Week Recap: LNG, Dollar Diplomacy, and Net-Zero Debates

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Michael Tanner: [00:00:10] What’s going on, everybody? Welcome into a special weekly edition of the Daily Energy News Beat stand up here on this gorgeous December 7th, 2024. As I mentioned, this is our weekly recap over the team. Pick some of the top segments from the week as great week guys. Lot of crazy stuff. Appreciate you guys checking us out as always. News and analysis brought to you by energy news v.com. Stu and the team tremendous job making sure that website stays up to speed. Everything needs to be the tip of the spear when it comes to the energy in the oil and gas business. Check out the description below. Check out us on substack. And again, if you have a tax problem, invest in oil.Energy news. Be the best way to solve your tax. Rob and become Billy Bob Thornton from land man with that, guys, I’m going to turn it over the team have a great weekend. [00:00:50][39.8]

Stuart Turley: [00:00:51] Trump threatens brics. There is a publisher note on this article on Energy News Beat.com and the publisher note says If the Biden-Harris administration had not weaponized the U.S. dollar in such a criminal pattern, BRICs would not have gained the traction that has been able to have been achieved. I wonder who put that in. But anyway, I love President Trump from this. He goes, Anybody quote, looking to replace the U.S. dollar can wave goodbye to America. The president elect as declared. Trump went on to say that he would ask brics, BRICs nations to promise not to create a common currency nor back any other currency and replace the almighty dollar. I almost disagree with his strong language to a point. I agree with the thought thought process around it. Cooperation within BRICs is not relegated against anyone or anything. President Putin came out last week. Michael, I don’t know if you remember, but he did say he’s not looking to displace the dollar. In fact, I think President Trump will lift some sanctions to end the war and stop this sanctioning madness. [00:02:02][70.9]

Michael Tanner: [00:02:03] Yeah, I mean, here’s the thing. Will this work? I don’t know. But at least someone’s fighting to keep the US dollar as the reserve currency. And, you know, we can talk about what the, you know, the destruction of the dollar. Up until this point, Trump understands or at least is getting advice from people that understand that if the dollar becomes the second most powerful currency in the world, that $34 trillion worth of debt looks a whole lot worse than it does right now. Surely reason we’re still here right now is because, in fact, the world is the dollar is the world’s reserve currency. So if all of a sudden we become the second most powerful country, a.k.a not the reserve currency, everybody’s trading in yen. All of a sudden we’ve got to start accepting substack donations in yen. Well, that’s $34 trillion. That becomes awful. [00:02:52][49.1]

Stuart Turley: [00:02:52] Exactly. And I firmly and very pleased by this. The only way that he could ever get rid of the Fed is if he has other things in place. And a professor strong stronghold has made a few great things on eggs. So I’m still trying to get him on the podcast. Maybe I’ll have him next week while you’re out. [00:03:12][19.7]

Michael Tanner: [00:03:12] Yeah, maybe. [00:03:13][0.3]

Stuart Turley: [00:03:13] Secretive Oil Shipping Hub Funneling Iranian Crude to China. This story fits in with the whole theme of sanctions and everything else. Because China and Iran have devised a complex system of ship to ship transfers in the South China Sea. And Michael, for our podcast listeners, this story on energy news beat.co, you look at that area of Bloomberg analysis that looks like a teenager’s face with acne. There’s so much ships in that area out there. It is unbelievable how many ships are out there. And it says analysis of nearly five years of satellite images shows the vast area of that. This data suggests 350 million barrels of oil have changed hands in the hotspot. But China goes. We see nothing. We see no oil. They say they have not bought any oil. [00:04:10][56.9]

