Daily Energy Standup Episode #250 – Iran-China Trade Surges, Legal Victories in Alaska, and the Growing Role of Fossil Fuels

It’s no secret that fossil fuels are still going strong, as we discussed last month. But a new United Nations-backed report paints an alarming picture of how dramatically coal, oil and gas production is expected to grow in […]

Moody’s turns negative on US credit rating, draws Washington ire

Michael Tanner: [00:00:15] What is going on, everybody? Welcome to another edition of the Daily Energy News Beat Stand up here on this gorgeous Monday, November 30th, 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 show, the purveyor of the show and the director, publisher of the world’s greatest website, Energy News Beat .com, Stuart Turley, my man, how are we doing? [00:00:38][23.3]

Stuart Turley: [00:00:38] Today is a beautiful day in a neighborhood up here in Bear country. Beautiful. [00:00:43][4.3]

Michael Tanner: [00:00:43] Absolutely. No, I’m glad you you made it up there. You’re staying safe away from any possible craziness, which is awesome. But you still managed to lineup an absolutely banger of a show. Got some titles here. Read off stuff. First one explainer. Iran is expanding oil trade with its top buyer, China in a move nobody really saw coming. It’s a joke. I think we figured China would go to these lengths to to buy as much crude oil as possible. So still dive into what’s going on with the new Iranian Chinese trade. Next up, Alaskan judge sides with ConocoPhillips on a new $7.5 billion oil project. TotalEnergies nears deal to Buy Texas gas power plants. Interesting. We made a lot of fun of them over the years. And it’s interesting and in my opinion, not a bad move to go ahead and move into the Texas gas markets. Dual coverage. Next up, oil and gas, quote, not the problem for climate change, says UK’s net zero minister. Interesting. Has he seen the light? We will cover all that. And finally coming soon, more oil, gas and coal. Interesting. This is actually out of the New York Times article, which is pretty funny to see those do dual cover and what a cover what one of our favorite newspapers is talking about. Bill Then toss it over to me. I’ll quickly cover what happened on Friday. When it comes to oil and gas finance, we did see rig counts come out, so I’ll quickly opine on that. Then we’ll let you guys get out on here and start your Monday. Before we do that, guys, again, as always, the news and analysis you brought to here is brought to you by the world’s greatest website www.energynewsbeat.com the best place for all your energy news you can check us out you can email the show dashboard.energynewsbeat.com Or [email protected] you can check out our news data platform dashboard.energynewsbeat.com. Appreciate everything that the team does they do a great job of making sure that the the show is up to speed with everything that we need to know in terms of the descriptions. You can check out the links below. Everything needs to be there. Links below. I’m out of breathe Stu. Where do you want to begin? [00:02:41][117.3]

Stuart Turley: [00:02:41] Hey, let’s start with our buddies over there in Iran. The title of that one is Iran’s Expanding Oil Trade with top buyer China. Michael, this one has got some stats in it that I didn’t know. And the existing sanctions, we know the Bidens have not you know, they’ve they’ve not enforce them. How much Iranian oil is China Buying is a huge thing. Tehran’s October output edged up to 3.17 million barrels per day. That’s net when Trump was in power, it was less than 500,000. Now that, you know, the Bidens have ignored it and there’s no saying no enforcement for you, 3.17 and China’s imports are 1.45 million barrels per day from Iran. That’s not you know, it’s not it’s a little bit less. Now, here’s how does Iranian oil enter China? Michael Stews Dark Fleet limps except for two cargoes. December 20, 21 and January 22. China’s customs has not recorded any direct imports from Iran since December 2020. Don’t turn, Turn. If anybody wanted to ask about how important Stu’s dark fleet is, there you go. [00:04:14][92.9]

Michael Tanner: [00:04:15] Well, no, in in, in. That is what again, you’ve been you’ve been on this for years now, so don’t hurt yourself. Patent yourself on the back. But it really comes down to measuring. The EIA and the IAEA aren’t looking at the dark fleet. So when they go and talk to you about demand forecast estimates. RO Something’s new data is dropping here that we need to cover. What they’re lacking. Lacking is an understanding of exactly what this article is talking about, except for two cargoes. China’s customs has not recorded direct imports from Iran since December 2020. And then there’s not. [00:04:47][32.5]

