1 00:00:09,039 --> 00:00:12,439 Speaker 1: Hello, and welcome to the Texas Tribune Tribcast for Tuesday, 2 00:00:12,519 --> 00:00:16,879 January twenty seventh. I'm Eleanor Klebanoff, wearing real pants for 3 00:00:16,920 --> 00:00:20,600 the first time since Thursday. If anything could get me 4 00:00:20,719 --> 00:00:24,039 into the office in an ice storm or a post 5 00:00:24,079 --> 00:00:27,559 ice storm, it is Tribcast. I am not joined this 6 00:00:27,559 --> 00:00:30,760 week by my usual co host, Editor in Chief Matthew Watkins, 7 00:00:31,120 --> 00:00:33,200 whose love of tripcast is not as strong as mine, 8 00:00:33,359 --> 00:00:35,679 and he would not put on hard pants to come 9 00:00:35,719 --> 00:00:36,320 in and do this. 10 00:00:37,439 --> 00:00:37,520 Speaker 2: No. 11 00:00:37,640 --> 00:00:40,759 Speaker 1: I believe he is slightly inconvenienced by Austin schools still 12 00:00:40,799 --> 00:00:44,240 being out and a little bit of our post ice 13 00:00:44,240 --> 00:00:47,880 storm chaos. But we are not here to talk about 14 00:00:47,880 --> 00:00:50,039 the ice storm this week. We are looking at how 15 00:00:50,119 --> 00:00:53,359 a decision made hundreds of miles away in Washington, d C. 16 00:00:53,960 --> 00:00:57,439 And executed thousands of miles away in Venezuela can have 17 00:00:57,600 --> 00:01:01,600 huge impacts here in Texas. Of course, talking about oil, 18 00:01:02,320 --> 00:01:04,760 a huge part of our economy, a bigger part of 19 00:01:04,799 --> 00:01:08,519 our lore as a state, and to discuss what the 20 00:01:08,560 --> 00:01:12,200 impact of the Venezuela upheaval will have on Texas. I'm 21 00:01:12,239 --> 00:01:15,799 joined by Texas Tribune Energy and Industry reporter Paul Cobbler, 22 00:01:15,840 --> 00:01:16,640 thanks for joining us. 23 00:01:16,680 --> 00:01:19,439 Speaker 2: Hey, Eleanor, thanks for having me. I am also wearing 24 00:01:19,519 --> 00:01:21,519 pants for the first time in quite a few days 25 00:01:21,560 --> 00:01:23,799 and feeling like a human again, so that's definitely nice. 26 00:01:23,840 --> 00:01:25,519 Speaker 1: And it's important that we say that because we're sitting 27 00:01:25,519 --> 00:01:27,560 behind a table, so people can't tell if we're wearing pants, 28 00:01:27,599 --> 00:01:29,280 but we are, and we'd like to be clear about that. 29 00:01:30,799 --> 00:01:33,959 And our other guest, Jack Balaysia, the executive director of 30 00:01:34,000 --> 00:01:37,239 the Kay Bailey Hutchinson Center Energy Center at the University 31 00:01:37,239 --> 00:01:37,879 of Texas. 32 00:01:38,159 --> 00:01:39,519 Speaker 3: Jack, thanks for joining us. 33 00:01:40,359 --> 00:01:42,519 Speaker 4: Thanks owner, Paul, I'm glad to be here. Thanks for 34 00:01:42,560 --> 00:01:42,920 having me. 35 00:01:43,920 --> 00:01:46,879 Speaker 1: Jack served as vice president and general counsel for Exon 36 00:01:47,000 --> 00:01:50,239 Mobile from twenty ten to twenty sixteen. Prior to his 37 00:01:50,239 --> 00:01:53,640 two decade career at Exxon, Jack was in private practice, 38 00:01:53,640 --> 00:01:57,519 specializing in oil and gas business litigation and First Amendment law. 39 00:01:58,159 --> 00:02:00,359 He is also and I should I want to put 40 00:02:00,359 --> 00:02:02,560 a disclaimer on how we ended up getting Jack on 41 00:02:02,599 --> 00:02:05,359 the podcast. I said to Paul, we're going to do 42 00:02:05,359 --> 00:02:07,920 an episode on oil in Texas and Venezuela. 43 00:02:08,159 --> 00:02:09,039 Speaker 3: Who do you recommend? 44 00:02:09,479 --> 00:02:12,120 Speaker 1: He said, there's this guy at the Kay Billy Hutchinson Institute, 45 00:02:12,199 --> 00:02:16,759 Jack Balaysia, I said, fantastic. We should perhaps loop in 46 00:02:17,159 --> 00:02:21,919 our ace investigative reporter, Kate McGee Balaysia. You guys probably 47 00:02:21,960 --> 00:02:26,039 know Kate McGee as our you know, phenomenal investigative reporter, 48 00:02:26,800 --> 00:02:31,560 my desk mate, perhaps what you might call, in popular parlance, 49 00:02:31,599 --> 00:02:35,000 my work wife. She is, in the eyes of the 50 00:02:35,120 --> 00:02:39,360 law more formally married to her actual husband, Michael Balaisia. 51 00:02:39,400 --> 00:02:40,759 Speaker 3: Who is your son, Jack, right? 52 00:02:41,439 --> 00:02:42,439 Speaker 4: Correct? Correct? 53 00:02:42,439 --> 00:02:44,919 Speaker 2: And to be clear, I just know Jack as an 54 00:02:44,919 --> 00:02:48,439 expert on Texas oil and yes, and now I know 55 00:02:48,479 --> 00:02:49,719 he wears multiple hats. 56 00:02:49,879 --> 00:02:52,719 Speaker 3: Yes, and side note. 57 00:02:53,400 --> 00:02:56,080 Speaker 1: As much as I love Kate, we love Michael, one 58 00:02:56,080 --> 00:02:57,759 of my favorite people on the planet. 59 00:02:57,879 --> 00:02:58,759 Speaker 3: So big fan. 60 00:02:58,840 --> 00:03:01,319 Speaker 4: Well that makes that makes three of us, big. 61 00:03:01,120 --> 00:03:04,960 Speaker 1: Fan of the Balasia household. But that is again also 62 00:03:05,000 --> 00:03:07,039 not what we're here to discuss. So Jack, maybe you 63 00:03:07,080 --> 00:03:08,840 can start just tell us a little bit about the 64 00:03:08,960 --> 00:03:12,759 Ky Balasia I'm sorry, the kay Bailey Hutchinson Energy Center 65 00:03:13,039 --> 00:03:14,319 and the work you all do there. 66 00:03:14,840 --> 00:03:18,960 Speaker 4: Yeah, you bet. The Kay Bailey Hutcheson Energy Center was 67 00:03:19,000 --> 00:03:21,599 started about eleven years ago on campus. It was a 68 00:03:21,680 --> 00:03:24,759 joint project of the Law School and the Business School. 69 00:03:25,560 --> 00:03:29,240 Today with the Engineering School and the Geoscience School participate 70 00:03:29,319 --> 00:03:35,840 as contributors to to the to the Center. Our goal 71 00:03:35,919 --> 00:03:39,680 at KBH is to try to encourage students who are 72 00:03:39,800 --> 00:03:44,080 studying all aspects of energy, whether it be renewables, all 73 00:03:44,199 --> 00:03:48,759 and gas, geothermal, nuclear. We want to make we want 74 00:03:48,800 --> 00:03:51,919 to make the University of Texas a safe place to 75 00:03:52,000 --> 00:03:54,840 study all kinds of energy. So we want to help 76 00:03:54,919 --> 00:03:59,000 students who are pursuing careers in any of the energy 77 00:03:59,039 --> 00:04:02,360 fields that are that are available. Last year we touched 78 00:04:02,400 --> 00:04:06,599 about a thousand students through some of our programs. That 79 00:04:06,759 --> 00:04:08,919 number keeps going up, and of course our goal is 80 00:04:08,960 --> 00:04:12,520 to have it continue to grow. We have a Student 81 00:04:12,560 --> 00:04:16,199 Advisory Council where students can participate in our activities and 82 00:04:18,279 --> 00:04:21,800 have an Energy Studies Minor, which is a summer program 83 00:04:21,800 --> 00:04:25,759 that allows students to have a concentrated curriculum and energy 84 00:04:25,800 --> 00:04:30,360 that goes on their transcript. We have a graduate Fellows 85 00:04:30,399 --> 00:04:33,120 program right now. It's limited to the Law School and 86 00:04:33,160 --> 00:04:37,600 the Business School where we select high achieving students to 87 00:04:37,680 --> 00:04:41,959 participate in the Fellows program and write op eds and 88 00:04:42,240 --> 00:04:47,160 research papers on energy issues. And then probably our biggest, 89 00:04:47,519 --> 00:04:50,480 our other big event is our symposium We have an 90 00:04:50,519 --> 00:04:54,560 annual symposium every year. We just had our eleventh annual 91 00:04:54,600 --> 00:04:59,480 symposium in September Exceon Mobile CEO Darren Woods was our 92 00:04:59,600 --> 00:05:04,279 keynote speaker, and we had the largest audience we've ever had, 93 00:05:04,279 --> 00:05:07,000 almost seven hundred people. So that's kind of what the 94 00:05:07,040 --> 00:05:12,279 center does. We continue to grow our programs to increase 95 00:05:12,360 --> 00:05:18,199 participation and it's just it's a way to encourage students 96 00:05:18,560 --> 00:05:21,279 who are interested in energy careers at the University of 97 00:05:21,319 --> 00:05:23,040 Texas Amazing. 