Speaker 1: Hello, and welcome to the Texas Tribune Tribcast for Tuesday,
January twenty seventh. I'm Eleanor Klebanoff, wearing real pants for
the first time since Thursday. If anything could get me
into the office in an ice storm or a post
ice storm, it is Tribcast. I am not joined this
week by my usual co host, Editor in Chief Matthew Watkins,
whose love of tripcast is not as strong as mine,
and he would not put on hard pants to come
in and do this.
Speaker 2: No.
Speaker 1: I believe he is slightly inconvenienced by Austin schools still
being out and a little bit of our post ice
storm chaos. But we are not here to talk about
the ice storm this week. We are looking at how
a decision made hundreds of miles away in Washington, d C.
And executed thousands of miles away in Venezuela can have
huge impacts here in Texas. Of course, talking about oil,
a huge part of our economy, a bigger part of
our lore as a state, and to discuss what the
impact of the Venezuela upheaval will have on Texas. I'm
joined by Texas Tribune Energy and Industry reporter Paul Cobbler,
thanks for joining us.
Speaker 2: Hey, Eleanor, thanks for having me. I am also wearing
pants for the first time in quite a few days
and feeling like a human again, so that's definitely nice.
Speaker 1: And it's important that we say that because we're sitting
behind a table, so people can't tell if we're wearing pants,
but we are, and we'd like to be clear about that.
And our other guest, Jack Balaysia, the executive director of
the Kay Bailey Hutchinson Center Energy Center at the University
of Texas.
Speaker 3: Jack, thanks for joining us.
Speaker 4: Thanks owner, Paul, I'm glad to be here. Thanks for
having me.
Speaker 1: Jack served as vice president and general counsel for Exon
Mobile from twenty ten to twenty sixteen. Prior to his
two decade career at Exxon, Jack was in private practice,
specializing in oil and gas business litigation and First Amendment law.
He is also and I should I want to put
a disclaimer on how we ended up getting Jack on
the podcast. I said to Paul, we're going to do
an episode on oil in Texas and Venezuela.
Speaker 3: Who do you recommend?
Speaker 1: He said, there's this guy at the Kay Billy Hutchinson Institute,
Jack Balaysia, I said, fantastic. We should perhaps loop in
our ace investigative reporter, Kate McGee Balaysia. You guys probably
know Kate McGee as our you know, phenomenal investigative reporter,
my desk mate, perhaps what you might call, in popular parlance,
my work wife. She is, in the eyes of the
law more formally married to her actual husband, Michael Balaisia.
Speaker 3: Who is your son, Jack, right?
Speaker 4: Correct? Correct?
Speaker 2: And to be clear, I just know Jack as an
expert on Texas oil and yes, and now I know
he wears multiple hats.
Speaker 3: Yes, and side note.
Speaker 1: As much as I love Kate, we love Michael, one
of my favorite people on the planet.
Speaker 3: So big fan.
Speaker 4: Well that makes that makes three of us, big.
Speaker 1: Fan of the Balasia household. But that is again also
not what we're here to discuss. So Jack, maybe you
can start just tell us a little bit about the
Ky Balasia I'm sorry, the kay Bailey Hutchinson Energy Center
and the work you all do there.
Speaker 4: Yeah, you bet. The Kay Bailey Hutcheson Energy Center was
started about eleven years ago on campus. It was a
joint project of the Law School and the Business School.
Today with the Engineering School and the Geoscience School participate
as contributors to to the to the Center. Our goal
at KBH is to try to encourage students who are
studying all aspects of energy, whether it be renewables, all
and gas, geothermal, nuclear. We want to make we want
to make the University of Texas a safe place to
study all kinds of energy. So we want to help
students who are pursuing careers in any of the energy
fields that are that are available. Last year we touched
about a thousand students through some of our programs. That
number keeps going up, and of course our goal is
to have it continue to grow. We have a Student
Advisory Council where students can participate in our activities and
have an Energy Studies Minor, which is a summer program
that allows students to have a concentrated curriculum and energy
that goes on their transcript. We have a graduate Fellows
program right now. It's limited to the Law School and
the Business School where we select high achieving students to
participate in the Fellows program and write op eds and
research papers on energy issues. And then probably our biggest,
our other big event is our symposium We have an
annual symposium every year. We just had our eleventh annual
symposium in September Exceon Mobile CEO Darren Woods was our
keynote speaker, and we had the largest audience we've ever had,
almost seven hundred people. So that's kind of what the
center does. We continue to grow our programs to increase
participation and it's just it's a way to encourage students
who are interested in energy careers at the University of
Texas Amazing.