Stuart Turley: [00:04:48] Oh, yeah. So, you know, the the dark Fleet. And that’s why I think the energy news beat is such a great website and resources because if you look at all of the sources across the world, you can’t just go with one source. You can’t listen to the IEA or the EIA or even Biden or Republicans. You can’t listen. You know, you got to have multiple. [00:05:13][25.1]

Stuart Turley: [00:05:14] Let’s go to the Alaska one. This was a pretty good story, Michael. This is the Willow Project. Alaska judge sides with ConocoPhillips on the new 7.5 billion oil project. When you sit back, the ruling clan ruling by Alaska based U.S. District Judge Sharon Gleason means that Conoco Phillips can continue developing the Willow Project. It should bring up Michael to 180,000 barrels per day, which is very much needed. One of the big issues was the Interior Department in the lawsuit. Now, I wanted to dress up. Can you imagine being an attorney and dressing up in the in front of the judge, as was? Who? The honeymooner. Jackie Gleason. If you showed up as Jackie Gleason in the courtroom, wouldn’t that be a hoot? Maybe. Maybe this is her, his granddaughter. You know, I don’t know. But anyway, GLEASON, let me read this part. Judge Gleason brushed apart those assertions Thursday, saying the Fish and Wildlife Service is decisions, including its conclusion that the Willow related work was unlikely to injure Non denying polar bears was reasoned and within the bounds of law. They have gone through study after study after study, and they have. And you know, Michael, the indigenous the beloved Eskimos and the tribes up there want this. It’s not like it’s the wind farms on the east Coast with the whales blowing up, killing all the whales that you like to do. This is very ecologically and friendly. [00:06:59][104.1]

Michael Tanner: [00:06:59] It doesn’t Alaska. Like kind of super silently. They don’t brag about this, but they have some form of universal basic income, not just not just Britain law, but it comes from the royalties that oil and gas production makes. They do. That’s what’s hilarious is this 180,000 barrels a day could be worth 80 another 500 bucks a month in the pockets of Alaska. So everybody in Alaska want this. Remember, the reason why they’re suing is because they thought it violated the conservation of this thought it violated the NEPA Act, which is the National Environmental Protection Act, which sort of governs all large project work in the mining business. You’re familiar with these huge 600 page NEPA reviews that you have to go through, you know, course of five years to do exactly what this is considered, any environmental externality. And I think what this judge did is say that this, you know, Judge Gleason, thank you very much, said the NEPA review that was done, clearly defined and and accounted for The many externalities that are going to come with this project include the Fish and Wildlife, as was sort of at the heart of this film, but also specifically talking about the climate related emissions. And I think it’s funny that he sort of brushed those brush those off to the side and said, well, that’s, you know, a blow to scope two and scope three emissions, which is really nice. [00:08:13][73.6]

Stuart Turley: [00:08:14] Oh, yeah. Hey, maybe Judge Gleason can transfer down and work on Ellen’s on the Starship thing we need named him some help down there. Hey, let’s go on to Total totalenergies deal. This is a really funny one to buy Texas gas power plants. Michael, how much power plants are they going to buy? This, to me is amazing. Total energy, as we say here in Texas, is nearing a deal to buy a fleet of natural gas powered plants. As it looks to expand that 2.3 gigawatt portfolio is enough to be a half a million homes on the hottest days, and it is much as a nuclear to nuclear reactors. That’s nuts. It’s pretty cool. Now, here’s here’s why this one is really important. Michael the gas plants a total were two years ago when they were making that big 90 degree turn to renewables. Only they were going to get rid of their oil and gas. The U.S., Chevron, Exxon and ConocoPhillips and everybody else that stayed their course and did both. And we see what Oxy is done now. Shell and BP and Total are going back to their roots. And this to me was significant, Michael. I mean, this is a huge implication for the European oil company. [00:09:52][98.3]

Michael Tanner: [00:09:52] Yeah, No, I mean, to think that Total is now jumping back into the U.S. gas businesses, it’s pretty hilarious considering their recent pivots with and recent losses, really when it comes to wind farms. So good to see them get back in there. And I mean, if the type of dispatchable energy that we need. So I’m all about it. I love this move. [00:10:09][16.9]