98 00:05:24,279 --> 00:05:27,160 Speaker 1: Let's sort of just talk about where the oil industry 99 00:05:27,199 --> 00:05:31,680 stands right now in Texas. I know oil prices have 100 00:05:31,759 --> 00:05:33,560 sort of been down, Paul, I don't know if you 101 00:05:33,600 --> 00:05:35,959 want to sort of set the table on where the 102 00:05:35,959 --> 00:05:39,399 oil industry, let's say go pre Venezuela going into twenty 103 00:05:39,439 --> 00:05:40,000 twenty six. 104 00:05:40,120 --> 00:05:40,959 Speaker 3: How are things looking. 105 00:05:41,120 --> 00:05:45,120 Speaker 2: Yeah, so I they're fine, I think would be the 106 00:05:45,120 --> 00:05:47,120 best way to describe it. I mean, prices are around 107 00:05:47,160 --> 00:05:50,000 sixty dollars a barrel, which is not you know, you're 108 00:05:50,040 --> 00:05:52,199 not going gangbusters in terms of the money that you 109 00:05:52,199 --> 00:05:54,519 can make, but it's not a total collapse of the 110 00:05:54,560 --> 00:05:57,439 market either. And so that's been fairly in studies. Something 111 00:05:57,480 --> 00:05:59,680 that folks have been watching. You know, we've all seen 112 00:05:59,680 --> 00:06:01,800 I think gas prices go down over the past couple 113 00:06:01,800 --> 00:06:05,639 of years, but the expectation is that they're going to 114 00:06:05,720 --> 00:06:08,879 go up at a certain point. That there's energy demand 115 00:06:08,959 --> 00:06:11,959 globally is rising, and Western nations due to AI and 116 00:06:12,000 --> 00:06:15,319 developing nations, there is a really intense demand right now 117 00:06:15,399 --> 00:06:19,079 for dispatchable power units like natural gas as those countries 118 00:06:19,120 --> 00:06:21,920 continue to energize more and more. And so the expectation 119 00:06:22,079 --> 00:06:23,800 is that there is going to be a greater need 120 00:06:23,800 --> 00:06:25,959 for oil in the years to come, and those prices 121 00:06:26,000 --> 00:06:28,680 are going to start going up, and you know, the 122 00:06:28,720 --> 00:06:31,920 Texas market is poised to capitalize on that. It's basically 123 00:06:32,319 --> 00:06:37,560 the situation going into Venezuela. 124 00:06:35,920 --> 00:06:36,920 Speaker 3: Again at end of this year. 125 00:06:36,920 --> 00:06:39,279 Speaker 1: I mean, Jack, what is your sense of having watched 126 00:06:39,279 --> 00:06:42,120 the market for many decades, where are we sort of 127 00:06:42,160 --> 00:06:46,120 in the inevitable boom and bus cycle here in Texas. 128 00:06:46,560 --> 00:06:48,920 Speaker 4: Yeah, I think we're in a kind of a stable place. 129 00:06:49,600 --> 00:06:52,480 I think Paul did a good job predicting or his 130 00:06:52,560 --> 00:06:56,040 predictions about what might happen, I think are fair. I 131 00:06:56,040 --> 00:07:01,879 think the economy is growing. You know, from the pandemic 132 00:07:02,000 --> 00:07:05,360 was kind of the low point of the oil business 133 00:07:06,079 --> 00:07:08,480 price of oil at some point when actually negative for 134 00:07:08,519 --> 00:07:12,800 a day, I think, and since then it has rebounded, 135 00:07:14,079 --> 00:07:18,120 it's backed down. It's in a place now where gasoline 136 00:07:18,120 --> 00:07:22,600 prices are low, where companies now have the ability to 137 00:07:22,680 --> 00:07:26,360 produce oil at a much lower cost. So even sixty 138 00:07:26,439 --> 00:07:29,959 dollars oil is attractive to them. So I think the 139 00:07:29,959 --> 00:07:34,839 outlet for the industry is excellent, especially in Texas, right. 140 00:07:34,879 --> 00:07:37,519 Speaker 1: And I mean, as we've already seen over the last 141 00:07:37,560 --> 00:07:40,959 couple of years, global affairs can have a huge impact 142 00:07:41,040 --> 00:07:45,560 on the oil industry. We saw a huge impact from 143 00:07:45,720 --> 00:07:49,040 the war in Ukraine. Now obviously we've added this other 144 00:07:49,319 --> 00:07:53,720 variable with Venezuela. Jack talked just about just Venezuela and 145 00:07:53,759 --> 00:07:56,639 the sort of what Venezuela represents in the oil world. 146 00:07:57,480 --> 00:08:02,120 Speaker 4: Well, as you said, I think it's the largest, maybe 147 00:08:02,120 --> 00:08:05,560 the largest reserves of oil in the world. A little 148 00:08:05,600 --> 00:08:08,600 bit of history, you know, American oil companies went into 149 00:08:08,639 --> 00:08:13,560 Venezuela in the nineteen twenties after oil was discovered, and 150 00:08:13,720 --> 00:08:17,560 they were very active in Venezuela. At one point Venezuela 151 00:08:17,720 --> 00:08:21,079 was the largest supplier of crude oil to the United States, 152 00:08:21,879 --> 00:08:27,560 and then in the nineteen seventies, the industry was nationalized. 153 00:08:28,920 --> 00:08:33,720 The government took over the assets of the American oil companies, 154 00:08:34,360 --> 00:08:38,200 and then in nineteen ninety two, the president of the 155 00:08:38,360 --> 00:08:43,720 country reprivatized the industry. All the oil companies went back 156 00:08:43,759 --> 00:08:46,440 in and then in two thousand and seven, President Chavez 157 00:08:47,200 --> 00:08:51,679 renationalized the oil companies by requiring that ninety three percent 158 00:08:51,799 --> 00:08:56,120 of the assets of the production go to the government. 159 00:08:56,639 --> 00:09:01,000 Exxon mobil and Conco Phillips refused to those terms, and 160 00:09:01,039 --> 00:09:04,159 they were their assets were taken over by the government. 161 00:09:04,600 --> 00:09:11,120 Chevron continued agreed to that to that arrangement and continues 162 00:09:11,159 --> 00:09:13,759 to produce there to this day. So that's sort of 163 00:09:13,919 --> 00:09:20,080 a quick history of the Venezuelan and American oil company experience. 164 00:09:20,759 --> 00:09:23,519 Speaker 2: And I think economically it's it's worth sort of thinking 165 00:09:23,519 --> 00:09:26,320 of Venezuela as one of like the original Petro states. 