Daily Energy Standup Episode #218 – Electric Buses, Shell’s CEO Under Pressure, and Saudi Arabia’s Surprising Investment in Iranian Energy

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Saudi Arabia Considers A Surprising Bet On Iranian Oil And Gas

Highlights of the Podcast

00:00 – Intro02:26 – Saudi Arabia Considers A Surprising Bet On Iranian Oil And Gas05:04 – EPA’s Illegal Power Play09:04 – Exclusive: Shell CEO comes under pressure from within on renewables shift11:33 – Jackson Buys 8 Electric Buses For Transit System, But None Are Working13:48 – Markets Update16:43 – Outro

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

Michael Tanner: [00:00:15] What is going on, everybody? Welcome into another edition of the Daily Energy News Beat Standup here on this gorgeous Thursday, September 28th, 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 Energy News Beat Stuart Turley, my man. How are we doing today? [00:00:38][23.9]

Stuart Turley: [00:00:39] It’s a beautiful day in the neighborhood. And holy smoke, Batman. Just when you thought the news was going to slow down? [00:00:45][5.7]

Michael Tanner: [00:00:45] No, absolutely not. You always keep it running. We’ve got an absolutely packed menu. First up, Jackson buys five. The town of Jackson buys eight electric busses, four transit system catches. None of them are working just to cover what’s going on there in Jackson. Next up, exclusive Shell CEO comes under pressure from within on renewable shift. Next up, EPA’s illegal power play at ten. Finally, Saudi Arabia considers a surprising bet on Iranian oil and gas. We’ll see what they’ve got going on in Saudi steel. Then kick it over to me. I’ll quickly cover what happened in the overall markets today. Not much movement one way or the other. Overall, we did see oil prices drop tremendously, though. I’m going to push back a little bit on the reason for that. Crude oil storage numbers from the EIA dropped 2.2 million barrel draw, but not really sure the underlying issue with where oil prices went. We’ll unpack it all and a bag of chips later, guys. But first, as always, the stories and analysis you are about to hear are brought to you by the world’s greatest website. Energy News Beat the best place for all your energy news and how to stay up to speed with the ever changing marketplace. You can hit the description below, see all the timestamps. You can subscribe to this podcast on Apple Podcasts, Spotify. You can also subscribe to the video on YouTube at Energy News Beat. Hit that subscribe button. The best way to keep up to speed and support the show is to go ahead and hit that subscribe button. Never miss an episode you can check out Dashboard@EnergyNewsBeat.com. Email the show Questions@EnergyNewsbeat.com. Let’s go and kick this off. Those do. Where do you want to begin? [00:02:22][97.1]

Stuart Turley: [00:02:23] Hey, let’s go ahead and start with Saudi Arabia. Saudi Arabia considers a surprising bet on Iranian oil and gas. I didn’t see this one coming around the corner. Iran has about 50 billion in oil and gas projects that are in the works. They run out of money. They happen to have $6 billion that they were just released by the Biden administration. So they got a little bit of money. But Saudi is about ready to kick this right in the pants. Let’s go through some of this. The national Iranian oil company in IOC has around 50 US 50 billion in oil and gas related projects now underway with more even coming further, Iran has done a great job in avoiding all of the sanctions on the nuclear deal really, really well over the last few years. But around 20 billion of this will go to completing the super giant South Paris natural gas field. Natural gas, one of the biggest gas fields in the world, stretches over 33,700 square kilometers in 14.2 trillion cubic meters of gas reserves, plus 18 billion barrels of gas. Consulate condensate, sir. Excuse me, Michael, is that a fairly big reserve? [00:03:46][82.6]

Michael Tanner: [00:03:46] Yeah, I’d say it’s not small. [00:03:48][1.2]

Stuart Turley: [00:03:48] I think we could do it. [00:03:50][1.2]

Michael Tanner: [00:03:50] The 33 point TCF of gas. Yeah, there’s a little bit there. [00:03:53][3.2]

Stuart Turley: [00:03:54] Okay, cool. And what they’re doing is they’re getting into the LNG rush. The LNG story is going to be here for years. So when Iran has another 6 billion sitting there that they’ve been given and then you have wait a minute, Saudi Arabia is seeing a long term play there. It’s kind of like BRICS is now including Iran. So it’s like, holy smokes, Batman, this oil, all of this is now coming to fruition for Ocean. [00:04:24][30.5]

