Plugging Program Paused

ENB Pub Note: This is a huge win for Colorado and a great friend of the Energy News Beat Podcast, Doug Sandridge. This article was first published on Doug’s Substack: https://douglascsandridge.substack.com/. We highly recommend reading […]

ENB Pub Note: This is a critical story, and we will dig into this issue. The program in the IRA allocated $1.55 billion to the MERP, with $350 million designated as formula grant funding to […]

Highlights of the Podcast

00:00 – Intro

02:36 – A Big Coal Plant Was Just Imploded to Make Way for an AI Data Center – WSJ

05:37 – It’s Time for Trump to Get Tough With Putin – or get a new team and understand what is imporant to Putin

07:47 – Colorado’s First Step Towards Energy Sobriety

09:55 – Trump halts historic orphaned well-plugging program

19:24 – Markets Update

20:41 – EIA Crude Oil Inventories

21:28 – Double Eagle V Gets Bump

22:28 – Chevron Announces Sale of Majority Interest in its East Texas Gas Assets

26:45 – Outro

---

Follow Michael On LinkedIn and Twitter

ENB Top News

Energy Dashboard

ENB Podcast

ENB Substack

ENB Trading Desk

Oil & Gas Investing

---

– Get in Contact With The Show –

---

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

---

Michael Tanner: [00:00:00] There’s a big problem with how orphan and oil and, you know, there’s orphan and plugging well business takes place. And it’s really a dirty business because really what, what you’re able to do is you’re ably able to freely transfer wells into a new P five. And for, for, for those listeners, a P five is an operator’s license. It gives you the ability to operate, you know, specifically like in the state of Texas, we call it a P5. [00:00:24][24.3]

Michael Tanner: [00:00:32] What’s going on, everybody? Welcome into the Thursday, April 3rd, 2025 edition of the Daily Energy Newsbeat. Stand up. Here are today’s top headlines. First up, a big coal plant was just imploded to make way for an AI data center, not to be confused with a big salad for all my Seinfeld friends out there. Next up, it’s time for Trump to get tough with Putin. Or get a new team and understand what is important to Putin. This is a very, very interesting article from Dennis Ross over at foreignpolicy.com. And, you know, Stu being chief of staff to Putin, this will be very interesting to see what’s next. Next up, another opinion piece from a great EMB contributor, Doug Sandridge. Colorado’s first step towards energy sobriety. Highly recommend you sign up for Doug’s Sandridge’s sub stack. We’ll have a link. in the description below. And then finally, this is a big one that actually got sent to us by, by a good friend of the show, RT Trevino last night, Trump Halt’s historic orphan well plugging program. Boy, I have a lot of thoughts on this one stool, then toss it over to me. I will quickly cover what happened in the oil and gas markets today. We did see oil prices slightly tumble just recently, actually in the afternoon session, but kind of up overall on the day, we did see EIA Crude Oil Inventory’s 6.2 million barrel build. And then two interesting oil field. We, you know, obviously double Eagle closing with diamond back a couple months ago on their M and a deal. That was double Eagle four, double Eagle five is obviously was already up and running, but today has received a larger equity commitment as I think everybody expected. So we’ll lightly touch on that. And then finally, super interesting Chevron out of East Texas, selling a majority interest in their East Texas gas assets. Tokyo gas company a very interesting structure on this deal. So we will cover all that in a bag of chips guys as always I am Michael Tanner joined by Stuart Turley [00:02:35][122.5]