Speaker 1: Let's sort of just talk about where the oil industry
stands right now in Texas. I know oil prices have
sort of been down, Paul, I don't know if you
want to sort of set the table on where the
oil industry, let's say go pre Venezuela going into twenty
twenty six.
Speaker 3: How are things looking.
Speaker 2: Yeah, so I they're fine, I think would be the
best way to describe it. I mean, prices are around
sixty dollars a barrel, which is not you know, you're
not going gangbusters in terms of the money that you
can make, but it's not a total collapse of the
market either. And so that's been fairly in studies. Something
that folks have been watching. You know, we've all seen
I think gas prices go down over the past couple
of years, but the expectation is that they're going to
go up at a certain point. That there's energy demand
globally is rising, and Western nations due to AI and
developing nations, there is a really intense demand right now
for dispatchable power units like natural gas as those countries
continue to energize more and more. And so the expectation
is that there is going to be a greater need
for oil in the years to come, and those prices
are going to start going up, and you know, the
Texas market is poised to capitalize on that. It's basically
the situation going into Venezuela.
Speaker 3: Again at end of this year.
Speaker 1: I mean, Jack, what is your sense of having watched
the market for many decades, where are we sort of
in the inevitable boom and bus cycle here in Texas.
Speaker 4: Yeah, I think we're in a kind of a stable place.
I think Paul did a good job predicting or his
predictions about what might happen, I think are fair. I
think the economy is growing. You know, from the pandemic
was kind of the low point of the oil business
price of oil at some point when actually negative for
a day, I think, and since then it has rebounded,
it's backed down. It's in a place now where gasoline
prices are low, where companies now have the ability to
produce oil at a much lower cost. So even sixty
dollars oil is attractive to them. So I think the
outlet for the industry is excellent, especially in Texas, right.
Speaker 1: And I mean, as we've already seen over the last
couple of years, global affairs can have a huge impact
on the oil industry. We saw a huge impact from
the war in Ukraine. Now obviously we've added this other
variable with Venezuela. Jack talked just about just Venezuela and
the sort of what Venezuela represents in the oil world.
Speaker 4: Well, as you said, I think it's the largest, maybe
the largest reserves of oil in the world. A little
bit of history, you know, American oil companies went into
Venezuela in the nineteen twenties after oil was discovered, and
they were very active in Venezuela. At one point Venezuela
was the largest supplier of crude oil to the United States,
and then in the nineteen seventies, the industry was nationalized.
The government took over the assets of the American oil companies,
and then in nineteen ninety two, the president of the
country reprivatized the industry. All the oil companies went back
in and then in two thousand and seven, President Chavez
renationalized the oil companies by requiring that ninety three percent
of the assets of the production go to the government.
Exxon mobil and Conco Phillips refused to those terms, and
they were their assets were taken over by the government.
Chevron continued agreed to that to that arrangement and continues
to produce there to this day. So that's sort of
a quick history of the Venezuelan and American oil company experience.
Speaker 2: And I think economically it's it's worth sort of thinking
of Venezuela as one of like the original Petro states.
Like when you when you think of that, I mean
their their economy is pretty singularly motivated by oil and
by oil prices. I mean, they do not really have
any other exports. They used to export coffee in big
in big ways back in the day, but that economy
has really become dependent on oil prices. And you know
this this government, the socialist government spends a lot of
money on social programs for its citizens, and so with
these kind of boom and bus cycles that you see
in oil and gas, and with that spending from the government,
that has also created a lot of economic problems really
throughout the deca I mean, we're going back to the
seventies of you know, there are these periods where they
are rich and they can spend their money on sort
of anything they want. But the sort of lack of
a rainy day fund being created there has created a
lot of issues, especially going into the two thousands, and
then with US sanctions beginning under the Trump administration in
twenty sixteen, it's really destabilized their economy in a big way.
Speaker 3: It's really interesting.