Michael Tanner: [00:04:25] Well, what’s Saudi doing? They’re specifically targeting the petrochemical sector through all of this, where they probably see a lack of their own refining capability. Now, if we could bridge the gap and use the petrochemical gap with Iran to bridge that, it maybe makes sense. So I think it’s interesting what Saudi Arabia is doing. They’ve clearly been thinking long term, considering they’ve started this process at the end of 2017, moving into 2018. But it’s super interesting what they’re doing and how, you know, at the end of the day, you know, commerce, men’s, all wounds. [00:04:55][30.1]

Stuart Turley: [00:04:56] It does. And Saudi first and Iran first is what this is saying. Again, what’s next? Let’s go to the EPA’s illegal power play. Michael, can you believe the are dead? Cassidy of the EPA. They come up with an illegal power play. [00:05:14][18.5]

Michael Tanner: [00:05:15] Michael I didn’t see it coming. [00:05:16][1.6]

Stuart Turley: [00:05:17] I didn’t see that one coming. The U.S. Supreme Court ruling in West Virginia versus EPA last year. Boy, everybody was just shouting around on that bad dog. A historic defeat for the EPA ruled that the 2015 Clean Power Plan by President Obama’s that was his big time climate agenda. You remember that was unconstitutional and dramatically limited the EPA’s power to regulate. All right. The article is fantastic, Michael. It says you could either have two outcomes. You could either take its lumps and then go work on real regulatory issues or it could throw everything into the boat and try to go for one last attempt to hit a home run with no bet. What do you think they’re going to do? [00:06:05][48.6]

Michael Tanner: [00:06:06] They’re going to take the home run and try to try to force their way down our throat. [00:06:09][3.7]

Stuart Turley: [00:06:10] Oh, yeah. And so what they’re going to try to do is put these through before next summer so that they can at least be in the court system as a political win for Mr. Biden under the proposed rule. This is just, Michael, what they’re saying is it’s called a new source performance standard and NSP s and they’re talking about new performance standards for the grid, natural gas and coal for retrofitting. They didn’t even make any rules because they said we’re not building any more, so we’re not going to need them. And so they’re not giving the power companies any directions. Okay. Larger, new modified, combined natural gas plants, 30% of the nation’s electricity would be required achieve close to zero carbon emissions by either implementing carbon capture and storage, which is cc s and not if you had the utilization at B utilization. If that CC you asked if they could store sell it. [00:07:19][69.2]

Michael Tanner: [00:07:20] But you got to drop the utilization because trust me, we don’t know what we don’t know how to utilize it yet. [00:07:23][3.8]

Stuart Turley: [00:07:24] There’s a lot of Diet Cokes that people are going to have to drink in order to get that. And so let’s see, what was it? Oh, capture 90% of the carbon emissions by 2035 or by switching from natural gas to 98% green hydrogen by 2038. [00:07:43][18.8]

Michael Tanner: [00:07:44] Because green hydrogen even ready. [00:07:45][1.3]

Stuart Turley: [00:07:46] Know it probably won’t be ready until 2040. I mean, holy smokes, man. Man, no, this is like somebody had a bad dream. They woke up and said, Hey, let’s get electric busses. We’ll cover that here in a sec. It is absolutely ludicrous. I mean, okay, I love Oklahoma and I love OSU and I love Oklahoma University, but this is so dumb. Even nobody from Oklahoma University could have had anything to do with this. This is so dumb. It’s even below them. [00:08:22][35.8]

Michael Tanner: [00:08:23] Below. See? You know, it’s stupid again. It you said it all in the beginning. It’s all for political winds. They don’t really care if it passes. They just need something for President Biden to campaign on. And unfortunately, it it it it comes at the expense of forcing a lot of extra. Yeah, a lot of extra stuff going on that doesn’t need to happen in terms of, you know, all of this new looking at regulation get everybody stirred up for ultimately nothing’s going to happen. Super annoying. [00:08:50][27.9]