166 00:09:26,480 --> 00:09:28,000 Like when you when you think of that, I mean 167 00:09:28,000 --> 00:09:33,039 their their economy is pretty singularly motivated by oil and 168 00:09:33,120 --> 00:09:35,200 by oil prices. I mean, they do not really have 169 00:09:35,240 --> 00:09:37,639 any other exports. They used to export coffee in big 170 00:09:37,759 --> 00:09:40,200 in big ways back in the day, but that economy 171 00:09:40,200 --> 00:09:44,600 has really become dependent on oil prices. And you know 172 00:09:44,679 --> 00:09:48,240 this this government, the socialist government spends a lot of 173 00:09:48,279 --> 00:09:51,759 money on social programs for its citizens, and so with 174 00:09:51,879 --> 00:09:53,879 these kind of boom and bus cycles that you see 175 00:09:53,919 --> 00:09:56,519 in oil and gas, and with that spending from the government, 176 00:09:56,759 --> 00:09:59,279 that has also created a lot of economic problems really 177 00:09:59,320 --> 00:10:01,120 throughout the deca I mean, we're going back to the 178 00:10:01,120 --> 00:10:03,799 seventies of you know, there are these periods where they 179 00:10:03,799 --> 00:10:05,440 are rich and they can spend their money on sort 180 00:10:05,480 --> 00:10:07,399 of anything they want. But the sort of lack of 181 00:10:07,399 --> 00:10:09,679 a rainy day fund being created there has created a 182 00:10:09,720 --> 00:10:12,039 lot of issues, especially going into the two thousands, and 183 00:10:12,080 --> 00:10:15,039 then with US sanctions beginning under the Trump administration in 184 00:10:15,039 --> 00:10:18,240 twenty sixteen, it's really destabilized their economy in a big way. 185 00:10:18,919 --> 00:10:19,720 Speaker 3: It's really interesting. 186 00:10:19,720 --> 00:10:21,639 Speaker 1: I mean my understand just from reading about this a 187 00:10:21,679 --> 00:10:24,320 little bit, right, It's like, if you know, just purely 188 00:10:24,360 --> 00:10:28,080 based on the amount of oil underground in Venezuela, if 189 00:10:28,159 --> 00:10:31,200 this was like in Texas or in you know, somewhere 190 00:10:31,240 --> 00:10:33,200 where there were sort of not these economic issues, these 191 00:10:33,240 --> 00:10:38,200 sort of political instability issues around, it would be you know, gushers, right, 192 00:10:38,240 --> 00:10:40,720 Like this would be like there's a huge amount of oil. 193 00:10:41,159 --> 00:10:44,799 The issue is more above ground in how we're accessing 194 00:10:44,840 --> 00:10:45,279 that oil. 195 00:10:45,320 --> 00:10:47,840 Speaker 2: It seems like if only it was that easy, Yeah, 196 00:10:47,840 --> 00:10:48,799 and it was just a like. 197 00:10:50,000 --> 00:10:52,639 Speaker 1: Fingers yeah right, Well, I mean that is certainly I 198 00:10:52,679 --> 00:10:55,840 think sort of how it's President Trump is talking about 199 00:10:55,840 --> 00:10:59,080 this as like we can come in. He has said 200 00:10:59,320 --> 00:11:02,080 to quote him and I won't do the voice. The 201 00:11:02,080 --> 00:11:04,559 oil business in Venezuela has been a bust, a total 202 00:11:04,559 --> 00:11:06,720 bust for a long time. He said, We're going to 203 00:11:06,759 --> 00:11:09,399 have our very large United States oil companies, the biggest 204 00:11:09,399 --> 00:11:11,960 anywhere in the world, go in, spend billions of dollars, 205 00:11:12,000 --> 00:11:15,320 fix the badly broken infrastructure, the oil infrastructure, and start 206 00:11:15,320 --> 00:11:19,279 making money for the country. Obviously, we cannot just snap 207 00:11:19,320 --> 00:11:23,159 our fingers and start doing that, you know, Jack, What 208 00:11:23,200 --> 00:11:25,600 do you see as the barriers to suddenly, you know, 209 00:11:25,879 --> 00:11:31,279 trying to create this oil or get the companies in 210 00:11:31,360 --> 00:11:35,840 the United States companies to sort of rehash the Venezuelan 211 00:11:35,919 --> 00:11:36,480 oil market. 212 00:11:37,320 --> 00:11:41,440 Speaker 4: Yeah, I think Eleanor, I think there's some irrational exuberance 213 00:11:41,480 --> 00:11:46,519 in some of those statements coming out of Washington. A 214 00:11:46,559 --> 00:11:48,639 couple of things that oil companies look for. They look 215 00:11:48,679 --> 00:11:55,080 for stability, political stability, economic stability. These are companies that 216 00:11:55,120 --> 00:11:57,720 are prepared to invest billions and billions of dollars, and 217 00:11:57,759 --> 00:11:59,600 they want to make sure that they get a return 218 00:11:59,639 --> 00:12:03,120 on those dollars and that those investments are being protected. 219 00:12:04,600 --> 00:12:07,639 They need a stable US policy. You know, US policy 220 00:12:07,720 --> 00:12:11,159 keeps flipping back and forth, so that kind of weighs 221 00:12:11,159 --> 00:12:16,120 against going into a place, a place like Venezuela. Venezuela, 222 00:12:16,159 --> 00:12:21,559 and oil production today is seven is less than it's 223 00:12:21,600 --> 00:12:24,720 decreased more than seventy percent since its peak in the 224 00:12:24,799 --> 00:12:27,360 nineteen nineties, and it's going to take I've seen some 225 00:12:27,440 --> 00:12:29,879 reports that suggest it's going to take one hundred billion 226 00:12:30,000 --> 00:12:33,600 dollars just to get the infrastructure back to where they 227 00:12:33,600 --> 00:12:36,360 can go back to producing at the peaks they were 228 00:12:36,360 --> 00:12:39,799 in the nineteen nineties. And to ask people to come 229 00:12:39,840 --> 00:12:42,600 and to ask companies who have to answer to their 230 00:12:42,639 --> 00:12:47,159 shareholders to put in hundreds of billions of dollars in 231 00:12:47,200 --> 00:12:50,679 a place where the stability is questionable, I think that's 232 00:12:50,679 --> 00:12:52,279 a that's a that's a big ask. 233 00:12:54,360 --> 00:12:54,559 Speaker 1: Yeah. 234 00:12:54,559 --> 00:12:58,039 Speaker 2: And I think it's also that that number of one 235 00:12:58,080 --> 00:12:59,720 hundred billion, and I've heard as much of one hundred 236 00:12:59,720 --> 00:13:02,879 and fifty billion all the oil companies combined in the 237 00:13:02,919 --> 00:13:07,200 world last year invested about seventy five billion dollars, so 238 00:13:07,960 --> 00:13:11,960 just anything in all their activities, Yeah, in general investments. 239 00:13:12,000 --> 00:13:14,480 So what you're saying in one country, the amount of 240 00:13:14,519 --> 00:13:16,279 money that would be needed to get them back to 241 00:13:16,320 --> 00:13:19,159 where they were, you know, twenty years ago, would take 242 00:13:20,279 --> 00:13:23,200 more than every oil company in the world spent last year. 243 00:13:23,840 --> 00:13:28,240 Speaker 4: That's and you know, Paulish, that's that's a really good point. 244 00:13:28,320 --> 00:13:31,639 And I don't mean to interrupt, please, that's a really 245 00:13:31,639 --> 00:13:33,279 good point. But the other thing I want to mention 246 00:13:33,440 --> 00:13:38,320 is that all publicly traded AILL companies today are much 247 00:13:38,360 --> 00:13:42,360 more disciplined than they were before the pandemic. And one 248 00:13:42,399 --> 00:13:46,039 thing that investors have demanded of those companies is fiscal 249 00:13:46,080 --> 00:13:49,360 discipline and cash flow, and those are two things that 250 00:13:49,399 --> 00:13:54,519 they're very very confident, very conscious of, and have to 251 00:13:54,519 --> 00:13:57,519 come into play when deciding whether to put an investment 252 00:13:57,559 --> 00:14:01,519 in the Permian and the Anadarko basin, or am I 253 00:14:01,559 --> 00:14:04,080 going to go to Venezuela where the risk is much 254 00:14:04,279 --> 00:14:04,840 much higher? 