemeth [00:32:57] Which was funny. Okay, so then the other headline I had there was US opposes dangerous anti-fossil fuel policies at global summit. So, this was the International Energy Agency. At some point last year said they would do an energy security summit in London this year. And so at the end of April, London hosted this two-day international energy agency meeting on energy security. And it was rather amusing to watch Fatih Birol at the meeting, because now suddenly He’s like this voice of reason. Well you know we can’t force renewables on every country and each jurisdiction has to make the decisions that are right for them. It was something I was like laughing while watching it. And then, of course, Keir Starmer, who’s the Prime Minister of the UK, and Ed Miliband, who is the Minister for Net Zero and Energy, they both doubled down. Oh, we need to go with renewable wind and solar batteries faster than ever. We need to double down. And then the US didn’t send Chris Wright, they didn’t send anyone it, you know. Significant. They sent the U.S. Acting Assistant Secretary of Energy for International Affairs from the State Department. And they’re like, we oppose the renewable focus of the summit. We should be looking at what’s, from a security perspective, what’s helpful for people, what’s help for our military, what goes towards strength of an economy. And it’s not investing more in wind and solar and batteries. So it was interesting to watch. I did sit through it and watch Fatty Birol twist himself into a knot, which was endlessly amusing.
David Blackmon [00:35:13] Well, God bless you for investing that time in some of these great
Irina Slav [00:35:17] Doing it for all of us.
David Blackmon [00:35:18] So the rest of us don’t have to do this.
Stuart Turley [00:35:25] Sorry and yours
Tammy Nemeth [00:35:27] And so you can find me on substack, TheNemethReport dot substack dot com. And last week I just put a little blurb on there. My prediction for what Mark Carney and the Liberal Party are going to do over the next four years. And at least I’m I’m saying this will probably happen within the next six to 12 months. But I hope I’m wrong. I really hope I am wrong.
Irina Slav [00:35:50] Yeah, I hope so.
David Blackmon [00:35:57] Okay, so here we go. Extended queue times plague wind and solar. That’s from Enveris. That’s my first article here. Enverus did a study that shows wind and solar projects being delayed by years in our regional grids from being able to be interconnected into the grid, and it causes about half the proposed projects. You know, that are planned to never be built because they just can’t get interconnected. And then some, many I know in Texas are built years before they’re actually interconnected into the grid. And so you end up with these basically startups in the wind and solar business building projects just to take advantage of the subsidies and tax breaks that they’re due without ever generating anything. Some of them even go completely out of business. Before they’re interconnected. So this is a growing issue in the US. On all the regional grids, you’re going to have a lot of abandoned assets that never do generate electricity and a lot of proposed startups that milk the government for millions of dollars in subsidies that don’t end up being built. And it’s just a hell of a racket. It’s great work if you can get it. But it’s the outcome of the inflation reduction act.
Stuart Turley [00:37:25] I want to bring up a big thing for us to watch with the energy realities podcast and that is land reclamation. Land reclamation in wind and solar is going to be astronomically a ecological financial disaster in the next decade.
David Blackmon [00:37:47] No doubt about it. I mean, that’s Robert Bryce has done a wonderful job.
Stuart Turley [00:37:52] Nobody’s talking about it yet
David Blackmon [00:37:55] We have to get Robert on here to talk about that. He’s just done a fantastic job of chronicling all that and building real databases related to it and all the ways that local communities have been fighting back against some of the big ones. So yeah, we got to get him back on here. One of Warren Buffett’s last big bets is souring that article. It was in the Wall Street Journal last week. It relates to Oxy, whose financials have not been performing real well, especially in the softening price environment. And so when we talk about remaining big targets for takeover, if Oxy’s financial performance continues to drag, they could end up being a potential takeover target for a company like ExxonMobil. The whole strategy for ExxomMobil, and Chevron, and Oxy as well in the Permian Basin is to just become bigger, and bigger, and bigger so you can turn these operations basically into more of a manufacturing process than any sort of risky exploration process like the old business used to be. You know, you just, one project after. Other project. They all look identically involved in exactly the same processes, same people, and it really helps take advantage of all these economies of scale and streamline costs. So a mega merger between ExxonMobil and Oxi would be something to behold, or even Chevron. The story doesn’t get a lot of notice anymore, but Exxomobil and Chevron are still involved in arbitration. Over Chevron’s Hess deal because of Hess’s 25% position in the Guyana project that ExxonMobil operates. And that’s been kind of a drain on Chevron here for over a year now. They’re hoping to have it all resolved by the end of this year. But if they can’t get that resolved, then Chevron may not be in a position to do a big takeover.
Irina Slav [00:40:09] It wouldn’t want to, it said so. But they’re talking about oxy. They had a pretty big bet on carbon capture.
