Daily Energy Standup Episode #231 – Energy Industry Insights: China’s Coal Expansion, COP 28, Natural Gas, Africa’s Resistance, and ExxonMobil’s Deal

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

Michael Tanner: [00:00:14] What is going on. Everybody, welcome into another edition of the Daily Energy News Beat Standup here on this gorgeous Tuesday, October 17th, 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 are we doing today? [00:00:38][23.5]

Stuart Turley: [00:00:39] It’s a beautiful day. Neighborhood. Hey, I got to drive by some more wind farms that weren’t turning. [00:00:44][5.6]

Michael Tanner: [00:00:45] And interesting because it was actually a windy day, at least here in Dallas. So they they didn’t get any wind out west. [00:00:50][5.3]

Stuart Turley: [00:00:51] Well, they did. One half hour on this side was spin and these weren’t. And I got a picture of it because I got a theory. They’re the old ones with the very, very small turbine. There have been abandoned move. [00:01:02][11.2]

Michael Tanner: [00:01:03] Well, we love that love some boots on the ground reporting you are your live at the international oil trade show is that it is Yep. [00:01:10][7.3]

Stuart Turley: [00:01:11] In in the Permian Basin International oil and gas show. [00:01:16][5.0]

Michael Tanner: [00:01:16] Yeah sounds sounds awesome you still have an absolute banger of a of a show for us lined out lots of stories first up cop 28 can’t start soon enough COP 28 in Dubai Climate negotiations at a crossroads. Next up, reality bites Why wind, solar and electric car advocates must also love fossil fuels. Got to love a little creepy. John Kerry, Joe Biden image there. So avoid that at all costs, folks. Next up, U.S. oil is back in ExxonMobil’s $60 billion deal for Pioneer. Is it even the biggest signal? Ooh, spicy stew. We’ll dive into a lot of what’s going on with the fallout between that big M&A deal that we saw a couple of weeks ago. Next up, Africa’s revolt against net zero and then finally, China’s coal power binge escalate. Over 300 more plants on its way. Well, that will cover the new segment stool and toss it over to me. I’ll quickly cover what happened in the financial markets today. Specifically, we saw the S&P 500 NASDAQ rise. We did see crude oil tumble a little bit, mainly off the back of some potential rumors that sanctions are easing on Venezuela. Very interesting. So we will cover all of that and a bag of chips near the end, guys. But first, as always, the news and analysis you are about to hear is brought to you by the world’s greatest website. EnergyNewsBeat.com The best place for all of your energy news to the team. Do a great job of curating that website, making sure it stays up to speed with everything you need to know to be at the tip of the spear. When it comes to the energy business, you can check us out Spotify, Apple Podcast, wherever you get your podcasts. The best way to support the show, go to YouTube at Energy News Beat. Go ahead, subscribe. Go like a you comment on the show. I’m tired of just having to comment on the stuff. It’s a joke. He only comments on every the third of every video. So we appreciate everybody who’s who’s who, who’s reviewed and sent in comments. You can do that via [email protected] or you can check out the description below has a great, great way to see all of the links, timestamps, stuff for the show. I’m out of breath Stu. Where do you want to begin? [00:03:20][123.4]

Stuart Turley: [00:03:20] Oh, I don’t know. Let’s start in my favorite country, China. China’s coal power binge escalates over 300 more plants on the way. We’re starting there for a reason here, Michael. This is pretty crazy. This is just China’s mad dash for coal power continues. There’s a couple weird numbers in here. They are issuing permits for 52 gigawatts in coal power. That’s 300 coal plants. How about that? ESG and climate warming over there from the folks that manufacture everything? Here is a report, quote, After the permitting spree of the past year, China has 243 gigawatts of coal fired capacity currently permitted in under construction. If the permitting rush is not stopped until projects that are currently announced or permitting stages of gain permits, as there will be a total of 392 gigawatts of new coal fired power capacity in the pipeline. [00:04:28][67.9]

Michael Tanner: [00:04:30] I love this one. Quote a career lead analyst, whatever her name is, Lowry Melody clung to the rapidly dissipating hope that China still plans to keep those promise of peak carbon by 2030 and net zero emissions by 2050. Even as they’re permitting more coal, they still have to come up and say, Well, no, we’re going to be net zero by 2050. [00:04:49][19.0]