Speaker 1: I mean my understand just from reading about this a
little bit, right, It's like, if you know, just purely
based on the amount of oil underground in Venezuela, if
this was like in Texas or in you know, somewhere
where there were sort of not these economic issues, these
sort of political instability issues around, it would be you know, gushers, right,
Like this would be like there's a huge amount of oil.
The issue is more above ground in how we're accessing
that oil.
Speaker 2: It seems like if only it was that easy, Yeah,
and it was just a like.
Speaker 1: Fingers yeah right, Well, I mean that is certainly I
think sort of how it's President Trump is talking about
this as like we can come in. He has said
to quote him and I won't do the voice. The
oil business in Venezuela has been a bust, a total
bust for a long time. He said, We're going to
have our very large United States oil companies, the biggest
anywhere in the world, go in, spend billions of dollars,
fix the badly broken infrastructure, the oil infrastructure, and start
making money for the country. Obviously, we cannot just snap
our fingers and start doing that, you know, Jack, What
do you see as the barriers to suddenly, you know,
trying to create this oil or get the companies in
the United States companies to sort of rehash the Venezuelan
oil market.
Speaker 4: Yeah, I think Eleanor, I think there's some irrational exuberance
in some of those statements coming out of Washington. A
couple of things that oil companies look for. They look
for stability, political stability, economic stability. These are companies that
are prepared to invest billions and billions of dollars, and
they want to make sure that they get a return
on those dollars and that those investments are being protected.
They need a stable US policy. You know, US policy
keeps flipping back and forth, so that kind of weighs
against going into a place, a place like Venezuela. Venezuela,
and oil production today is seven is less than it's
decreased more than seventy percent since its peak in the
nineteen nineties, and it's going to take I've seen some
reports that suggest it's going to take one hundred billion
dollars just to get the infrastructure back to where they
can go back to producing at the peaks they were
in the nineteen nineties. And to ask people to come
and to ask companies who have to answer to their
shareholders to put in hundreds of billions of dollars in
a place where the stability is questionable, I think that's
a that's a that's a big ask.
Speaker 1: Yeah.
Speaker 2: And I think it's also that that number of one
hundred billion, and I've heard as much of one hundred
and fifty billion all the oil companies combined in the
world last year invested about seventy five billion dollars, so
just anything in all their activities, Yeah, in general investments.
So what you're saying in one country, the amount of
money that would be needed to get them back to
where they were, you know, twenty years ago, would take
more than every oil company in the world spent last year.
Speaker 4: That's and you know, Paulish, that's that's a really good point.
And I don't mean to interrupt, please, that's a really
good point. But the other thing I want to mention
is that all publicly traded AILL companies today are much
more disciplined than they were before the pandemic. And one
thing that investors have demanded of those companies is fiscal
discipline and cash flow, and those are two things that
they're very very confident, very conscious of, and have to
come into play when deciding whether to put an investment
in the Permian and the Anadarko basin, or am I
going to go to Venezuela where the risk is much
much higher?
Speaker 2: And you know that risk is I think the important
part the situation on the ground is really I think
what a lot of folks are looking at. We don't
have a lot of clarity on and you know, I'm
certainly not going to ask Jack to speculate on the
future of Venezuelan politics. But you know something I was
struck by in the days after this operation to capture Maduro.
I mean, there was a State Department memo warning Americans
to get out of the country because there were armed
gangs roaming the streets. I mean, that is not a
country that sounds like a safe investment right now. And
you know, obviously President Trump and the Venezuelan Vice president
now president have been apparently been having good conversations. It
seems like there's some efforts towards reconciliation there. But you know,
this is still the Maduro regime, who many conservative members
of Congress are happy would like to see completely rid of.
You know, there's questions about what and elections might happen,
who the next leader might be. I don't you know,
I don't think any of us have the answer to
any of these things. And it seems that the administration's focus,
you know, recently has been on Greenland and now Minneapolis,
and you know, it's kind of unclear what's going to
come next. I think that's a lot of what everybody's
waiting for is like what is going to be the
next shoot to drop in Venezuela. And I don't know, right.
Speaker 1: Because it's not just money, right, Like I mean, I
was reading some interviews with people who talked about, you know,
sort of in the previous era when there were more
American oil companies on the ground there. I mean people
talking about they lived in Venezuela for periods of time,
they brought their families to Venezuela, like there was a
degree of sort of American compounds American oil cities there.