Michael Tanner: [00:04:11] Well, that’s I mean, that’s a lie. But, you know, I mean, we all knew this was happening. And the problem is, what can we really do to shut it down? We you know, this article points out that Trump’s national security advisor pick, Mike Waltz, has said he’s pledged to stop or greatly reduce Iran’s ability to collect petroleum revenue, which is going to theoretically have positive benefits both for Ukraine and the Gaza wars, both from a U.S. policy perspective and where where they’re going to attack. Iran is not necessarily Iran. Where they’re going to attack is China. And basically make sure that they because if you can stop people from buying it, if they’ve got nobody sell it to, they can’t sell naturally. You don’t have to go and stop Iran from selling it. You have to stop somebody from buying it. [00:04:54][43.3]

Stuart Turley: [00:04:54] Exactly. Now, I need to ask Anand I ask because he is great on on ABC’s Dr. Dr. hand and I need to ask him because you can again over think this in many ways I trust his opinion mostly on. Lot of those things. And I think that is an outstanding question. Do we go get China to shut it down? And then what happens to the rest of the oil market? I think OPEC would be happy with that because they cannot control their membership. [00:05:24][30.0]

Michael Tanner: [00:05:25] Well, they they have they better be. You know, I mean, they better be. [00:05:28][2.9]

Stuart Turley: [00:05:28] They haven’t. They can’t. So this is kind of interesting. [00:05:30][2.3]

Michael Tanner: [00:05:31] It’s very interesting. [00:05:31][0.5]

Stuart Turley: [00:05:32] Let’s go to U.S. LNG Demand nears Record highs is when winter looms. U.S. natural gas LNG plants are running full throttle. Surge comes as colder weather ends. Michael, this brings up an outstanding point. That is. Listen to this. The US continues to dominate as the world’s largest LNG exporter, with more product production expected as new plants go up online, the LNG demand ramps up nearly 40% in the last two months due to cold weather forecasts. Michael I’m writing a couple papers and one of the papers is we need to get rid of the Jones Act to help out and reduce emissions. And how why we like clean Hawaii, but they can’t import us LNG. How about Boston? Boston could really use low cost LNG, but they won’t build pipeline. Why can’t they import at U.S. LNG? Yeah. So yeah. [00:06:30][57.8]

Michael Tanner: [00:06:31] It’s. [00:06:31][0.0]

Stuart Turley: [00:06:31] Hand in hand with the study I’ve got going. [00:06:33][1.7]

Michael Tanner: [00:06:33] On it. No, it’s really interesting. Check that out again on our Substack little free plug there guys. But I do think the LNG, I was actually talking with my brother about it this weekend or this week while he was in town. We were talking about, you know, in the next five to 3 to 5 years, what where’s really are we going to see the growth? Trump keeps talking about increasing American energy. I don’t think he’s really talking about oil. I think where you’re going to see the massive growth is in natural gas. I think most people in that specifically you want to talk about the this council for this and the Energy Council that now has, you know, Doug Burgum. Chris. Right. These guys, they are natural gas all the way. And what you’re going to see, I think, is the ability to permit a lot more of these one pipelines. We saw that with BlackRock or Blackstone and Ekiti Ekiti attempting to monetize their midstream assets at what they feel like is the highest valuation it’ll have in 3 to 5 years, because now people can build pipelines because the permitting will be fine. So the you know, we talked about that on Friday, but then also these LNG export terminals are going to get approved a lot quicker. And so you’re going to see more of them sprout up and you’re going to see natural gas prices, or at least the spread being sold from the United States to Europe continue to increase because that’s why natural gas prices are depressed. Ship it anywhere. We are all ship it overseas. We’d all be making, you know, Jerry Jones and Comstock. We make it a fortune can. [00:07:53][79.7]

Stuart Turley: [00:07:53] But that goes back to my point also here. Let’s go to the next building block of growth for energy exportation. And that would be why don’t we tie this to a lot? And like Vietnam has put in an LNG power plant, meaning it goes straight from the LNG tanks to their power plant. And that would be a great thing for us to export a building. The power plants, kind of like the bricks and mortar road, the road from China. Let’s go build these markets, export our power plants, export our LNG. This would make a lot of sense. Yeah. [00:08:28][34.2]