Stuart Turley: [00:04:50] Well, you know what? I think the Biden administration has given all of the United States permitting reform to China. And so we have not we don’t have any permitting experts over here in the U.S.. [00:05:03][12.6]

Michael Tanner: [00:05:03] No kidding. I what’s next for me? [00:05:07][3.4]

Stuart Turley: [00:05:07] Okay. Here we are. We’re going to my favorite place, Dubai. And we’re flying around from China to Dubai. COP 28. In Dubai, climate negotiations at a crossroad. And I think China is probably right in the center of that crossroads. Michael, there’s a cartoon, cute cartoon there. And you look at 22, 23, 24, 25, 26, and then 28 is there. And you see people at the bar either trying to pick each other up, and now they’re having that I’ll take checks. Bank order. Do you have any money? Is there money down there? What is going on this year? And that’s because there’s such a there’s a great sequence of events in here. Michael from COP 27, and now we’re coming down to Camp 28 with the leadership in the UAE being cast animated by legacy media. Similarly, the conclusion of COP 28, will it care? This is a hoot of an article, Michael. It’s kind of like sitting there going in COP 28 another high carbon footprint fast. And they have the Saudi prince going to be there. They have Aramco going to be there. I got to get me a flight to Dubai to be there for this and maybe. [00:06:27][79.6]

Michael Tanner: [00:06:27] Catch a flight on John Kerry’s private jet. We know that’ll make it. We’ll know that. [00:06:30][3.4]

Stuart Turley: [00:06:31] But I would not out there ever on a ride with Lurch. There is no way that I could ever get my cart ready carcass on a plane with Lurch. The economist John Kenneth Galbraith once remarked, Meetings are indispensable when you don’t want to do anything. They’re going to go over there and have ladies in the evening, and they’re going to have nothing to talk about because it’s economies. [00:06:56][25.7]

Michael Tanner: [00:06:57] Is your prediction that COP 28 is going to be a slight about face when it comes to setting these ambitious climate targets? Or do you feel like there’s all of this? Because right now there’s all this noise every we’ve read. This is the fourth story we ran that said, Hey, cop 28 might be a little different, maybe a little bit. You know, you said NBS is going to be there, UAE is going to be there. You know, there’s a lot of people within the oil and gas business. They’re going to be there and are giving a prominent voice. Do you see this is actually a shift in what’s going to be the policy’s, quote unquote, detriment come out of this? Or is this just a lot of noise around what will eventually just be the same old talking points? [00:07:32][35.4]

Stuart Turley: [00:07:33] This is a great one because it rolls right into the next story. Michael, reality bites. Why wind and solar are going to be needed in order for the energy transition. However, I want to go over a couple of numbers in here in COP 28 and to buy 140 heads of state, senior government leaders, 70,000 participants, and I now have about a year all those heads spinning. I can’t wait to see the prince walk in. Okay. Reality bites. Michael COP26. When you and I were talking about they snuck in. Natural gas is needed. It took longer than I had thought in order for it to be accepted. This is the year they’re going to roll out natural gas as the queen of the prom. In the picture on this one looks like a lurch. I mean, John Kerry is trying to really. [00:08:22][49.6]

Michael Tanner: [00:08:23] He told the really funny joke some Heinz ketchup joked, oh, yeah. [00:08:27][3.7]

Stuart Turley: [00:08:28] Hey, if you slip again, I’m going to throw some catch up on you on the stage and that’ll flip people out. The Secret Service wouldn’t know what to do. So here it is in this. It says, As I see it, coal and natural gas are so essential that investing in them is the epitome of sustainability because these fuels sustain our privileged way of life and our $25 trillion economy, for instance, in this article provides 95 to 97% of our energy for transportation, coal, jack gas generators, 60% of the U.S. electricity. And I got into an argument for the very same point this is making Michael Bay go. But what about wind is actually 15% of our energy that we’re making with because of renewables. Now, how did those renewables get on the grid? You got the minerals, you got everything else, you got the steel, all of the fossil fuels had to get them there and then they’re not sustainable. So anyway, I got really tickled at this one. Those two articles go hand in hand with each other. [00:09:39][71.1]