I mean, you need people, you need engineers, you need
so much there to rebuild that that's not just money.
And like you said, I mean, if you're telling if
the State Department is saying don't go to Venezuela, and
we're also saying we need oil companies to put a
lot of boots on the ground in Venezuela to get
this back up and running, that's a conflicting message.
Speaker 3: Lint yea, Yeah, yeah, I mean Jack, what is your sense?
Speaker 1: I mean you talked about sort of this preps fiscal discipline,
maybe a little bit like risk aversion from the oil
companies right now, just in general, when we think about
sort of investing, like you said, like you can invest
in the Permian or you could invest in Venezuela. I mean,
what do you think and then adding in on top
of that, you've got President Trump, who is obviously a
very influential figure, and sort of how do you think
that these companies are balancing all of these competing pressures.
Speaker 4: Well, that's a that's a really good question. If you
look at what they said at the press conference or
at the meeting in the White House. I think the
Excellon Mobile CEO Darren Woods called Venezuela uninvestable. There were
some some of the some of the executives from some
of the smaller companies seemed to be a whole lot
more enthusiastic about it. But I'm very I'm very I'm
pessimistic that we're going to see a lot of activity,
American money, American employees heading into vend as a way
to start on some brand new venture. I just think
I think things are still too unstable for that to happen.
You know, Chevron is there and they've been operating there
for a long time, and they seem to be able
to continue the operations that they're doing under their US license,
but can they are they prepared to grow that investment.
I just I can't say.
Speaker 1: I don't know right what would be the impact or
what potentially is the impact for let's say Texas and
the West Texas oil fields and things like that, if
suddenly there was a lot more oil gushing out of Venezuela.
Speaker 4: Well, I think realistically, even if we assume that everybody's
ready to go in there, you're not going to see
any significant increases in production for some time. And you
know the way the markets work. You know, oil is
a worldwide market. It's influenced by obviously by supply and demand.
It's it's influenced by economic activity, it's influenced by political events.
So it's it's kind of hard to predict. I do
know that there are some American refineries that were set
up specifically to handle this kind of heavy crude. They
would probably welcome that crew because it's cheaper and can
be refined into products and improve improve the margins. So
I think it's I think it's uncertain. I don't I
don't really expect it to be to all of a
sudden happen and and and glut the market with crude oil.
That's just not that's just not in the near.
Speaker 1: Term, right I think, you know, we didn't even really
see immediately oil prices shift that much. Like the market
isn't really necessarily freaking out in response to this, certainly
not that there doesn't seem to be this immediate threat
of like everything's going to change overnight.
Speaker 2: Yeah, and that's that's what I've heard from from energy economists,
from you know, oil companies, is they they are not
really worried about this right now. I mean, obviously they
are going to be worried about the comments for the
president and sort of how they're going to handle all
of that. But as far as like economic concerns of
there being an oil glut, like Jack mentioned like that
is that is not something we're worried about in the
short term. What it's like what I said earlier, what
I think folks are really thinking about is the rising
energy demand across the world and meeting those needs. You know,
if suddenly Venezuela came online in a big way, that
would help a lot with those energy demands. But that
is just for all the reasons that we stated in
the last couple questions, that is not something that we
think is going to happen anytime soon with the caveat
also though that markets can change very quickly, especially in
oil and gaess. I mean I was I was thinking
when Jack was talking about the negative price of oil,
and then it was two years later that the war
in Ukraine started and gas prices skyrocketed, and you know
they've stabilized since then. You know, who knows where we'll
be in twenty twenty seven.
Speaker 3: Right, Like, if there's anything we know about oil, is.
Speaker 2: It boom and busts?
Speaker 3: Yes?
Speaker 1: But I will say you know, there obviously will always
be some people willing to take the risk or to
try to get in. Their reuters had some reporting about
you know, some of these smaller I mean they were
even calling you know, like these like wildcatters, sort of
reminiscent of the era of you know, discovering the Texas
oil fields, of like people who are going to try
to like make a buck off of this, people who
are going to see, like can we get something up?