Stuart Turley: [00:08:51] Oh, it’s just pathetic. And what’s happening, Michael, is we’re seeing around the world this push, this gigantic it started with the prime minister of England and then it got into a shell. This one shell is now under the pressure because they’re now saying, hey, wait a minute, since the prime minister of England said, hey, we had to push it out five more years, all of a sudden, all the big boys, big oil and every energy, total energy is already said it and Shell while Swan, that’s a funny name, has already come under pressure. In an open letter posted this month. Let’s see where is it? Quote, For a long time this guy was Thomas Brostrom. After less than two years, he was out. He quit. He said, quote, For a long time, it has been Shell’s ambition to be a leader in the energy transition. It’s the reason we work here. The recent announcements at and after the capital markets that they deeply concern us and we can only hope the optics of the CMT announcements are deceiving and that Shell continues its path as a leader in the energy transition, you know, how can they pay for the energy transition? If there’s no profits, the taxpayers are now not bidding on offshore wind. And there’s a whole money paradigm shift changing right now in the renewables. So I thought this was pretty interesting when we you and I talked, I believe two weeks ago, Michael Shell, BP and all these others started following the U.S. big oil companies and backing away from renewables. I thought this is a pretty good article. [00:10:42][110.9]

Michael Tanner: [00:10:43] Yeah, And I mean, one thing, it’s it’s it’s nice to see a company be able to take criticism from internally and turn it into a positive. And I love the quote from from the CEO. For an organization with the crux of the energy transition, there are no easy answers and no shortages of dilemmas or challenges, Hills is spokesperson said. We appreciate our staff that are engaged in a passion for the energy transition and sell that a bunch of Google he got after that. But I love that they’re standing behind this guy and these two people are not completely throwing them under the bus because he’s right. There is some you know, something’s got to go here if you’re going to lean more, You know, they say Shell keeps saying they’re going to lean more into operational efficiency. Well, you know what that means. Oil and gas projects. [00:11:25][42.0]

Stuart Turley: [00:11:25] Drill more wells. [00:11:26][0.5]

Michael Tanner: [00:11:27] Exactly. Get more oil so we know exactly what that stands for. Hi. [00:11:31][4.6]

Stuart Turley: [00:11:32] My next let’s go to the Jackson buys eight electric busses for transit system. No, no working. Hang on, hang on. Oh, this is the vice president. She wants to cut in. She loves busses so much. She just wants to take the story from us, so. Okay. Sorry. Okay. The wheels on the bus. Let’s go down here. This is actually pretty funny. It’s from Jackson Hole News and guide reports that the last of the electric busses went out service two months ago. Michael and the broken busses have been waiting parts for months. This is really kind of sad. Sad. They were so excited to get them, he said. It’s difficult to move forward with road projects, a community with a strong voice. Not in my backyard. You got to love, Not NIMBYs, not in my backyard. And so instead, a majority wanted driving to remain inconvenient in hopes that people would ride more bikes in public transit. That’s not very practical. [00:12:30][58.6]

Michael Tanner: [00:12:31] I mean, this just seems to be the continual case with renewables. It seems to be that there’s there’s you know, we we spend all of this capital upfront to roll these things out. Then they break down and they don’t even necessarily do the job and now they go bankrupt. [00:12:46][14.7]

Stuart Turley: [00:12:47] Oh, here’s the part. I loved it. Range shrinkage, he said. [00:12:52][4.9]

Michael Tanner: [00:12:52] It’s just shrinkage. It’s just shrinkage. [00:12:54][1.6]

Stuart Turley: [00:12:56] All I can see is George Costanza in the corner, shrinkage of the cold water. So the breast just had shrinkage and they had to return to the depot at midday to recharge and they replaced by another one, one or diesel powered busses. There’s a difference in performance in cold weather and warm weather. Oh, that’s where their shrinkage joke comes in. [00:13:24][28.2]

Michael Tanner: [00:13:25] It all comes back to shrinkage. [00:13:26][1.1]

Stuart Turley: [00:13:26] But now, you know, I wanted to pick a story that all we needed, all we needed out of this story was a beaker. Like there was a manhole beaker. Oh, I said Beaker, Sorry. [00:13:40][13.5]

Michael Tanner: [00:13:40] That’s funny. What else you got? Is that it? [00:13:42][1.7]

Stuart Turley: [00:13:42] That’s it, man. I had too much fun today. Pig in the storage. [00:13:45][2.9]