Michael Tanner: [00:09:39] Yeah. And so I think to your point, I think we are going to see a narrative shift when it comes to COP 28, you know, Yes, we’ve seen hints of it in 26, 27, 28 may be the coming out party. It’s going to be interesting to see the narrative and and if it’s actual policy that’s being, you know, and how far they go, obviously natural gas has to be a part of it. It’s going to be very interesting cop to stay up. When is cop 28 is coming up here, right? [00:10:07][27.6]

Stuart Turley: [00:10:07] Oh, yeah. It’s next month. [00:10:09][1.6]

Michael Tanner: [00:10:09] There you go. So the best place to stay up to speed on everything going on. 28. EMV baby. [00:10:15][5.6]

Stuart Turley: [00:10:16] That’s right. Real quick, I want to give a shout out to Mark Mills and he has been on the podcast twice and he’s quoted in here is some of the information on it. Mark Mills Got to love my podcast. Your podcast, Our podcast. Let’s go to Africa. [00:10:30][13.9]

Michael Tanner: [00:10:30] Oh, my neck here. Just scratching my back. Sorry. [00:10:33][2.6]

Stuart Turley: [00:10:33] Oh, I broke my arm pat in my back, you know. Hey, somebody’s got to do it. What’s in Africa? Africa? Revolt against net zero. This is one of my passions about being a humanitarian and a legend in my own mind. Not only am I a legend, I am a humanitarian. And guess what I get to do tomorrow? I’m talking to Cyrus Brooks from. He’s going to be in Africa and he’s lining me up some African leaders and big dogs to talk about Africa and stepping away from net zero. Africa is revolting against net zero and I’ll have more on it, but this article is really cool. Then at the COP26 summit, Oh, this one is actually in a thread again, Michael, you see how I wove that in there? The Breakthrough Institute. I can’t even. I’m I, Michael VI, her, Rima Chand and Siva Wang of the Breakthrough Institute observed, quote, No matter what advocates and policy makers say, these cheap renewables only scenario remain the theoretical and unproven for wealthy countries. Africans are tired of having a high belt and road initiative, high cost of capital, high cost of energy being forced on them because nobody is loaning them money for fossil fuels. And that drives me nuts. [00:12:02][88.7]

Michael Tanner: [00:12:03] Sorry, it is. Considering the fact that, you know, they have in it, you know, they have 13% of the world’s global gas reserves, which is only slightly less than the Middle East. I mean, what Africa has the same amount of natural gas as the Middle East and we can’t allow them to unlock it. Why? Because. Because. Oh, we got to it first. You know, we had all our fun with with with oil. And now we all have I mean, it’s incredible to me creates the amount of natural resources that Africa has that they’re really not able to be exploited. I loved it. You know, at one point they say the governments of Uganda and Tanzania say they intend to move forward with the project regardless, arguing they can’t afford not to exploit their natural resources while the world still runs on fossil fuels. I couldn’t agree more. [00:12:43][40.6]

Stuart Turley: [00:12:44] Absolutely. But I guarantee you we as a world should pay more for oil coming out. But I know it’s it’s a world market. There needs to be in Africa only Africa only tax so that we pay for the energy transition by buying from them more expensive and then selling it internally for them at a lower price. I’m all in on that. [00:13:07][22.8]

Michael Tanner: [00:13:07] Yeah, this is a great article. Thomas Fasi over at the Unheard. Yes. You know, there’s a bunch of hot quotes in here. You’ve got the Senegalese president, Macky Sall, who’s also the president of the African Union. He’s quoted in here basically saying that they’ve got no choice but to explode. The largest gas reserves mean that the president of the former VP of Nigeria making the exact same argument, everybody. What’s funny is everybody in Africa is on the same page. It’s just us that for some reason can’t get on their page. [00:13:32][24.8]

Stuart Turley: [00:13:32] Oh, it’s me. I’m all in, man. I’m a cheerleader. I’m like. [00:13:36][3.3]

Michael Tanner: [00:13:36] Yeah, you’re not the one holding it back, though. But yes, I agree. But we are talking Exxon here. [00:13:40][4.3]