Stuart Turley: [00:02:35] Where do you want to begin? What’s in the Pennsylvania? The Marcellus, which is about 50 miles east of Pittsburgh is expected to house what would be the country’s largest gas-fired power plant. Listen to this. Up to 4.5 gigawatts. The plant could nearly power Manhattan. That’s a big power plant! The plant will rely on natural gas from the Marcellas Shale, a major natural gas field. And this goes along with what I’ve saying is, if you’re going to see… AI datacenters, you’re going to see them either in the Haynesville or you’re gonna see them in Pennsylvania, and poof, here comes this story, come rolling around there. What makes this site very unique, it checks all the boxes that you need for a datacenter, said Andrew Shanahan, partnered investment firm at Knighthead Capital Management, the majority owner. When you take a look at all the prices, but you take look at the also GE Vernona manufacturing facility is making the gas turbines? there is a limit on how many are going to be out there dude. There is a shortage and there’s very few that are going be available here very quickly. Ercot is the only grid section that has got enough bought and ready to rumble for the next several years. It’s not that way across the US. [00:04:13][98.1]

Michael Tanner: [00:04:14] Yeah. No, I mean, it’s, it, it it’s going to be very interesting. I think that’s, you know, this, this 4.5 gigawatts is basically enough to power Manhattan. And so I think again, it all about letting the free market decide what’s the best use, especially with these AI data centers, you’re going to need power, but obviously natural gas is probably a better option than coal, especially in this scenario, considering the location of this snow. I mean, I’m on board with this. Again, I am all about the private sector making decisions because they’re gonna make the most efficient and most economic decision for stakeholders. Anytime government gets involved, it tends to muddy the waters too much. [00:04:56][41.8]

Stuart Turley: [00:04:56] Oh, I couldn’t agree more, but here’s where I have a real warning, Michael, and that real warning is upcoming up. You’re going to see just like the how much natural gas is going to be needed for contracts to support micro grids that are not supporting houses or the grid. This is going to be a huge issue. Look at Abilene, Texas, with that one that will support 90,000 homes. Well, 90,00 homes. That is not going to be going into the grid. This one may tie back into the grids. What the article said. So big, big difference. Yep. All right. What’s next? Hey, it’s time for Trump to get tough with Putin or get a new team and understand what is important to Putin. This was an excellent article, Michael, from a almost a left-wing group there, Dennis Ross, and they are a very interesting, the foreignpolicy.com, sometimes they’ve got some really kind of wild ones. He brings up some very interesting points in this. Until now, Putin has not felt the need to do so. The irony is that Trump, if he’s willing to really apply pressure and let Putin know our support for Ukraine will not change, as long as he rejects. acceptable outcome. Here’s where it comes. In other words, Trump can use an American leverage combined with the Europeans because they want to control the bulk of the frozen Russian assets. Here’s the big thing. President Trump has no leverage over President Putin because he’s moved all of his business to Asia and he has absolutely no business reason. So what President Trump needs to do is get a carrot. Putin is not going to respond to getting hit in the head. He’s a bonehead. He is not going to respond well to a shovel in the head. So he needs a new team and needs to realize that. [00:06:53][116.3]

Michael Tanner: [00:06:53] No, it makes sense. I think the part that I think becomes interesting is the energy component woven through this, because we covered last week about how Nord Stream is going to become a huge negotiating tool on one side or the other. And I mean, if I was Europe, I would be really, really interested in getting Nord Stream back online, because yeah, I still need to be buying natural gas from the US, but you shouldn’t be dependent on any one source. So, the fact that now you have two options actually helps your economy a lot more than just now being reliant on the United States. [00:07:30][37.0]

Stuart Turley: [00:07:31] Exactly. In fact, Russia has actually lowered its price to the European through its pipelines because of US LNG coming through. So competition is a good thing, Michael. That thing is really good. [00:07:46][14.6]

Michael Tanner: [00:07:46] Yep. All right. What’s next? [00:07:47][0.9]

Stuart Turley: [00:07:47] Let’s go to our buddy over there, Doug Sandridge. I actually enjoy all my time with Doug. He is a cool cat. Got a really good podcast coming out with him. The staff is now working on Colorado’s first step towards energy sobriety. Michael, this is out of Colorado. It is a huge win. Governor Jared Polis signed HB 25-1040, which defines nuclear energy as clean energy under the Colorado revised statutes. This is really huge. I did not realize that Colorado was, I believe, number eight in producing oil in the United States, but they are a very huge supplier of uranium. I did no know that. And also, Grace Stanky had been in front of Congress several times, and … Senator Liston and former America Grace Stanky testifying in support of the bill. It’s pretty neat to see that she had been supporting the nuclear movement in Colorado. [00:08:50][63.0]