255 00:14:05,480 --> 00:14:08,120 Speaker 2: And you know that risk is I think the important 256 00:14:08,240 --> 00:14:11,159 part the situation on the ground is really I think 257 00:14:11,200 --> 00:14:12,720 what a lot of folks are looking at. We don't 258 00:14:12,759 --> 00:14:14,200 have a lot of clarity on and you know, I'm 259 00:14:14,200 --> 00:14:16,960 certainly not going to ask Jack to speculate on the 260 00:14:17,000 --> 00:14:19,720 future of Venezuelan politics. But you know something I was 261 00:14:19,720 --> 00:14:23,080 struck by in the days after this operation to capture Maduro. 262 00:14:23,159 --> 00:14:26,039 I mean, there was a State Department memo warning Americans 263 00:14:26,080 --> 00:14:28,039 to get out of the country because there were armed 264 00:14:28,039 --> 00:14:31,240 gangs roaming the streets. I mean, that is not a 265 00:14:32,639 --> 00:14:35,799 country that sounds like a safe investment right now. And 266 00:14:35,879 --> 00:14:40,960 you know, obviously President Trump and the Venezuelan Vice president 267 00:14:41,000 --> 00:14:45,639 now president have been apparently been having good conversations. It 268 00:14:45,679 --> 00:14:49,519 seems like there's some efforts towards reconciliation there. But you know, 269 00:14:49,559 --> 00:14:54,840 this is still the Maduro regime, who many conservative members 270 00:14:54,879 --> 00:14:58,320 of Congress are happy would like to see completely rid of. 271 00:14:58,720 --> 00:15:01,440 You know, there's questions about what and elections might happen, 272 00:15:01,919 --> 00:15:05,039 who the next leader might be. I don't you know, 273 00:15:05,039 --> 00:15:06,480 I don't think any of us have the answer to 274 00:15:06,519 --> 00:15:09,120 any of these things. And it seems that the administration's focus, 275 00:15:09,159 --> 00:15:12,159 you know, recently has been on Greenland and now Minneapolis, 276 00:15:12,200 --> 00:15:14,840 and you know, it's kind of unclear what's going to 277 00:15:14,919 --> 00:15:16,559 come next. I think that's a lot of what everybody's 278 00:15:16,600 --> 00:15:17,759 waiting for is like what is going to be the 279 00:15:17,799 --> 00:15:21,919 next shoot to drop in Venezuela. And I don't know, right. 280 00:15:21,799 --> 00:15:24,360 Speaker 1: Because it's not just money, right, Like I mean, I 281 00:15:24,399 --> 00:15:27,200 was reading some interviews with people who talked about, you know, 282 00:15:27,440 --> 00:15:30,240 sort of in the previous era when there were more 283 00:15:30,279 --> 00:15:32,720 American oil companies on the ground there. I mean people 284 00:15:32,720 --> 00:15:35,080 talking about they lived in Venezuela for periods of time, 285 00:15:35,080 --> 00:15:37,600 they brought their families to Venezuela, like there was a 286 00:15:37,639 --> 00:15:41,200 degree of sort of American compounds American oil cities there. 287 00:15:41,200 --> 00:15:43,799 I mean, you need people, you need engineers, you need 288 00:15:43,879 --> 00:15:47,799 so much there to rebuild that that's not just money. 289 00:15:47,879 --> 00:15:49,519 And like you said, I mean, if you're telling if 290 00:15:49,559 --> 00:15:52,120 the State Department is saying don't go to Venezuela, and 291 00:15:52,159 --> 00:15:54,519 we're also saying we need oil companies to put a 292 00:15:54,559 --> 00:15:56,919 lot of boots on the ground in Venezuela to get 293 00:15:56,960 --> 00:15:59,440 this back up and running, that's a conflicting message. 294 00:15:59,480 --> 00:16:02,559 Speaker 3: Lint yea, Yeah, yeah, I mean Jack, what is your sense? 295 00:16:02,559 --> 00:16:05,600 Speaker 1: I mean you talked about sort of this preps fiscal discipline, 296 00:16:05,600 --> 00:16:07,720 maybe a little bit like risk aversion from the oil 297 00:16:07,799 --> 00:16:11,759 companies right now, just in general, when we think about 298 00:16:11,799 --> 00:16:14,919 sort of investing, like you said, like you can invest 299 00:16:14,919 --> 00:16:17,120 in the Permian or you could invest in Venezuela. I mean, 300 00:16:17,159 --> 00:16:20,360 what do you think and then adding in on top 301 00:16:20,399 --> 00:16:22,360 of that, you've got President Trump, who is obviously a 302 00:16:22,399 --> 00:16:25,440 very influential figure, and sort of how do you think 303 00:16:25,519 --> 00:16:29,720 that these companies are balancing all of these competing pressures. 304 00:16:30,679 --> 00:16:32,559 Speaker 4: Well, that's a that's a really good question. If you 305 00:16:32,559 --> 00:16:34,840 look at what they said at the press conference or 306 00:16:34,840 --> 00:16:37,440 at the meeting in the White House. I think the 307 00:16:37,480 --> 00:16:44,080 Excellon Mobile CEO Darren Woods called Venezuela uninvestable. There were 308 00:16:44,120 --> 00:16:46,879 some some of the some of the executives from some 309 00:16:46,960 --> 00:16:49,960 of the smaller companies seemed to be a whole lot 310 00:16:50,000 --> 00:16:57,840 more enthusiastic about it. But I'm very I'm very I'm 311 00:16:57,879 --> 00:17:01,840 pessimistic that we're going to see a lot of activity, 312 00:17:01,879 --> 00:17:06,759 American money, American employees heading into vend as a way 313 00:17:06,960 --> 00:17:09,559 to start on some brand new venture. I just think 314 00:17:09,960 --> 00:17:12,839 I think things are still too unstable for that to happen. 315 00:17:13,759 --> 00:17:15,880 You know, Chevron is there and they've been operating there 316 00:17:15,920 --> 00:17:17,640 for a long time, and they seem to be able 317 00:17:17,680 --> 00:17:22,319 to continue the operations that they're doing under their US license, 318 00:17:23,640 --> 00:17:26,680 but can they are they prepared to grow that investment. 319 00:17:26,920 --> 00:17:28,119 I just I can't say. 320 00:17:28,160 --> 00:17:32,920 Speaker 1: I don't know right what would be the impact or 321 00:17:33,000 --> 00:17:36,599 what potentially is the impact for let's say Texas and 322 00:17:36,799 --> 00:17:38,960 the West Texas oil fields and things like that, if 323 00:17:39,480 --> 00:17:42,759 suddenly there was a lot more oil gushing out of Venezuela. 324 00:17:44,759 --> 00:17:48,599 Speaker 4: Well, I think realistically, even if we assume that everybody's 325 00:17:48,640 --> 00:17:50,480 ready to go in there, you're not going to see 326 00:17:50,480 --> 00:17:54,440 any significant increases in production for some time. And you 327 00:17:54,480 --> 00:17:56,400 know the way the markets work. You know, oil is 328 00:17:56,400 --> 00:18:00,839 a worldwide market. It's influenced by obviously by supply and demand. 329 00:18:00,960 --> 00:18:07,839 It's it's influenced by economic activity, it's influenced by political events. 