David Blackmon [00:40:19] That’s right. Yes. Yeah. And so does Exxon. You know, I mean, you know, carbon capture, if it works, you can be profitable. ExxomMobil firmly believes that, and they’ve made it profitable throughout the years. Oxy has a direct air capture.
Irina Slav [00:40:38] Yeah exactly, that’s very expensive, very nonsensical to me kind.
David Blackmon [00:40:45] And so that’s a big, big capital investment bet on something that’s, you know, pretty out there just in terms of whether or not you’re going to be able to do that in a profitable way. So maybe that’s been a drain on them. And then, um, we have gain in oil prices. Did you, was this one of mine? I’m not sure this is one of my, when us China trade talk optimism. But yeah, we did have a weekly gain in oil prices for the first time in a while. But WTI is still down around $61, which isn’t ideal for the companies that are drilling these really expensive wells. Breakeven costs have, at least according to that survey the Dallas Fed did in the first quarter, they’re really more up around 65 to 70 now. So it’s… Tough environment for these pure upstream companies right now with oil prices down where they are. But at least we had a gain and we may have a significant gain in oil prices today as a result of this announcement that the administration put out about its positive meeting with China on Saturday. I’m not really sure there’s a lot of meat on that bone, but it looks like the stock market futures are way up, so we’ll see how that goes today.
Irina Slav [00:42:09] Well, yeah, I just checked Brent is up to 66 per barrel, so.
David Blackmon [00:42:15] Yeah, and so WTI is probably still sitting around 61.
Irina Slav [00:42:19] No, it’s 63 and something.
David Blackmon [00:42:21] Oh, 63. Okay, so that gap is closed. Okay. Well, good. Yeah, that’s a little bit. Every dollar counts. Every dollar counts, right? And there I am at Blackmon.substack.com. Come see me.
Irina Slav [00:42:47] Oh yeah, two lovely stories. One from the UK, another one from Europe. First story, UK government, okay, solar PV farm in East Yorkshire. Now, I think Yorkshire is a major farming region, if I’m not mistaken, I may be mistaken, but that’s my impression. And they’re going to build a solar PV farm there. They have learned no lesson whatsoever from anything that happens anywhere in the world with regard to energy or, for energy security. To be honest, I don’t remember the details of the story, but the very fact that they are… It’s a big, big PV fan by the way.
Tammy Nemeth [00:43:37] 400 Megawatts
Irina Slav [00:43:39] Yeah, it’s a huge one. This will take up a lot of land. That cannot be used for anything else. It’s just stunning how they keep digging that hole that they’re dragging the whole country into with them. Yeah, that’s actually a depressing story. But the other one’s funny because apparently in Europe now, you have actual competition for electricity. Yes you have data centers versus weapons producers because there is not enough electricity to go around and you know satisfy all consumers, industrial consumers. Isn’t this amazing and shocking? I laughed a lot when I read this story. So they’re talking about allocation of energy. Can you can you imagine the center operators? What would they be doing? They will be bidding against defense contractors.
David Blackmon [00:44:56] And what’s the next step to that? The next step is rationing by the government electricity, which is where they want to go. And we talked about that for years. That’s where they wanna end up.
Irina Slav [00:45:10] But they don’t, they shouldn’t want that because they need the revenues from both the data centers and the weapons manufacturers. They need the money.
David Blackmon [00:45:20] Yes,
Irina Slav [00:45:22] You know, self-sabotage, yet again, I mean, that has become the specialty of European governments, in the West especially. There’s self- sabotaging at every step.
David Blackmon [00:45:37] It’s a religious exercise, not a business exercise. I’m talking about the climate of our lives.
Irina Slav [00:45:43] It’s called thinking. Yeah, you don’t think rationally at all.
Stuart Turley [00:45:51] You know, it’s kind of like Poland is not
David Blackmon [00:45:54] There’s a comment here that says, I’m experiencing a curtailment to my electricity, I want that LinkedIn user to know you are absolutely correct. I am. I came out here to Las Vegas and picked up the wrong laptop charger to a different laptop than the one I brought with me. And so I’m having to have Amazon deliver me a new charger to this hotel today, hopefully. I am experiencing a curtailment in my electricity usage. This is what it looks like when that happens.
Stuart Turley [00:46:32] I figured that person would say you look better, but we’ll just leave that one alone. And then, and Irina, your substack is wonderful.
Irina Slav [00:46:42] Is it? I’ve been losing subscribers, so I think I’ve started to repeat myself, but it’s Irina Slav on Energy.Substack.com.
Tammy Nemeth [00:46:58] I don’t know.