Michael Tanner: [00:08:52] I love Doug Sandridge, but let’s not confuse him with Miss America, so we’ll just need to eat it. He’s much- [00:08:58][6.3]

Stuart Turley: [00:08:59] I’ve interviewed both of them several times and so… [00:09:01][2.7]

Michael Tanner: [00:09:02] No, I know. But again, I think it’s you’ve got two great minds. Doug Sandridge is really on the forefront. Oil and gas executives for nuclear. Colorado is an energy powerhouse. And so the question is, can it will and will it move towards will it moved towards embracing nuclear? Because if it does, it’s in a great spot. I mean, we know that there used to be a commercial nuclear power plant, as it as this article mentions in Platteville. We also know that there was… you know some a a governmental nuclear facility just north there in our vada very close close to my neck of the woods when i was living back there so there’s a bunch of stuff there you know i do think colorado for as as crazy as it’s gotten has generally been on the right side of all this energy stuff and i i enjoy seeing this stuff moving forward [00:09:50][48.5]

Stuart Turley: [00:09:51] do too. It’s a breath of sanity in an insane state. Let’s go to the next one here. Trump halts historic orphan well plugging program. This is really a huge story that RT sent to you. Billions of dollars approved by Congress to clean up abandoned wells have been frozen as part of the Donald Trump sweeping cuts. This has to get to Secretary Wright and Secretary Burgum on this. This is a very important thing because the amount of money that was available for plugging wells, and it was not just because they were called orphan wells. The program set aside $4.7 billion. A large sum for plugging Wells was meant to supplement state-level plugging efforts, so it’s kind of like really stretching your dollars by helping out. The grants were distributed in five point film five million to clean up abandoned wells in the state. California also received a nine million grant sure that went to like busses or the homeless in California I bet but I’m just kidding that was a joke but when you sit back and take a look at this the orphan well program is going to be dwarfed here in a little bit. This is where they have undocumented orphan wells may emit nearly 63 million grams of methane per hour into the atmosphere. Here’s where I disagree with this statement totally. They don’t know how many undocumented orphan wells they have. This is almost like we have undocumented citizens in the United States voting in a government elections. And we, no, we don’t. Yeah, we do. They’re now on social security. So, I mean, no. How do you know how many it is? You don’t even know how many it is, but we know. [00:11:37][106.2]