Stuart Turley: [00:10:10] Oh, it is. And when you go back in here, Texas. Also, Texas leads the world in in transitions and good transitions. They’ve also been acquiring gas fired plants in Belgium, France, Spain. About another 4 billion that they’re investing in. So anyway, I think they’re doing great. Hey, let’s go to the next one here. We’re going to fly over to the UK now. Oil and gas, not the problem for climate says the U.K. is net zero. Minister, this is pretty amazing. This falls on the grounds of the prime minister and the head cabana. What was it a month ago when he said he’s going to delay the transition to EVs and then now all these heads were going nuts. And then that started the whole that that to me was one of the I think, the catalyst. Everybody was realizing it. Now, this guy, Graham Stewart, I like his name. Graham Stewart said fossil fuel production was not driving climate change, but demand for fossil fuel was. Huh? Oil and gas are not the problem, but the carbon emission arising from them are. Now this guy is. I thought it was okay. It’s a play of words. If you really care about climate change, the last country you need to worry about is the U.K. We’re not the problem. It’s encouraging others. Here’s the thing. It’s the hypocrisy that this brings out, and that is everybody, all of the climate protesters that are out there, I would love to see them not film themselves using their iPhones that require oil and gas in order to produce those things. So what are they going to use? [00:12:00][110.2]

Michael Tanner: [00:12:02] Yeah, I mean, it’s it’s it would be pretty hard to protest oil and gas without using any products that come from oil and gas. So, you know, you basically stand out there naked and get a wave around a tree branch. [00:12:14][12.1]

Stuart Turley: [00:12:14] I don’t know. But it would be pretty funny. 80 countries call for the phase out at COP 27. Now they’re trying to make the same demand at COP 28 in a couple of weeks in Dubai. I can’t wait for the circus in a couple weeks at COP 28. I mean, you got a minister, you get everybody from Dubai coming in there, you got everybody from Saudi Arabia. And I know that Kerry is going to go in there and nobody’s going to want to talk to him because the US has lost so much global prestige. So anyway, let’s go to our last story here. I just coming more oil, gas and coal. United Nations backed report plants and an alarming picture of how dramatic coal, oil and gas production is expected to grow in the coming years. This one is absolutely got some numbers in it. They’re doubling down on the fossil fuel because, Michael, for the political leaders around the world, they’re realizing that the high cost of energy could cost them being voted out of office and voted off the island. So Brazil president has has vowed to prove once again that it’s possible to generate wealth without destroying the environment. Brazil used to be one of the most wealthy countries in the world until socialism hit. India is looking at double its production of coal they’re needing. I applaud the Indian leadership for trying to electrify everybody. Let’s get everybody in power first and and then do it in a clean way. If the US was smart. Michael, we’ve talked about this before. Why don’t we sell India clean coal burning technology to bring this in so that coal would not be as as harmful form. Canada is now on track to boost its oil output by 25% in the next 12 years. Norway has phased out most of the fossil fuel, but they export their hydro and everything else. Now they’re investing in natural gas. This was a great quote. It’s looking really dire, said Nicholas Hagel Berg, the U.N. environmental program global coordinator for climate change. We’re really on life support here. [00:14:47][152.6]

Michael Tanner: [00:14:49] Hey, hey, hey, hey, hey, hey, hey, hey, hey. We need. [00:14:52][3.0]

Stuart Turley: [00:14:53] You. Yeah. Get the mace out and clear. [00:14:56][2.1]

Michael Tanner: [00:14:57] I do find it funny. COP 28 Being in Dubai, there’s there’s got to be some sense of of of irony when it comes to that. [00:15:03][6.5]

Stuart Turley: [00:15:04] Oh, and it’s just going to be a hoot. An absolute, ever loving dude. You can’t buy this kind of entertainment. I’ve never. Seeing this energy transition hit a brick wall. I never thought I’d see it. And it’s about time. Sustainable means you can’t print money. And we’ve hit the end of the printing press. [00:15:24][19.6]

Michael Tanner: [00:15:24] Yeah, Now we really have. So you got anything else? [00:15:27][2.4]