Michael Tanner: [00:08:28] No, absolutely. U.S. enters winter with highest natural gas stocks in eight years. This is great news if you’re if you’re part of the lower 48 here, that working natural gas storage in the lower 48 has ended or has ended its season at 3.9 to 2,000,000,000 cubic feet of gas in its reserves, which is the highest natural gas inventories that we’ve had since 2016. That’s according to our friends at the e. I a, we’ve, you know, as we know, we inject gas during the winter and or during the summer and we draw during the winter. So we’ve ended injection season and have entered now a withdrawal season, which is great considering the fact that we have our working natural gas storage at 6% above the five year average. And this ironically comes on the back of lower than average injections into storage through the entire injection season, which basically runs April 1st through October 31st. It’s pretty much I mean, the reasoning they’re saying is that we had a lot to begin with that is up in dispute a little bit, mainly if you look at the underlying data, But stocks were about 25 times higher than they normally were or 25% higher than they normally were, but they were up 40% than the five year average in March. So there’s a little bit of a conflicting data there. A lot of what they’re saying is the reason why stocks were so high to begin injection season was the fact that we had a lot of excess natural gas. Again, some conflicting data coming out there relative to that because of this data. We actually was part of the reason we saw the Henry Hub price, which we’ll cover in a bit, actually drop about two percentage points today, mainly due to the fact that, now listen, we’ve got all this gas. This is great if you’re a consumer, this is good. Because this means your heating price won’t go through the roof this winter. And hey, it’s the reason why we need to make the United States energy independent. We have enough natural gas here to drive our entire inventory and drive our entire inventory of natural gas and heating supply. So I’m glad we’re doing this. Definitely, definitely necessary. And, you know, for once, it’s working out. We love a good natural gas play here. But again, what Trump is going to ease regulations and I think where the regulations are onerous is on the LNG sub. So the spread between both of these is we have all this excess natural gas. If we can get new LNG export terminals permitted, we’ll be able to take that natural gas and fulfill the supply that needs to go on. And you know, that’s going to help our prices here going to rise. Natural gas prices here help our producers. It may hurt consumers, but we’ll we can talk about that from different spreads. But it’s going to allow Europe to not pay exorbitant costs for energy. So the funny part is releasing and allowing more permitting and allowing more LNG export produce actually raises energy prices here because the arbitrage between here and Europe is interesting. So I’ll I will be curious on what Trump does from that standpoint. He’s not going to outlaw LNG export terminals. But I do think that’s a weird cause and effect. So we will be definitely watching that. [00:11:24][175.8]

Stuart Turley: [00:11:24] A poor UK for net zero. UK climate advisers urge Brits to eat less meat, take fewer flights and buy EVs. Brits will have to fly less easily and use public transportation more often to hit net zero goals. Net zero is actually nothing more than a wealth transfer proposition and keeping carry and all. Is climatologists panicking in money. In terms of asked at the Commons Environmental Audit Committee, to what extent will individual behaviors be needed? James Richardson, director of analyst at the c, c, c said In terms of the analyzes we’ve done, about 10% of emissions of reduction to 2035 comes from what we behavior change. That’s predominantly around diets flying and modal shift of public transport. This is exactly why the World Economic Forum wants you to be in the 15 minute cities and why they’re trying to control you. The e. V. I believe firmly that Elon and Tesla will be a survivor. They are going to be a very profitable country company. And I love Eamonn. I love the fact that he is not taking subsidies for his EVs. Why? Because he has all of the features and all of the other things that are needed. But the average bear is not going to be able to afford a Tesla yet. But as far as the other cars, then they’re not there yet and they’re not that affordable. They don’t have the lifecycle of an ice car of an internal combustion car. So our very top recommendation, he also said, Piers Foster, interim chairman, said our very top recommendation is to reduce the cost of electricity. If you reduce the cost of electricity, you make a more compelling buy of an electric car. Here’s the paradigm shift. Where do you get your lower cost energy? You burn coal. Coal is not as clean as natural gas. Why? How did the United States lower all of its CO2 output? It replaced coal power plants with natural gas. How did China increase its by 200% over the last several years? It started opening up all forms of energy, including wind. Solar. What’s the coal plants? So a net zero is nothing more than a scam. And it’s going to be a problem for folks. There is going to be more revolts against net zero coming around the corner, low cost energy. And we can do this. We can do low cost energy with the least amount of impact on everyone on the planet. And let’s end energy poverty, but let’s do it through proper use of deployment of a good solid grid. And we would be able to have low cost power for everyone. [00:14:36][191.3]