Michael Tanner: [00:11:38] There’s a big problem with how orphan and plugging well business takes place, and it’s really a dirty business because really what you’re able to do is you’re able to freely transfer wells into a new P5. And for those listeners, a P5 is an operator’s license. It gives you the ability to operate specifically like in the state of Texas. We call it a PFAS. And in order to have a P five, there’s a bond you have to put up and there’s a limit if you’re under a hundred wells, it’s like 50,000 if you are above a hundred Wells, it like 250,000. And so what that is supposed to do is that bond is supposed to be there as a, Hey, these are funds set aside in case the state ever has to take control of the Wells to go plug them. The problem is you’ve got 99 orphaned Wells and have only put up a $50,000 bond. It’s much cheaper for an operator to abandon those wells, start a new P5, which they’re allowed to do, seen it happen many times, transfer the three good wells into that new P five, leave the 96 wells that suck under the old P five and then just lose out on the 50 grand and then only have to put up a 50 grand bond here. Whereas if you had to plug all those wells it would at least be a half, you know, $750,000 to plug all those wells. So, there is a shell game being played by operators, and this is where, you know, this is where to kind of contradict the statement I said earlier about how the private market will solve it. Well, the private will solve and they’ll solve it in an efficient way for stakeholders. The problem is, some of the stakeholders in these orphan and abandoned wells aren’t financially incentivized, aka, wells that are in people’s backyards, wells on people’s ranches that are leaking. and we can’t just have companies being able to freely move without any repercussions. So in theory, I like the idea. If we’re going to spend money on cleaning up the environment, I’m not against plugging these certain wells. Now, I mean, you’ve given out $4.7 billion, and it says in this article, California, Colorado Montana New Mexico plugged a hundred orphan wells so that’s not equal about a billion dollars per one minute obviously it’s less than that but i mean it’s wildly inefficient and i think this brings up the hard part of government money comes with stipulations one it’s really hard to turn a profit plugging a well because it’s from we use it because it to reimbursement so what do you do you have people jack up prices it becomes less efficient there are there are ways specifically ways that stew and i have have been and tossing around with our friends. There’s ways to solve this. We went to a conference six months ago. They were talking about all of this stuff, but nobody had any answers. And really, the answer is you got to incentivize operators to either keep these wells under their P5, increase a bond, which is going to be tough because you’re going to put smaller oil and gas companies out of business, tax the heck out of large companies because think about it. Chevron’s only put up a $250,000 bond for their 10,000 wells. It’s the same as your mom and pop that has 101 wells. So now, Chevron has kind of maybe sliced and diced their assets, but it’s all the same. So should Chevron and Exxon pay more? Should it be a per-well fee? Should you have to put up 5% of the plugging cost per well? There’s that way to do it? You know, then there’s this whole world of carbon credits and that, you know, that market is, is extremely early is extremely green from the standpoint of it’s undeveloped. There’s a lot that needs to be worked out, but there’s an interesting path down. Well, if you plug these wells, you could maybe be able to achieve carbon credits, but then you could go sell on the open market and a bunch of stuff like that. So I think there’s all of these different. ways that, or there’s a bunch of different ways you could go about solving the problem. Just handing out money is a solution, but is it the most optimal solution? I do think in some cases, getting the state to come in and plug high-valued wells, and when I mean high-value wells, I mean wells that are leaking on people’s ranches, wells that are in people’s backyards that are causing, you know, soil contamination or that type of stuff. There is a need for just, we need to provide some state money to go plug some of He’s extremely… owner as wells, but you have to figure out a way to incentivize the private sector to either solve this problem or put restrictions or change the way, I don’t want to say restrictions, but change the ways you go about modifying these bonds because it’s not working right now. Exxon and Chevron shouldn’t have to pay the same amount of a bond as Turley Energy Corp. This shouldn’t happen. [00:16:32][293.8]

Stuart Turley: [00:16:33] Here’s here’s one thing I do want to say is that was we’ve tracked this and report on it We need to let everybody know about it But I also want to raise a gigantic issue that needs to be handled by the same people the same Doug Burgum and Chris Wright need to also take a look at all the wind farms and solar farms that are coming Offline in the next five years are going to be Horrific, it’s going to make the orphan wells look silly [00:17:01][28.6]