Stuart Turley: [00:13:41] This is a wild article, Michael. Okay, this one. Let’s go through this article. U.S. oil is back in. ExxonMobil’s $60, $60 billion deal is not even the biggest signal. And so when we roll through this capital discipline, this is a great quote in here. Capital discipline in the US industry hasn’t gone away and oil is at 85 to 90 barrels. This is from Rob Thamel, senior portfolio manager at Tortoise African in Kansas City. Capital discipline in the US industry has not gone away. And I’ll tell you what, Michael, this is hats off to the oil and gas industry for not going away from it and that they are having the capital discipline not to just go nuts and start drilling again. On the other hand, it’s going to keep the price up. So I think that’s one of the biggest ones in here where oil companies have been spending their money, cut capital spending to $106 billion last year from a 199 billion in 2014. That’s a lot of wells not being drilled. Michael. [00:14:53][72.5]

Michael Tanner: [00:14:54] Mm hmm. And again, what this what the deal signals is buying current production is going to be a lot easier than getting new production. Now, I think what’s interesting is that his argument of peak oil production will continue to rise as we see rig counts continue to fall off. I know we did see an increase of three last week, but we’re still a hundred rigs. Lower than what we were last year. We’re going to start seeing some of those declines. So I think it’s I think it’s interesting. You have no money not being spent in the capital and people being more disciplined is a year for the oil and gas business, but it also comes at the cost of higher energy costs. If we if we have these extraneous world events like what we’re seeing right now, it can really do a number to prices. You know, to give you an idea, in 2014, we spent about 200 billion on capital spending. Last year was about $106 billion. So that’s just a increase over about four. That’s a decrease of about $90 million. There is we spent about 45 billion per quarter on shareholder on stock buybacks and dividends. So there there’s the same amount of money still going out. It’s just going back into the shareholders, which they like. [00:15:59][64.8]

Stuart Turley: [00:15:59] Now, let me let’s go to the one paragraph here where it says the heading is U.S. crude energy security and big oil economics. There’s two quotes in here that I want to read real quick. The super majors are taking capital out of offshore, Hatfield said. They are reducing overseas development because it’s more risky, which is great for U.S. energy security. In the Permian, you get your capital back in a little over a year. Hatfield said the return on investment is much faster and much higher because the wells begin to produce so quickly. Pretty cool little insight there. That is also energy security around the world and geopolitical stuff going on that they’re really looking at. [00:16:42][43.3]

Michael Tanner: [00:16:42] And they put that in there. That was one of their fourth bullet points was energy security in their merger deck. So they’re kind of hammered home for sure in that. [00:16:51][8.4]

Stuart Turley: [00:16:51] Great. So anyway, we got an awful lot going on. [00:16:54][3.4]

Michael Tanner: [00:16:55] No, absolutely. Is that all? Is that all for the news? [00:16:57][2.4]

Stuart Turley: [00:16:58] I got about 17 more stories, but I’m good for right now. Cool. [00:17:01][2.7]

Michael Tanner: [00:17:02] Quick, we cover what’s going on in finance. We did see the S&P 500 up about one full percentage point. NASDAQ trades up about 1.1 percentage points, as I think some of the led by defense stocks today. I always find that hilarious when I wonder why Raytheon’s up. Not just kidding. We did see oil side oil did tumble. You know, we were all the way up to a little bit above $88 currently sitting 8693 really off and it was late movement and still, I don’t know how much insight you have on this, but really that dollar drop from what we saw earlier in the afternoon comes off some rumors that Reuters dropped about price right as we’re sitting down here, Stuart, that the Venezuelan government and opposition plan to resume long suspended talks on Tuesday in order to ease oil sanctions if President Nicolas Maduro can commit to an internationally monitored election next year, according to multiple sources. So obviously, I doubt there’s going to he’s going to agree to monitor elections, but that seeming the restart of those talks already drops oil, the dollar. It also seems to be it seems from from from analyst standpoint, specifically, where’s my quote here? Hey, we’re talking specifically about right here we go. I’m John Cunliffe, partner with again Capital. It’s more of the same old money in terms of conflict in the Middle East being contained from affecting crude oil supply. So yes, what’s going on in Israel is not great. We’ll continue to keep ever BRP, but it seems to be as long as we don’t think the Strait of Hormuz is going to get closed, all sort of kosher with oil. And I don’t know. And it seems to be again, I agree with the sentiment from John Cutcliffe. Here are Kid Kliff again, Capital again, it seems. Have you ever see what movie was that with? Was it Oh, what’s the miracle? We’ve got the hockey players again. Okay, who do you play for? So I’ll stop quote Movies point is. [00:18:49][107.5]