Michael Tanner: [00:13:46] Crew will kick over to finance quickly, guys. I mean, not much for the S&P 500 and NASDAQ. S&P flat only about point only about really a 10th of a percentage point. NASDAQ 2/10 of a percentage point. Oil’s really what ran open the day just at 9083, currently trading 93, 85 time stands 5:50 p.m. here on the 27th. So pretty good day for crude. You know, if you tuned into routers, they’d tell you that it was due to the EIA crude oil storage drop of only 2.2 million barrels. So you know to spoil the headline EIA comes out we saw yesterday was supposed to be about a 1.5 million barrel build EIA comes out and says oh nope it’s actually 2.2 million barrel draw. The issue is everybody freaked out because they finally looked at the report and realized the Cushing stocks are down. I mean, I read this quote that we’ve got from Andrew Lipow, president of Lipow Oil Associates. You probably just went ahead and opened up the crude oil storage numbers today. Thank you. Good job, Andrew. The market is being led up by storage numbers as we are getting to minimal operational inventories at Cushing, folks. Hello, McFly. We’ve been trending this way for months and even years, and we just now decided at Lip Oil Associates to wake up and say, Oh, wait a second, wait a second. Cushing’s at dangerously low levels. You don’t. You know. [00:15:11][85.1]

Stuart Turley: [00:15:12] And people are selling the U.S. Treasuries. [00:15:14][2.0]

Michael Tanner: [00:15:15] Dashboard.EnergyNewsBeat.com folks. You’ll see crude oil storage numbers over historically hit the five year button. Folks, it’s down in the SPDR there. Yeah well the ESP led by the SPR. But Cushing is also getting extremely low, which it’s been trending that way for weeks. My point is, you see, I see moves like this and the justifications for those moves don’t seem to add up. Now, what was really the cause of the move? I think the overall tightness of the market is really what’s driving this up. Is it the fact that we think we’re going to run our oil off Cushing? No, no, no, no, no. People, you know, guys like Andrew may have just rolled out of bed this morning like, oh, EIA Wednesday day. Okay, great. Take a look at what happened. Is that what’s moving the markets in terms of this big move? No, it is much more to do with the long term fundamental outlook than I think some day to day movements here. So I was getting a good giggle out of this. [00:16:07][51.3]

Stuart Turley: [00:16:07] Do you got a lot of it out of Libya? How do we get him more coffee? Oh, that’s a nice mug. [00:16:12][5.6]

Michael Tanner: [00:16:13] Any he needs. It’s a great mug. I love our combo curve mug. I love that. You know, clearly he’s not using combo curve. They do valuations because, you know, he’s he’s way again. He’s clearly not. We know that. I think it’s been a great how does. [00:16:27][14.3]

Stuart Turley: [00:16:27] He get a hold of you for to teach him how to do that right. [00:16:30][2.7]

Michael Tanner: [00:16:31] Well my contacts information in the show notes you call us will help you with any valuation you need. Trust me, we’re not waking up at at nine at 928 just to tune into crude oil storage and trade some oil. I tell you that much. What should people be worried about this weekend, Stu? We’re off now is the last is last They’ll hear of us. [00:16:48][17.0]

Stuart Turley: [00:16:49] Well, it’s going to be interesting to see what happens there. Some more decisions come in around the corner. We get the we just got stupidity coming out of the current administration there. I’m hearing rumblings of some things next week that just make me want to throw up. [00:17:03][14.2]

Michael Tanner: [00:17:03] Well, we’ll we’ll make sure to leave that to next week, guys. But we appreciate you. Check this out on Friday, you’ll be able to listen to our weekly or what interviewed, I guess, weekly recaps on Saturday. What drops Friday. [00:17:14][10.9]

Stuart Turley: [00:17:15] What we’ve got Todd Todd Royal and he is a nuclear geek I guess they just rolled it out on the LinkedIn little blurb on it and so it’s rolling out Friday. I’m excited that that was a fun, fun podcast. Great for Todd. [00:17:34][18.8]

Michael Tanner: [00:17:35] Now. Got to love Todd Royal there. You can check out the weekly recap. Otherwise we will see you guys on Monday. Folks for Stuart Turley on Michael Tanner, stay frosty out there. [00:17:35][0.0][1011.8]

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