Michael Tanner: [00:17:03] It’s true. I mean, we need we need a lot of minds thinking about it. So I think that you bet, you know, we’re we’re going to keep having this as a conversation. Let’s go overhead and jump into finance, guys. But before we do that, let’s go ahead and pay the bills. As always, thank you for checking us out here on the world’s greatest website, Energy Newsbeat dot com. Stu and the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas. Business go ahead and hit that description below all the links of the timestamps links to the articles Check us out on sub stack the energy newsbeat dot sub stack doc dot com a great way to support the show Go ahead and subscribe there if you feel the need and are so inclined go ahead And sign up for a paid subscription allows us to keep coming at you every single day Stu is writing some tremendous Paid only subscriber articles, and if you you like to go back and read old old articles that we have posted We only got about two weeks worth of them, and we’re about to close that window to a week here. So we’re really, really making a push there. So we appreciate all of our paid subscribers there. We’d also like to, to shout out Reese Energy Consulting for supporting the show. They do a tremendous job in the midstream space. You know, if you’re, if your an oil and gas operator and you’re not working with a marketing company, highly recommend calling Reese Energy Consulting, tell them energy news beat sent you, they’re going to come in and they’re gonna negotiate much, much higher margins on all of your oil. and for first purchaser and natural gas contracts, you’re losing out on 10, 15 cents on the gas side and you could be losing out as much as $3 on the oil side. So I highly recommend giving them a call. If you’re in the LNG space, they know that. Left, right, backwards and forwards, all of the regulations. They’ve got a great energy training for all different sectors. So we love them over there, reeseenergyconsulting.com. And finally, guys, if you are interested in getting into the oil and gas business and becoming. Billy Bob Thornton from Landman. We’ve got some great resources for you at investinoil.energynewsbeat.com. All the ways that you can get a little bit of cash flow, get ahead on your 2025 taxes, which is key. It’s never too early to start thinking about that. And then also, as always, be able to show up to a party and tell your friends you are now Billy Bob Thorton from Landmen. So that’s investin oilenergynewspeed.com Let’s go ahead and jump and look at the markets too. Liberation Day, we were all supposed to die. Markets were supposed to crash. We’re all, we’re gonna be out on the streets. Whoops, S&P 500 up 6 tenths of a percentage point. NASDAQ up three quarters of a percent point. So hardly Armageddon two and 10 year yields did drop basically about eight tenths of a percentage point on both of them. Dollar index dropped about three, four tenths a percentage points. Bitcoin fairly flat $84,000 crude oil, you know is gonna drop a little bit closed at 71 71 But we’ll probably as as you know, we record this about 430 when it opens here in a bit We’ll probably be trading a little below 70 or a little but below 71. Excuse me somewhere in that 70 70 70 75 range A Brent oil was not about a half a percentage point for 74 22 natural gas up about 2 percentage points up to $4 and 5 cents And XOP, which is our EMP securities contract, was up about a full percentage point, $133.75. I think obviously people are wondering what’s going to happen with these reciprocal tariffs that came on on today’s what was known as Liberation Day, which I think people were taking multiple different ways. We did see the EIA also drop crude oil inventories a 6.2 million barrel. build if we can go and put that chart up there pretty unbelievable relative to what we saw last week which is a pretty big draw i think that kind of tampered expectations there but i think right now all eyes are on what’s going on with oil prices and obviously the threat of secondary tariffs that could be coming on russian oil and then on monday you know there the there were some more sanctions that were tightened on iran and as part of their you know their quote MAXIMAL pressure campaign to really drive down their oil exports. So all around pretty, pretty, pretty bearish on, on the crude oil inventory side, but I think, you know, the tariff side kind of balances everything out. Let’s go ahead and jump over double Eagle. We know that they went ahead and sold their V4 company to diamond back about a couple of months ago. They today announced an upsize offering with their V5 with about a 2.5 million. 2.5 billion in equity committed from, you know, management team, Apollo, and obviously NCAP being their big backer. You know, their main focus is going to be across oil and gas, specifically in the Permian. But they also are teaming up with Tumbleweed 5, which will focus on some royalty and mineral investments, primarily in the permian. So, I mean, we knew this was coming, but it’ll be great to see them continue to roll out. It’s going to interesting to see. what they end up purchasing, where they end up purchasing it. You know, I think, you know, they’re, you know, all the, all that, you know, people keep saying all the good stuff’s been taken, but with this type of capital, you’ve got the ability to go in and really swing big and, and swing fast. So it’ll be interesting to see where they ended up. And the other interesting thing we saw yesterday was Chevron announcing its sale of its majority interest in its East Texas gas assets. So they go ahead and sell a 70% interest in its East Texas gas asset. to basically a company owned by Tokyo Gas Company and another international company called Castleton Commodities. Interesting deal structure. It’s for 525 million, 75 million in cash, and a $450 million capital carry, which is meant to fund their portion of Haynesville development. Chevron in that deal actually sells a 30% non-operated working interest in a joint venture that they have and an overriding. royalty interest in all the assets, Tokyo gas and CGI will own approximately 93 and 7% in TGR, which is the company owning 70, you know, which is a company that’s buying the 70%. So they’ll, you know most of its Tokyo gas in gasoline commodities will own a small 7%. It’s as expected according to the press release to generate over 1.2 billion in value at current Henry Hub prices. Basically, if you include the capital carry, they’re retained 30% working interest. and the overriding royalty interest, you know, this is, this is part of its plan to divest 15, you know, 10 to 15 billion of assets by 2028 in order to quote, optimize their global energy portfolio, AKA get themselves out of East Texas, which is not a non-core asset and go ahead and invest more both offshore and then obviously onshore in the Permian. So very interesting deal structure. You don’t see a lot of these, you You know, basically, Carrie… a carried interest or capital carry on these type of deals, especially at Chevron’s level. So this could signal that companies with these large non-core asset stakes are kind of open for business and open to kind of interesting deal structures because again, you normally wouldn’t see this. Normally Chevron would say, yo, we need all that cash up front. We’re trying to divest 10 to 15 billion of assets. We need that cash upfront. We really only got 75 million But they’re really getting 450 of a capital carry on the back end to fund that, you know, their 30% interest. So really fascinating deal structure. Love to see it. So maybe this will be something that changes up, but great for- [00:24:47][464.9]