Stuart Turley: [00:18:50] As long as we. [00:18:51][0.8]

Michael Tanner: [00:18:51] Know there is not going to be a disruption of that Strait of Hormuz or some of those larger pipelines. Remember, we should theoretically be having sanctions on Iran. Do talks about the darkly. I wonder why Stu’s been talking about that darkly. It’s rare times like this because it pricing that is so again, very interesting to see what happens. You know it seems like that cease fire failed today. I don’t know. You know, still maybe you give a quick update. It’s if you’re listening to this, it’s it’s Monday night world coordinates about 6 p.m.. What’s the latest in Israel right now? [00:19:20][29.3]

Stuart Turley: [00:19:21] I don’t have any changes or updates or everybody keeps saying, wait a minute there. They’re about to jump in. Oh, they’re about to jump in. Oh, they’re about to. The biggest change was the tone from Iran. Iran. Now it’s causing a big question around the Middle East. Are they abandoning Hamas? Kind of like Biden abandoning all of our gear in Afghanistan? And so it looks like Iran may the people are in the street saying death to America. But the ayatollah is up there saying, oh, by the way, we’re not going to go stepping in with Hamas. It looks like they just threw Hamas under the bus or Hamas. [00:20:04][43.1]

Michael Tanner: [00:20:05] It’s a joke. Joke. [00:20:06][1.0]

Stuart Turley: [00:20:07] Okay. Anyway, so with that, though, I do want to say they are president. Lifting or ignoring the sanctions again on Venezuela is energy and policy. Hypocrisy of despicable. Huge trend issues. I heard that today and I was like, What a chowder head. We have a president that is a chowder head because he’s going to lift sanctions again for Venezuela. And we’ve got the great oil and gas people in the United States that we could do this. This is nuts. [00:20:46][38.4]

Michael Tanner: [00:20:47] Yeah, it’s not very America first. It’s it’s and, you know, maybe we don’t need to be. I mean, and that gets into the whole argument of, you know, do you come at a mindset of America first versus everybody else first? I think that’s a legitimate argument. But I can absolutely agree with you there that this is this is not an America first policy and that, you know, we’d be much better getting those 2 million barrels a day here rather than going out and trying to get it from Venezuela. But unfortunately, some either you and I get to make that decision. So we just sit here and read the news. What else got you worked up today? [00:21:16][29.5]

Stuart Turley: [00:21:17] Oh, I am excited about getting to meet with all the CEOs and record podcast. I got two days of about 90 people I got to talk to. I can’t wait. [00:21:26][9.0]

Michael Tanner: [00:21:26] To be outside. Hopefully we can get power to you. Hopefully you’re not hooked up to a generator that’s being fed by a wind farm. [00:21:31][4.7]

Stuart Turley: [00:21:32] You’re going to laugh. I brought my solar generator. At last I can run my office of ten screens. It’s big enough that I can run ten screens, 8 hours on it. Just people are going to laugh. [00:21:43][11.8]

Michael Tanner: [00:21:44] Hey, solar, wind, nuclear. We love it. [00:21:47][2.8]

Stuart Turley: [00:21:47] All. I love it all. Got me some. [00:21:48][1.5]

Michael Tanner: [00:21:49] Context. [00:21:49][0.0]

Stuart Turley: [00:21:50] Get me some hydro. [00:21:51][0.5]

Michael Tanner: [00:21:51] All right, guys, with that. Yeah, we’re going to we’re going to dig a river out there in Midland. That’s exactly what we’re going to do. Hi, guys. With that, we’re going to let you get out of here, Get back to work. Appreciate you guys Checking us out here on the World’s Greatest podcast. For Stuart Turley, I’m Michael Tanner. We’ll see you tomorrow, folks. I think I’m doing a solo show tomorrow, so you’ll get me more. [00:21:51][0.0][1266.0]

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