Stuart Turley: [00:15:27] No. It was a fun day. [00:15:28][1.1]

Michael Tanner: [00:15:29] Now is a long weekend. Appreciate you. You staying up to speed with everything? Well, quickly come over and talk a little bit about what happened in the oil against finance side. Prices actually rose a little bit on Friday, mainly due to the fact that Iraq has sort of come in and said, hey, we’re going to try to attempt to cut more. We did cover the whole Dark Fleet aspect. Didn’t really matter what happens. But there. So I think that, you know, as again, Reuters is probably reaching for straws here. Again, I think we’re in multiple different camps here when it comes to what’s driving prices down. I think the fact that what we saw, the bump, the you know, every any time there’s some sort of international conflict, you’re going to see prices rise in the short term, if only due to the fact that there’s an unnecessary or unwillingness to to not really know where the oil and demand supply will go based on that outcome. I think now that the Strait of Hormuz is pretty much off the table, I don’t think anybody thinks that’s going that’s going anywhere unless I ran decides to really go nuclear. And I say that you’re not laughing because of that. That would be a nuclear move one way or the other. That’s really where you’ll probably see prices rise. But I think as prices have fallen, I think that 5 to $10 buffer that we had for the conflicts going on right now in the Middle East clearly has sort of slipped away. I think I think you’ve seen a little bit of a reversion back to the mean. You know, we did see breakouts do that dropped on Friday. And again, I found it interesting, you know, mainly from the fact that prices again default fell last week. But these rig count decisions don’t get made and these rig decisions don’t get made. Over a week, we lost two. Again, we’re down to 616 total, and that week ends November 10th. So they cut it off. Canada did see an increase in about three rigs internationally, saw about 22 rigs. But but here at home, rigs are getting cut in the era of and there’s a reason why mergers are happening instead of investment into drilling. It’s because the amount of Tier one acreage is shrinking. And so why would you drill up tier two acreage when you have to just go overpay or pay market for tier one? It’s again, the decision that ExxonMobil made when they went out and bought Pioneer. It wasn’t a decision, you know, it was numerous. It was a lot of different points that went into it. But that’s definitely one of the reasons, perhaps it’s why you’re continuing to see rigs drop, even though everybody talks about consolidation. Why now? Because then you just increase your likelihood of finding a Tier one rock that you’re able to make profitable. Because trust me, you know, 80, 85, even $90, that’s how you get your tier two, Tier three acreage profitable. So I think it’s again, it’s interesting, rigs continue to fall. As always, we’ll continue covering it. But it was pretty quiet this weekend still. We finished up our earnings report. I think really we’re in the quiet before the storm, before I think a host of deals happen. I think there’s a lot I was I was this weekend. I heard some pretty crazy stuff of some potential things that could happen between some big name players that we’ve actually been covering here. I think there’s a lot of potential deals in the works. As things become more substantiated, I’m sure they’ll leak out, but I think we’re in a little bit of a calm before the storm after earnings finished up. And I think you’ll see a host of deals happen, not right before Christmas. I think probably in that couple of weeks. Our are following the new year after everybody lines it up this holiday stew. But what do you think people should be worried about this week? Well. [00:18:27][178.5]

Stuart Turley: [00:18:28] I’m looking forward to our new series Coming around the Corner, dude, because of the M&A activity that’s out there and a lot of money coming in. We talked about Moody’s a little bit as well, preshow. And, you know, with the downgrade of the U.S. is because we printed so much money, But boy, investors are flat trying to figure out where to put their money. And I think I can’t wait to see you tear apart deal of the you know, it’s going to be a focus deal of the week or however we have this thing roll out. It’s going to be phenomenal. [00:19:03][34.6]

Michael Tanner: [00:19:04] It’s going to be fine. You can look for that segment to drop here and we’ll get one at least drop before the new year. But really, we’re going to hit it hard in 2024, guys. But with that, we going to let you get out of here, get back to work, start your day. Stay strong, guys. Hopefully you only have a few meetings that suck, be able to claw through them and you’ll get to the end of it. And then it’s going to be Tuesday and you’ll be fine. So Stuart Turley, I’m Michael Tanner. We’ll see you tomorrow, folks. [00:19:04][0.0][1111.1]

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