330 00:18:08,720 --> 00:18:11,559 So it's it's kind of hard to predict. I do 331 00:18:11,680 --> 00:18:14,680 know that there are some American refineries that were set 332 00:18:14,759 --> 00:18:19,160 up specifically to handle this kind of heavy crude. They 333 00:18:19,200 --> 00:18:22,799 would probably welcome that crew because it's cheaper and can 334 00:18:22,839 --> 00:18:28,119 be refined into products and improve improve the margins. So 335 00:18:29,519 --> 00:18:32,119 I think it's I think it's uncertain. I don't I 336 00:18:32,119 --> 00:18:34,880 don't really expect it to be to all of a 337 00:18:34,920 --> 00:18:38,680 sudden happen and and and glut the market with crude oil. 338 00:18:38,720 --> 00:18:40,799 That's just not that's just not in the near. 339 00:18:40,680 --> 00:18:45,519 Speaker 1: Term, right I think, you know, we didn't even really 340 00:18:45,559 --> 00:18:48,680 see immediately oil prices shift that much. Like the market 341 00:18:48,720 --> 00:18:53,440 isn't really necessarily freaking out in response to this, certainly 342 00:18:53,640 --> 00:18:56,680 not that there doesn't seem to be this immediate threat 343 00:18:56,720 --> 00:18:58,559 of like everything's going to change overnight. 344 00:18:58,839 --> 00:19:01,640 Speaker 2: Yeah, and that's that's what I've heard from from energy economists, 345 00:19:01,720 --> 00:19:04,640 from you know, oil companies, is they they are not 346 00:19:04,759 --> 00:19:07,759 really worried about this right now. I mean, obviously they 347 00:19:07,759 --> 00:19:10,640 are going to be worried about the comments for the 348 00:19:10,680 --> 00:19:12,519 president and sort of how they're going to handle all 349 00:19:12,519 --> 00:19:14,839 of that. But as far as like economic concerns of 350 00:19:14,920 --> 00:19:18,079 there being an oil glut, like Jack mentioned like that 351 00:19:18,160 --> 00:19:19,839 is that is not something we're worried about in the 352 00:19:19,839 --> 00:19:21,759 short term. What it's like what I said earlier, what 353 00:19:21,799 --> 00:19:23,720 I think folks are really thinking about is the rising 354 00:19:23,799 --> 00:19:27,079 energy demand across the world and meeting those needs. You know, 355 00:19:27,559 --> 00:19:30,079 if suddenly Venezuela came online in a big way, that 356 00:19:30,119 --> 00:19:32,519 would help a lot with those energy demands. But that 357 00:19:32,680 --> 00:19:35,519 is just for all the reasons that we stated in 358 00:19:35,559 --> 00:19:38,279 the last couple questions, that is not something that we 359 00:19:38,279 --> 00:19:41,359 think is going to happen anytime soon with the caveat 360 00:19:41,559 --> 00:19:44,440 also though that markets can change very quickly, especially in 361 00:19:44,480 --> 00:19:46,039 oil and gaess. I mean I was I was thinking 362 00:19:46,039 --> 00:19:47,880 when Jack was talking about the negative price of oil, 363 00:19:47,920 --> 00:19:49,559 and then it was two years later that the war 364 00:19:49,559 --> 00:19:53,160 in Ukraine started and gas prices skyrocketed, and you know 365 00:19:53,160 --> 00:19:56,279 they've stabilized since then. You know, who knows where we'll 366 00:19:56,279 --> 00:19:57,440 be in twenty twenty seven. 367 00:19:57,480 --> 00:20:00,039 Speaker 3: Right, Like, if there's anything we know about oil, is. 368 00:20:00,200 --> 00:20:01,079 Speaker 2: It boom and busts? 369 00:20:01,759 --> 00:20:02,039 Speaker 3: Yes? 370 00:20:02,559 --> 00:20:04,880 Speaker 1: But I will say you know, there obviously will always 371 00:20:04,960 --> 00:20:07,599 be some people willing to take the risk or to 372 00:20:07,640 --> 00:20:10,279 try to get in. Their reuters had some reporting about 373 00:20:10,319 --> 00:20:12,680 you know, some of these smaller I mean they were 374 00:20:12,720 --> 00:20:15,440 even calling you know, like these like wildcatters, sort of 375 00:20:15,640 --> 00:20:18,319 reminiscent of the era of you know, discovering the Texas 376 00:20:18,319 --> 00:20:20,839 oil fields, of like people who are going to try 377 00:20:20,880 --> 00:20:22,319 to like make a buck off of this, people who 378 00:20:22,319 --> 00:20:24,400 are going to see, like can we get something up? 379 00:20:24,480 --> 00:20:27,880 I mean, the CEO of Halliburton was saying on an 380 00:20:27,960 --> 00:20:31,000 earnings call that you know, his phone was quote ringing 381 00:20:31,039 --> 00:20:34,839 off the hook. They exited Venezuela in twenty twenty, but 382 00:20:34,880 --> 00:20:40,240 they're working on securing licenses to return. Another the former 383 00:20:40,279 --> 00:20:45,000 head of Chevron in Africaan Latin America who's now with 384 00:20:45,039 --> 00:20:47,640 a group in Houston, saying that they've been preparing for 385 00:20:47,759 --> 00:20:51,559 years to enter Venezuela, but you know, saying they're in 386 00:20:51,720 --> 00:20:54,119 early stage talks, you know, to raise as much as 387 00:20:54,119 --> 00:20:56,359 two billion dollars, which, as we said, is a lot 388 00:20:56,359 --> 00:20:58,640 of money, but it's not quite even close to what 389 00:20:58,720 --> 00:21:03,039 it would take to meaningfully stand up the energy economy 390 00:21:03,519 --> 00:21:06,880 in Venezuela. Do you expect Jack to see I mean, 391 00:21:07,920 --> 00:21:09,400 sort of is this the kind of thing where you 392 00:21:09,440 --> 00:21:13,079 can see like incremental steps and incremental projects or is 393 00:21:13,440 --> 00:21:16,359 your sense that it's like you're we're either going into 394 00:21:16,400 --> 00:21:18,640 Venezuela in a big way or it's not really gonna 395 00:21:18,640 --> 00:21:19,240 have an impact. 396 00:21:19,839 --> 00:21:22,960 Speaker 4: No, I think I think. I think it's going to 397 00:21:22,960 --> 00:21:26,720 be incremental eleanor there may be some small companies that 398 00:21:26,799 --> 00:21:28,200 are willing to go in there and as you say, 399 00:21:28,279 --> 00:21:31,440 sort of be the wildcatters and take a chance, but 400 00:21:31,519 --> 00:21:33,799 I don't think that will make a significant difference in 401 00:21:33,839 --> 00:21:36,440 what we see in Venezuela. They won't. I don't think 402 00:21:36,480 --> 00:21:39,400 it'll be dramatic in terms of increasing production. I think 403 00:21:39,480 --> 00:21:42,720 until the infrastructure is fixed, and that's going to be 404 00:21:42,759 --> 00:21:46,039 a long term effort, I don't think we're going to 405 00:21:46,079 --> 00:21:49,960 see much improvement in oil and gas oil production from 406 00:21:50,400 --> 00:21:51,400 from Venezuela. 