Stuart Turley [00:47:00] All right. And then I put this one out there. I found it very interesting that China approved 10 new reactors. That’s going to put them up to 68 reactors, but it was the dollar amount that kind of got my eyeballs peeled. $2.74 billion each. And we had in the United States, two of them come back online and the Vogel transactions. And those are about third, $27 billion. So how can we, how can we go, you know, you got 2.74 billion each in China. So secretary Wright has his work cut out for him. If we’re going to be putting nuclear reactors out like hot cakes at that price point, it ain’t going to happen. So, and the only way for us to get to net zero is to go nuclear. PJM is one of the largest, the other story here is put a warning out that if they’ve got enough water, you know, planned power going on, if they have a normal summer going on, they’ll be fine. I thought this was an interesting story from the standpoint that the amount of natural gas that they’re having to put on and the reason. They’re retiring some of their coal plants early, even though President Trump is allowing them to stay open. They have people on their board. They’re wanting them to shut down. So this one is an energy crisis of board management by BJM. I thought this was pretty interesting. And then this was a fun article that I put out. Can the you UK avoids Spain blackouts or are they doomed? And I was fairly amazed by the amount of money that the UK is spending in. I’m going to call stupid policies. And I, I, did not know how bad it was until I started digging into it. And I’m sorry, Tammy, for bringing this up, but you can blame me. And I, I absolutely think that, um, they’re investing in grid infrastructure, $35 billion investment from 2026 to 2031 to nearly double the energy transport capacity, fast tracking 4 billion pounds in development, prioritizing clean energy. You can’t buy this kind of stupid. I mean, we I just gave you a price for stupid, so none of the grid frequency is going to work. I hate to say this, but buckle up. It’s gonna get ugly and dark in the UK.
Tammy Nemeth [00:50:13] But that’s okay because all that solar they’re installing they’re also going to dim the clouds to prevent the sun from coming down You know brilliant if I could add something
Stuart Turley [00:50:27] Oh, sure.
Tammy Nemeth [00:50:28] When you’re talking about the UK and for Irena’s story, they said the local community doesn’t want it because they’re like it’s going to wreck the countryside, it’s taking land out of production, there’s how are we going to clean this up afterwards or whatever and so the normally these kinds of planning permissions are done at the local level, the council level, but they some new law. We’re now the the national government can make a determination that this is national infrastructure and can override any of those local authorities. And that’s what they did with this project. They said, yeah, okay, we’ve heard your concerns. We don’t think they’re so bad. We’re pushing ahead anyway because this is infrastructure of national concern. And so When you talk about the billions that they want to put into all this infrastructure over the next five years, this is one component of it, where they’re just going to run roughshod over what the people want and do what the central planners want. So this is going to be setting the UK up for an interesting situation. I don’t know if people, what they’ll do, because the British have tended to be kind of passive about a lot of the different stuff that’s going on, except for Extinction Rebellion for some reason. They chose the wrong thing. But also, your article there about the US largest grid operator, the PJM, I read that article and what concerned me was the part about demand control. So before they said, there was certain times of the year where citizens had signed up to say, if it’s really bad, we’ll curtail our use. You know, we will ration ourselves so that the grid will survive and not have a brown out or a blackout or whatever. And they applied to FERC and it was approved that they can now have demand control all year round. So before it was only at certain times of the year, now it can be any point, at any point in the year they can toggle this on and people be like, oh, okay, I guess I have to ration myself to make sure there’s no blackout or brownout. So I thought that was really interesting in that report.
Stuart Turley [00:52:52] It was, and I did not understand the, I’ve been doing a review of the US grid system. We’re not looking pretty sporty. We’ve got, ERCOT is good for the next couple of years because of natural gas plants, but David and Robert Bryce have brought up a fantastic point, and that is the number of natural-gas turbines are sold out. Yeah. So there is a finite amount of natural gas plants that can come back online and it comes back to my point of why PJM is it may be in trouble is because they’re retiring some of their coal plants, even even though they’ve got permission to keep them open. So it’s like, hmm, I’m not sure who this is, but
Irina Slav [00:53:46] It’s Travis Lynn. His name doesn’t appear for some reason, it never does.
David Blackmon [00:53:53] Yeah, It’s so weird.
Irina Slav [00:53:56] LinkedIn is weird.
David Blackmon [00:53:58] LinkedIn is very weird.
Irina Slav [00:54:00] That’s why people should go to Substack.
Irina Slav [00:54:02] Go to Substack
Stuart Turley [00:54:06] And then my Energy News Beat Substack is theenergynewsbeat.substack.com. And you can find all these stories on Energy News Beat. And I’d like to give a shout out to all the people trying to hack my site. We’re at a hundred thousand people a day on the site, but yet I get seven, five to seven thousand denial of service attacks. We know who you are, so please stop. You’re costing me a lot of money and go away. So anyway.