Stuart Turley: [00:24:48] for Chevron and TNG. What’s up from Tokyo Gas? It’s very important because they are buying LNG through that contract and this is out of the Haynesville straight into the export facilities. So you’re talking about a vertically [00:25:01][13.2]

Michael Tanner: [00:25:02] The integrated system here. [00:25:03][1.7]

Stuart Turley: [00:25:03] So we love to see this is energy security for Japan. Very smart. [00:25:08][4.8]

Michael Tanner: [00:25:09] Yep, absolutely. Really, that’s all I see, Stu. We’ve had a great week so far. We’ve got a couple cool things coming up on the podcast. You just had a great one with IBM that I think we’ll be able to drop on Friday. I think we just got the live back, or I just saw we got the recording back from the team. So we’ll drop in that. [00:25:28][18.8]

Stuart Turley: [00:25:28] Friday I hope. I don’t know I haven’t even seen it yet we haven’t turned it into the team yet so it’s already [00:25:33][4.9]

Michael Tanner: [00:25:32] We filmed it at the studio, so it’s already done and cooked, and I just saw it come through the email before I sat down. [00:25:38][6.2]

Stuart Turley: [00:25:39] Well, I will do the best I can. So I’ve already got one teed out. What’s that? It is one that we had at NAEP and I can go tell you here in a sec. [00:25:48][9.3]

Michael Tanner: [00:25:49] We’re still rolling. I mean, folks, we’re the hardest working oil and gas media team in the business. We’re Still rolling out content from NAEP. [00:25:56][7.1]

Stuart Turley: [00:25:57] That’s right. Let’s see here. It is just been complete and just James Walker with nano nuclear went out today and then we have Joe McClintock with ILEX energy corporation is already loaded into the system and is rolling. Yes. Good old Joe. I met. [00:26:16][19.4]

Michael Tanner: [00:26:17] have met him multiple times as a very interesting structure they have. So everyone should go check that one out. [00:26:23][6.0]

Stuart Turley: [00:26:23] And then we also have John Rogers coming out. We have Doug Sandridge and Georgia Talk radio legend Martha Zoller. And I’m interviewing about four more people. So we’ve got a lot in the pipe and I want to get that one from IBM out as soon as we can. So as soon we can, we’re going to roll it in. [00:26:43][19.9]

Michael Tanner: [00:26:43] Yep, the pipe is full so alright guys so with that we’re gonna let you get out of here get back to work finish up your Week we appreciate you guys sticking with us here on the energy news beat podcast We’ll be have a great week and look for us to come out Friday. We’ll have our weekly recap on Saturday We’ll take Sunday off and be back in the chair bright and early Monday guys. Have a great weekend We’ll see you then. [00:26:43][0.0][1580.9]