407 00:21:52,240 --> 00:21:54,799 Speaker 2: And I think what the way things are sort of leave, 408 00:21:54,960 --> 00:21:57,440 Chevron is the biggest potential winner out of this. I mean, 409 00:21:57,480 --> 00:22:00,240 they're they're the ones who already there, who have staff 410 00:22:00,240 --> 00:22:01,799 on the ground, who have equipment on the ground, and 411 00:22:01,880 --> 00:22:05,119 certainly needs to be built out and improved. But you know, 412 00:22:05,160 --> 00:22:08,319 they are the ones that stayed, and I think the 413 00:22:08,480 --> 00:22:10,880 expectation that they did have their stock prices go up 414 00:22:10,920 --> 00:22:13,200 a little bit, uh in the wake of the invasion, 415 00:22:13,279 --> 00:22:15,960 kind of just with the expectation that they are, you know, 416 00:22:16,119 --> 00:22:18,480 the best position one to take advantage of this. But 417 00:22:18,519 --> 00:22:20,759 it's it's not again, it's not in any big way. 418 00:22:20,839 --> 00:22:23,599 There's still not any major expectation that this is something 419 00:22:23,640 --> 00:22:25,960 that's going to happen in the next months or even 420 00:22:26,160 --> 00:22:27,279 year or more. 421 00:22:27,640 --> 00:22:30,440 Speaker 1: Right, And you know you mentioned this, Jack, that there 422 00:22:30,440 --> 00:22:33,160 are some refineries here, I mean, particularly on the coast 423 00:22:33,160 --> 00:22:36,200 of Texas and Louisiana that were built specifically to process 424 00:22:36,759 --> 00:22:38,960 the oil out of Venezuela, which you know, as I 425 00:22:39,039 --> 00:22:43,039 understand it is sort of is it's stickier, it's cruder, 426 00:22:43,200 --> 00:22:47,519 it's like less. You call it sour, Yes, it's sour 427 00:22:47,640 --> 00:22:50,680 next door sweet sweet tex oil. 428 00:22:51,160 --> 00:22:52,880 Speaker 2: No one is actually tasting the oil. I want to 429 00:22:52,880 --> 00:22:53,839 make that clear. I had to. 430 00:22:53,880 --> 00:22:55,720 Speaker 3: I had to look as I don't know, I can't 431 00:22:55,759 --> 00:22:56,440 attest to that. 432 00:22:57,240 --> 00:22:59,680 Speaker 4: I think I think the word elander is viscous. It 433 00:22:59,720 --> 00:23:03,880 is a very thick viscus. It's a very thick, almost 434 00:23:03,960 --> 00:23:05,279 tar like substance. 435 00:23:06,319 --> 00:23:08,799 Speaker 2: Well, very interesting, and just the kind of the science 436 00:23:08,839 --> 00:23:12,480 on this is there's high amounts of sulfur and heavier oil, 437 00:23:12,680 --> 00:23:15,079 and that's kind of where the sour versus the sweet 438 00:23:15,079 --> 00:23:18,680 thing comes from. And the Permian basin, like you said, 439 00:23:18,680 --> 00:23:21,880 has a lot of the sweet, lower sulfur content oil 440 00:23:22,359 --> 00:23:25,160 and its we used to get heavy oil out of 441 00:23:25,279 --> 00:23:26,599 it in the eagle Ford Shell, but it was the 442 00:23:26,640 --> 00:23:29,000 fracking boom that really started and gave us access to 443 00:23:29,039 --> 00:23:31,680 more of this lighter crude oil. And so it's these 444 00:23:31,720 --> 00:23:33,880 refineries along the Gulf coast, they really are just like 445 00:23:34,680 --> 00:23:36,640 not getting the heavy oil they used to since we 446 00:23:36,680 --> 00:23:40,279 started importing from since we stopped importing from Venezuela and 447 00:23:40,279 --> 00:23:41,680 we get a lot of our heavy crude oil now 448 00:23:41,720 --> 00:23:44,880 from Canada. In Canada, is someone we're thinking about. Is 449 00:23:45,000 --> 00:23:47,559 we kind of discussed the winners and losers out of 450 00:23:47,680 --> 00:23:50,480 potential access to Venezuelan and oil. 451 00:23:50,440 --> 00:23:53,200 Speaker 3: Because they are sort of providing that hit there are. 452 00:23:53,160 --> 00:23:55,119 Speaker 2: Primary crude importer right now. 453 00:23:55,240 --> 00:23:57,880 Speaker 1: Yeah, and do we sorry, this is like an oil 454 00:23:57,920 --> 00:24:01,319 novice question. Do we need crude oil and sweet oil 455 00:24:01,359 --> 00:24:03,319 or does crude oil have to be turned into sweet 456 00:24:03,359 --> 00:24:04,799 oil to be useful? 457 00:24:04,920 --> 00:24:06,599 Speaker 3: Jack, I don't know if that's a distinction. 458 00:24:07,920 --> 00:24:10,279 Speaker 4: But no, they it does not have to be turned 459 00:24:10,319 --> 00:24:14,319 into sweet oil. It's actually turned into well, I guess 460 00:24:14,359 --> 00:24:16,880 some of it is probably turned into some sweet oil. 461 00:24:16,920 --> 00:24:20,839 But they use the they have the ability to extract 462 00:24:20,880 --> 00:24:24,200 the sulfur to do the things and make product out 463 00:24:24,240 --> 00:24:27,359 of out of everything that's in that viscous crude. So 464 00:24:27,400 --> 00:24:30,400 then nothing goes to waste. And as I said earlier, 465 00:24:30,440 --> 00:24:34,480 it is cheaper because it is a less attractive crude. 466 00:24:34,519 --> 00:24:37,880 It has to have more, it has to be refined more. 467 00:24:39,119 --> 00:24:42,680 Speaker 1: And so potentially, you know, again long down the road, 468 00:24:42,720 --> 00:24:45,799 if we are able to get you know, meaningful oil 469 00:24:45,920 --> 00:24:48,720 out of Venezuela. That would be a boom potentially for 470 00:24:48,799 --> 00:24:51,319 these refineries that were built to handle that. 471 00:24:51,720 --> 00:24:54,519 Speaker 2: Yes, correct, because it's it's it's like Jack said, like 472 00:24:54,559 --> 00:24:57,720 in its purest state, this heavier oil is cheaper, so 473 00:24:57,759 --> 00:25:00,359 it's easier to bring in. It's going to more and 474 00:25:00,400 --> 00:25:02,599 it takes more advanced equipment to be able to refine. 475 00:25:02,640 --> 00:25:05,039 And I think something worth kind of when we think 476 00:25:05,079 --> 00:25:07,039 of the Venezuelan infrastructure that they have one of the 477 00:25:07,079 --> 00:25:10,079 largest refineries in the world there, but it's it is 478 00:25:10,119 --> 00:25:14,920 employ It employs about seven thousand people, largely whom are 479 00:25:15,359 --> 00:25:19,440 loyalists to the current regime because they actually fired all 480 00:25:19,480 --> 00:25:21,559 of the previous employees back in the two thousands under 481 00:25:21,599 --> 00:25:25,240 Hugoshaves and since then there have been a number of 482 00:25:25,279 --> 00:25:30,279 issues with accidents, with corruption, and that refinery's capacity has 483 00:25:30,359 --> 00:25:32,839 dropped in the year since then. So like that's kind 484 00:25:32,839 --> 00:25:35,519 of just it's not even just an equipment issue. It's 485 00:25:35,559 --> 00:25:37,880 like a human capital thing too. I mean, I think 486 00:25:37,920 --> 00:25:40,839 when we think about the immigration crisis that we saw 487 00:25:40,880 --> 00:25:43,039 at Venezuela, I mean, these are you know, these are 488 00:25:43,400 --> 00:25:46,119 experts in the oil industry. Is their primary expert that 489 00:25:46,160 --> 00:25:49,000 we're leaving the country and or you know, Texas is 490 00:25:49,000 --> 00:25:52,000 presumably benefiting from that in some way. Also, there are 491 00:25:52,079 --> 00:25:54,319 Venezuelans that live in the Midland and Odessa area that 492 00:25:54,359 --> 00:25:56,839 I've talked to that you know, work in the oil fields, 493 00:25:56,920 --> 00:26:00,599 and you know that is not an e thing to 494 00:26:00,720 --> 00:26:04,720 just quickly reverse. And so yeah, like it's it's you 495 00:26:04,839 --> 00:26:08,440 need these advanced refineries that Texas has that Venezuela doesn't 496 00:26:08,440 --> 00:26:10,400 really have in a big way. So if we are 497 00:26:10,400 --> 00:26:15,559 going to see heavy increased exports of heavy oil from Venezuela, 498 00:26:15,880 --> 00:26:17,839 it's probably probably gonna have to be come into the Gulf. 499 00:26:18,680 --> 00:26:23,960 Speaker 1: Interesting Jack, when if we sort of think separate from Venezuela, 500 00:26:24,039 --> 00:26:26,160 or if we're like being realistic that Venezuela is not 501 00:26:26,720 --> 00:26:30,319 likely to be a major you know, shifting majorly. What 502 00:26:30,440 --> 00:26:33,240 is happening in the Permian base and in Texas's oil economy. 