Tammy Nemeth [00:54:39] Can I, I want to comment on those attacks, because what’s interesting is that if you go to a large language model like Grok, and you ask Grok to look at different research, and it will go to the web, right? So you can say, yes, search the internet. If you have defenses on your website, like what’s up with that, or some of these other ones, Grok can’t access that information. So I asked it a question, it gave me some answer. I’m like, well, can you go to this site and look at that? And it says, I’m trying, I can’t get in. And so then it goes to Mother Jones, or it goes Wikipedia, or it go to someplace that’s easily accessible. So it’s interesting that these attacks, in your protecting yourself from those attacks, you’re also preventing the large language models from accessing an alternative viewpoint.
Irina Slav [00:55:34] So they use the information from the mother Joneses of the internet, which is biased. Yeah, it’s one thing it can’t make, yeah. So the only way you can then count… Fiction and propaganda.
Tammy Nemeth [00:55:51] So I mean it’s interesting when you ask a question and you say do the research and it gives you the links and it’s like well why are you choosing these links, what about these ones, and then it says it can’t access those websites and so on. So I’ve got to think about that when you’re asking these large language models to be doing research. And it’s unable to access alternative research because of those defenses from these nefarious. Attacks and so on.
Stuart Turley [00:56:23] Yeah, unfortunately, I know the government agencies that are doing attacks on my site, and it just really is irritating. But I do have a, I think I have two things. Imagine if you’re a UK business or a UK oil company, I’ve got a video of some of the planning sessions going on. So let’s go ahead and play that one here. Let me bring this up here. Sorry.
Stuart Turley [00:57:05] These are some of the business meetings going on.
Stuart Turley [00:57:15] Should we move to the US or not? I don’t know. What do you think?
Irina Slav [00:57:22] Poor guy, he tried so hard!
Stuart Turley [00:57:28] And poor grandma gets really waxed in this one.
Stuart Turley [00:57:37] But this one… What? How? How high do you go?
Stuart Turley [00:57:54] Those are energy policies in action.
Tammy Nemeth [00:57:56] Yeah, Net zero in a nutshell.
David Blackmon [00:58:01] Okay, who among you misses Jennifer Granholm and all the comic relief she provided?
Stuart Turley [00:58:09] Who?
Irina Slav [00:58:10] In fact, I miss her, yeah.
David Blackmon [00:58:12] That’s the, that’s the problem with Chris Wright? He doesn’t ever say stupid stuff, you know, that we can make fun of.
Irina Slav [00:58:19] Yeah, but he’s positive without being hilarious to Lafette.
David Blackmon [00:58:23] Yeah, yeah.
Stuart Turley [00:58:26] Chris Wright is one cool cat, and he knows that he is a cool cat. That is the, oops, sorry, didn’t mean to do that one. Speaking of cool cat this video is really cool, especially when you consider. The dog knows that this is not really a house cat. And so here we are. We all are talking about energy policies and we know what works and what doesn’t work. But yet this dog knows this ain’t a housecat. Watch his eyes. You got to see his eyes
Stuart Turley [00:59:03] Look at his eyes. He’s going, hey, wait a minute.
Stuart Turley [00:59:20] that dog is
Tammy Nemeth [00:59:24] Wait till that bobcat is bigger.
David Blackmon [00:59:27] You gotta, you gotta, baby Bobcat are fun for about three months and then they’re not fun anymore.
Stuart Turley [00:59:33] Because they do.
Stuart Turley [00:59:34] Are you saying that just because you’re a windmill, you can get bigger and you’re gonna get more efficient or they’re just gonna be worse?
David Blackmon [00:59:44] They’re going to be worse, meaner and more destructive.
Irina Slav [00:59:50] Okay, any last words?
David Blackmon [00:59:53] Um, will BP and Shell leave the UK? Okay. Jeff Chestnut with the final word. Thank you, Jeff. Probably there will. Interesting times anyway. Yes, they should. If they were smart, I think they would. So, Stu, sometimes your thought processes are scary from Tom Mumford. That’s, that’s perfect. And we all agree with that.
Stuart Turley [01:00:20] And by the way, Tom, you ought to live in my mind for about five minutes and you’d be really scared.
David Blackmon [01:00:28] Let’s have a beer some day, Stu.
Stuart Turley [01:00:33] All right, with that, let’s have a fantastic week and we’re going to have some serious fun. Have a great time, guys.
Tammy Nemeth [01:00:40] Thanks, everybody.
David Blackmon [01:00:41] To find a charger now.
Irina Slav [01:00:43] Good luck.
Tammy Nemeth [01:00:45] Good luck!
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