Michael Tanner: [00:14:37] Why? Nobody wants California’s orphaned oil wells. I mean, I wouldn’t want them either. Basically, what’s going on there is there are a huge amount of deals that are in the process of being approved because of this or 2023 Orphan Well Prevention Act. Basically, the reason why that’s holding up all of these deals is basically it requires the state’s oil and gas supervisor to approve the transfers of these marginal oil and gas wells. Only once the acquirer has has has on hand the full cost of well. Plugging in abandonment, abandonment and site restoration covered by some sort of bond or other financial assurance mechanism. You know, according to this is Kathleen Rotten Sadr, who who’s the California state director for the Environmental Defense Fund. As marginally productive wells are increasingly sold to companies without the resources to retire. We now have an insurance policy if they go bankrupt and disappear. I mean, again, basically what they’re trying to do is as wells go down the value chain, they become less and less valuable. They get sold to smaller, smaller companies. Eventually you get to a point where an operator buys it. They don’t have the ability to plug it. So when they go out of business and are able to sell the well, then it becomes a taxpayer problem. And this I mean, the orphan wells are a huge problem in all of the United States, not just California. I do think what this is doing is holding up some you know, this is holding up, obviously, M&A in California. We were at a conference last month talking about orphan and idle wells. And there’s really no good solution for all of this. You know, obviously liabilities. We need to figure out how to handle that, but we need to figure out a way, in my opinion, for the free market to figure it out. And that’s where I think, you know, a lot of times it’s like, well, let’s just throw government money at this. Well, the government, as we know, is never terribly efficient when it comes to this. Never. When’s the last time you heard somebody say, I love that my tax dollars are going towards worthless stuff everyone hates. So there’s a lot of money getting thrown around these orphan wells and they’re they’re spending like $5 billion to plug six wells. That’s not that much at cause there’s some there’s some pork in as always. So I again, I think what we have to figure out in order to make these things out because you’re going to see this happen in other states. So this isn’t just a California broth. This is going to be a problem that is happening countrywide is how can the free market, the capitalist, the invisible hand, according to Adam Smith, how can the free market figure out how to do something with these orphaned wells, either make them productive? Probably not really, but all but not really make an orphan while productive. It’s why it’s an orphan. Well, so then how do we get them plugged via the free market? Is it a nonprofit? Is there other things? There’s a lot of interesting ideas floating around. I encourage everybody to take a look at that. You know, basically be, you know, California, because of this, has stopped all of this. You know, it you know, the other issue, you know the kind of play to counter this is friend of the show, Chad Hathaway. He owns Hathaway LLC, which is a company that’s actually refurbishing oil wells in Kern County. He told Capital and Maine via email that the California regulation places such high cost on abandonment and remediation that it makes transfers impossible, unaffordable and economically unfeasible to bond. So what he’s basically saying is they’re way over pricing what it cost to plug a well. And it could be interesting. I mean, to give you an idea there, you know, as of according to the California regulator, they’re sitting on about $13.2 billion of onshore decommissioning costs for dried up wells. And it’s about double the expected profits from those oil and gas wells, which is somewhere about 6.3 billion. So there is an interesting shift there. Who knows if that’s true or not? But again, this is an issue that’s happening countrywide, so we’re going to have to take that into account. [00:14:37][0.0][856.1]

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