503 00:26:33,559 --> 00:26:37,240 What are the challenges that Texas's oil economy faces, sort 504 00:26:37,279 --> 00:26:40,359 of separate from the Venezuela question. What were the issues 505 00:26:40,400 --> 00:26:42,480 beforehand and what are the prognosis. 506 00:26:43,759 --> 00:26:48,440 Speaker 4: Well, I think the Permian is is still going great guns, 507 00:26:48,480 --> 00:26:51,359 but it is it is. I don't know whether it's 508 00:26:51,359 --> 00:26:54,160 peaked yet or whether it is on a decline. I 509 00:26:54,200 --> 00:26:57,119 know that the prediction is that the whales in the 510 00:26:57,160 --> 00:27:01,039 Permian will continue to decline. But I think what we 511 00:27:01,160 --> 00:27:04,759 always forget about when we think about the decline of 512 00:27:04,920 --> 00:27:09,119 oil and gas production, we forget how important technology is 513 00:27:09,400 --> 00:27:13,599 and innovation is, and how that can change the outlook overnight. 514 00:27:14,799 --> 00:27:19,640 That's certainly what happened with fracking, with horizontal wells. We 515 00:27:19,680 --> 00:27:23,799 went into shales which before nobody could could get the 516 00:27:23,920 --> 00:27:26,400 crew or the gas out of those those were That's 517 00:27:26,480 --> 00:27:29,759 kind of where the where the where the products actually 518 00:27:29,880 --> 00:27:34,559 were born originated. So I think the outlook for the 519 00:27:34,559 --> 00:27:37,079 industry is great. I heard an economist with Golden and 520 00:27:37,079 --> 00:27:39,799 Sacks last week say that the outlook in Texas for 521 00:27:39,880 --> 00:27:43,559 the Texas only gas industry in twenty twenty six is excellent. 522 00:27:43,759 --> 00:27:47,720 So my expectation is that the industry will continue to thrive, 523 00:27:47,799 --> 00:27:52,480 it will continue to innovate, and I think we're in 524 00:27:52,480 --> 00:27:53,400 pretty good shape. 525 00:27:54,559 --> 00:27:56,759 Speaker 2: And I think that's that's kind of like one as 526 00:27:56,799 --> 00:27:58,920 long as we're comparing Texas and Venezuela. I mean, the 527 00:27:58,960 --> 00:28:02,599 Texas drilling industry is one of the most, if not 528 00:28:02,640 --> 00:28:05,359 the most advanced in the world. I mean, there there 529 00:28:06,279 --> 00:28:08,880 are these refineries we've discussed, but I think even just 530 00:28:08,920 --> 00:28:11,680 thinking about like the state, how big the economy is 531 00:28:11,680 --> 00:28:13,920 in the state of Texas. You know, we've got the roads, 532 00:28:13,920 --> 00:28:17,119 we've got the power lines, we've got the ports, we've 533 00:28:17,119 --> 00:28:21,480 got the refineries, we've got advanced technology that is allowing 534 00:28:21,559 --> 00:28:24,559 us to find and discover oil and gas in new ways. 535 00:28:25,119 --> 00:28:27,359 You know, this this is not a market that can 536 00:28:27,400 --> 00:28:28,759 be undercut very easily. 537 00:28:29,359 --> 00:28:31,519 Speaker 1: And stability, which I think you has both sort of said, 538 00:28:31,599 --> 00:28:34,440 was a key difference there. I mean, even as Texas 539 00:28:34,559 --> 00:28:37,039 is becoming a leader in a lot of different renewable energies, 540 00:28:37,079 --> 00:28:39,079 the state has made it clear they really continue to 541 00:28:39,759 --> 00:28:42,599 want to continue to prioritize and invest in oil in 542 00:28:42,640 --> 00:28:46,319 a big way exactly one thing and then please go ahead. 543 00:28:46,799 --> 00:28:49,359 Speaker 4: No, I'm sorry. Well, not only are we the largest 544 00:28:49,519 --> 00:28:51,960 oil and gas producer in the US, but we're also 545 00:28:52,039 --> 00:28:54,880 the largest producer of renewable energy in the US. So 546 00:28:55,599 --> 00:28:58,440 I think these two are these I think these these 547 00:28:58,440 --> 00:29:01,839 two different types of energy production or living side by 548 00:29:01,880 --> 00:29:03,319 side and doing so very well. 549 00:29:04,279 --> 00:29:08,279 Speaker 1: Right, just uh, Texas the energy hub, you know, no 550 00:29:08,400 --> 00:29:11,839 caveat needed, right, We're not being picky about what kind 551 00:29:11,839 --> 00:29:13,160 of energy we're creating. 552 00:29:13,240 --> 00:29:14,640 Speaker 3: We just have a lot of it, just a lot 553 00:29:14,640 --> 00:29:15,160 of energy. 554 00:29:15,279 --> 00:29:17,799 Speaker 1: Yeah, well, I mean on that and Paul, you've this 555 00:29:17,920 --> 00:29:21,039 is a slight pivot, but you've written about recently sort 556 00:29:21,079 --> 00:29:23,160 of this demand for more energy coming out of data 557 00:29:23,160 --> 00:29:27,079 centers AI. I mean, what is the the outlook there 558 00:29:27,160 --> 00:29:30,200 in terms of what Texas will need energy, whether it's oil, 559 00:29:30,400 --> 00:29:32,359 renewables or anything in the coming years. 560 00:29:32,559 --> 00:29:36,240 Speaker 2: Well, the forecasts are pretty eye popping. You know Urkott, 561 00:29:36,240 --> 00:29:39,519 who is our nonprofit that basically manages the grade in 562 00:29:39,519 --> 00:29:40,240 the state of Texas. 563 00:29:40,400 --> 00:29:43,359 Speaker 1: After the last week, everybody knows Arcott. If you forgot Urkott, 564 00:29:43,400 --> 00:29:44,279 you were never Kot. 565 00:29:44,279 --> 00:29:46,160 Speaker 2: After the last couple of days, it was there was 566 00:29:46,279 --> 00:29:47,720 I was talking to somebody about this. There was a 567 00:29:47,720 --> 00:29:49,519 time in twenty twenty where no one had ever heard 568 00:29:49,559 --> 00:29:51,319 of her. Now I'm from Texas and I had never 569 00:29:51,319 --> 00:29:52,480 heard Arcott. No. 570 00:29:52,759 --> 00:29:53,920 Speaker 3: Urkott would have preferred that. 571 00:29:54,000 --> 00:29:56,599 Speaker 2: Yes, absolutely, But you know, so they had this this 572 00:29:56,680 --> 00:29:59,759 forecast a couple of years ago that the Texas is 573 00:29:59,799 --> 00:30:01,240 going to I have a demand of about one hundred 574 00:30:01,240 --> 00:30:03,759 and fifty gigawatts, which may you know, just one fifty 575 00:30:03,839 --> 00:30:06,680 one hundred and fifty gigawatts is one thousand megawatts, and 576 00:30:07,079 --> 00:30:10,279 you know, we keep kind of building this out from there, 577 00:30:10,279 --> 00:30:13,039 but like that is a huge amount of energy demand. 578 00:30:13,200 --> 00:30:15,559 And our peak that we have ever had, our record 579 00:30:15,599 --> 00:30:18,759 peak is about eighty five gigawatts, So we. 580 00:30:18,720 --> 00:30:21,279 Speaker 1: Will need one hundred and fifty gigawatts and our peak 581 00:30:21,359 --> 00:30:22,920 has been eighty five five. 582 00:30:22,920 --> 00:30:26,720 Speaker 2: Right, so quite a bit more jump, yes, quite a jump. 583 00:30:26,839 --> 00:30:29,000 And this is by twenty thirty and this is this 584 00:30:29,079 --> 00:30:32,039 is driven, like you said, by data centers. Texas has 585 00:30:32,079 --> 00:30:37,279 also become recently the crypto capital of the world, ever 586 00:30:37,319 --> 00:30:40,200 since China banned the practice a number of years ago. 587 00:30:40,720 --> 00:30:46,519 And so basically, like there there is an acknowledgment that 588 00:30:46,599 --> 00:30:48,680 we need a lot more power and it really doesn't 589 00:30:48,680 --> 00:30:51,559 matter where it comes from, you know. I think sort 590 00:30:51,599 --> 00:30:57,359 of the politicking over fossil fuels versus renewable energy is 591 00:30:57,759 --> 00:30:59,720 really not something that you hear when you talk to 592 00:30:59,759 --> 00:31:02,319 these folks. You know, they're kind of just trying to 593 00:31:02,359 --> 00:31:04,759 make it work to have a diverse grid. I think 594 00:31:04,799 --> 00:31:06,519 something that a lot of folks aren't thinking about right 595 00:31:06,519 --> 00:31:10,160 now too, tied to data centers, is the growth of 596 00:31:10,559 --> 00:31:15,200 storage capacity of batteries that the technology around battery storage 597 00:31:15,279 --> 00:31:18,519 has just jumped by leaps and bounds over it just 598 00:31:18,559 --> 00:31:21,039 like the last five years. And we now have the 599 00:31:21,079 --> 00:31:23,200 ability to put these batteries on the grid that can 600 00:31:23,240 --> 00:31:27,079 hold like one hundred megawats, two hundred megawats, three hundred 601 00:31:27,079 --> 00:31:30,440 megawatts of power, and they can just basically, like think 602 00:31:30,559 --> 00:31:33,839 in a twenty twenty one ury situation that when we 603 00:31:33,920 --> 00:31:37,759 start losing generation capacity because oil pipelines are freezing or 604 00:31:37,759 --> 00:31:40,480 because solar panels are covered in snow, these batteries can 605 00:31:40,519 --> 00:31:42,960 turn on in the blink of an eye and suddenly 606 00:31:43,000 --> 00:31:46,240 be providing that power to give or cut time to 607 00:31:46,319 --> 00:31:49,119 sort of manage whatever situation is happening. And so that 608 00:31:49,279 --> 00:31:51,079 is also becoming a huge thing, and they played a 609 00:31:51,079 --> 00:31:54,839 big part this weekend coming online in situations where there 610 00:31:54,880 --> 00:31:58,599 was strain on the grid. These batteries now really provide 611 00:31:59,000 --> 00:32:02,359 a pretty significant to what we're doing. So I think 612 00:32:02,359 --> 00:32:05,880 there are a lot of exciting things happening right now. 613 00:32:05,920 --> 00:32:09,000 I think that you know, we have a market that 614 00:32:09,119 --> 00:32:11,400 is truly free in the Texas energy market, and it 615 00:32:11,519 --> 00:32:14,000 currently looks like it's meeting these demands and sort of 616 00:32:14,599 --> 00:32:17,000 new and advanced ways. But you know, I think we 617 00:32:17,079 --> 00:32:20,799 have along road ahead of us the next five years. 618 00:32:20,799 --> 00:32:22,519 And then there's also like a lot of questions about, 619 00:32:22,519 --> 00:32:25,359 you know, how how legit are these forecasts going to be. 620 00:32:25,400 --> 00:32:26,920 I think there's a lot of a lot of building 621 00:32:26,960 --> 00:32:28,880 that is happening right now from these data centers, But 622 00:32:29,279 --> 00:32:33,039 you know, will all of that materialize? You know, where 623 00:32:33,119 --> 00:32:35,559 where will the AI industry go from here over the 624 00:32:35,640 --> 00:32:37,039 next five years? You know, I think there's been a 625 00:32:37,079 --> 00:32:39,480 lot of questions over a bubble. It certainly seems like 626 00:32:39,480 --> 00:32:41,839 it is a very very valuable industry one way or 627 00:32:41,839 --> 00:32:44,039 the other. But you know, is it going to be 628 00:32:44,759 --> 00:32:49,920 a further what is it sixty five gigawatts of generation valuable? 629 00:32:50,440 --> 00:32:53,880 I'm not totally sure, but it's it's definitely something that 630 00:32:53,960 --> 00:32:58,200 at this point in time the grid operators are meeting. Jack. 631 00:32:58,279 --> 00:33:00,920 Speaker 1: Is that your sense that we're sort of and expanding 632 00:33:00,960 --> 00:33:03,119 are all different forms of energy in a way to 633 00:33:03,160 --> 00:33:05,359 sort of meet the demand that Texas is going to 634 00:33:05,440 --> 00:33:08,519 pose or Texas gonna require in the coming years. 635 00:33:08,880 --> 00:33:11,440 Speaker 4: Yeah, and I think Paul did a good job outlining it. 636 00:33:11,759 --> 00:33:16,240 I think the numbers are huge. Are they real? That's 637 00:33:16,279 --> 00:33:19,480 the other question I think not I think they're probably overinflated. 638 00:33:20,279 --> 00:33:22,160 I think when it comes right down to it in 639 00:33:22,240 --> 00:33:24,960 terms of actually, you know, moving putting the shovel in 640 00:33:25,000 --> 00:33:28,480 the ground and moving the dirt, I think the numbers 641 00:33:28,480 --> 00:33:29,839 are going to be less than that, and I think 642 00:33:29,920 --> 00:33:33,640 Texas is well poised to probably meet that demand. 643 00:33:34,640 --> 00:33:35,279 Speaker 3: Yeah, I'll tell you. 644 00:33:35,319 --> 00:33:36,680 Speaker 1: I mean I was out in West Texas for like 645 00:33:36,720 --> 00:33:39,920 another story, and you know it's oil Derek's next to 646 00:33:39,920 --> 00:33:42,640 the wind turbines, next to the data centers, next to 647 00:33:42,640 --> 00:33:46,000 the solar farms. It's just all sort of coming online 648 00:33:46,279 --> 00:33:47,519 or remaining online. 649 00:33:47,680 --> 00:33:49,480 Speaker 2: And there's probably a battery in there too. 650 00:33:49,680 --> 00:33:53,640 Speaker 1: Absolutely, Yeah, they're building battery farms. Yeah, it's really amazing 651 00:33:53,680 --> 00:33:54,079 to see. 652 00:33:55,200 --> 00:33:57,480 Speaker 3: Great. Well, this has been wonderful. I think we'll leave 653 00:33:57,519 --> 00:33:57,880 it there. 654 00:33:57,920 --> 00:34:00,400 Speaker 1: But you know, if we suddenly start investing billions of 655 00:34:00,440 --> 00:34:03,039 dollars in Venezuela, we'll bring you guys back and talk 656 00:34:03,079 --> 00:34:05,160 about you know what that future looks like. 657 00:34:05,720 --> 00:34:07,680 Speaker 3: Thank you so much, Jack for joining us. 658 00:34:07,680 --> 00:34:11,079 Speaker 4: We appreciate it, Thank you my pleasure, really appreciate it. 659 00:34:11,159 --> 00:34:14,199 Speaker 1: Yeahs Paul, thanks for being here and putting on hard pants, 660 00:34:14,480 --> 00:34:17,440 and we will leave it there. You can get the 661 00:34:17,480 --> 00:34:20,440 trip cast anywhere you get your podcast. We're also available 662 00:34:20,480 --> 00:34:23,639 on YouTube. Our producers are Rob and Chris. They also 663 00:34:23,679 --> 00:34:27,039 wrote the theme music and we will see you next week.