I mean, the CEO of Halliburton was saying on an
earnings call that you know, his phone was quote ringing
off the hook. They exited Venezuela in twenty twenty, but
they're working on securing licenses to return. Another the former
head of Chevron in Africaan Latin America who's now with
a group in Houston, saying that they've been preparing for
years to enter Venezuela, but you know, saying they're in
early stage talks, you know, to raise as much as
two billion dollars, which, as we said, is a lot
of money, but it's not quite even close to what
it would take to meaningfully stand up the energy economy
in Venezuela. Do you expect Jack to see I mean,
sort of is this the kind of thing where you
can see like incremental steps and incremental projects or is
your sense that it's like you're we're either going into
Venezuela in a big way or it's not really gonna
have an impact.
Speaker 4: No, I think I think. I think it's going to
be incremental eleanor there may be some small companies that
are willing to go in there and as you say,
sort of be the wildcatters and take a chance, but
I don't think that will make a significant difference in
what we see in Venezuela. They won't. I don't think
it'll be dramatic in terms of increasing production. I think
until the infrastructure is fixed, and that's going to be
a long term effort, I don't think we're going to
see much improvement in oil and gas oil production from
from Venezuela.
Speaker 2: And I think what the way things are sort of leave,
Chevron is the biggest potential winner out of this. I mean,
they're they're the ones who already there, who have staff
on the ground, who have equipment on the ground, and
certainly needs to be built out and improved. But you know,
they are the ones that stayed, and I think the
expectation that they did have their stock prices go up
a little bit, uh in the wake of the invasion,
kind of just with the expectation that they are, you know,
the best position one to take advantage of this. But
it's it's not again, it's not in any big way.
There's still not any major expectation that this is something
that's going to happen in the next months or even
year or more.
Speaker 1: Right, And you know you mentioned this, Jack, that there
are some refineries here, I mean, particularly on the coast
of Texas and Louisiana that were built specifically to process
the oil out of Venezuela, which you know, as I
understand it is sort of is it's stickier, it's cruder,
it's like less. You call it sour, Yes, it's sour
next door sweet sweet tex oil.
Speaker 2: No one is actually tasting the oil. I want to
make that clear. I had to.
Speaker 3: I had to look as I don't know, I can't
attest to that.
Speaker 4: I think I think the word elander is viscous. It
is a very thick viscus. It's a very thick, almost
tar like substance.
Speaker 2: Well, very interesting, and just the kind of the science
on this is there's high amounts of sulfur and heavier oil,
and that's kind of where the sour versus the sweet
thing comes from. And the Permian basin, like you said,
has a lot of the sweet, lower sulfur content oil
and its we used to get heavy oil out of
it in the eagle Ford Shell, but it was the
fracking boom that really started and gave us access to
more of this lighter crude oil. And so it's these
refineries along the Gulf coast, they really are just like
not getting the heavy oil they used to since we
started importing from since we stopped importing from Venezuela and
we get a lot of our heavy crude oil now
from Canada. In Canada, is someone we're thinking about. Is
we kind of discussed the winners and losers out of
potential access to Venezuelan and oil.
Speaker 3: Because they are sort of providing that hit there are.
Speaker 2: Primary crude importer right now.
Speaker 1: Yeah, and do we sorry, this is like an oil
novice question. Do we need crude oil and sweet oil
or does crude oil have to be turned into sweet
oil to be useful?
Speaker 3: Jack, I don't know if that's a distinction.
Speaker 4: But no, they it does not have to be turned
into sweet oil. It's actually turned into well, I guess
some of it is probably turned into some sweet oil.
But they use the they have the ability to extract
the sulfur to do the things and make product out
of out of everything that's in that viscous crude. So
then nothing goes to waste. And as I said earlier,
it is cheaper because it is a less attractive crude.
It has to have more, it has to be refined more.
Speaker 1: And so potentially, you know, again long down the road,
if we are able to get you know, meaningful oil
out of Venezuela. That would be a boom potentially for
these refineries that were built to handle that.
Speaker 2: Yes, correct, because it's it's it's like Jack said, like
in its purest state, this heavier oil is cheaper, so
it's easier to bring in. It's going to more and
it takes more advanced equipment to be able to refine.
And I think something worth kind of when we think
of the Venezuelan infrastructure that they have one of the
largest refineries in the world there, but it's it is
employ It employs about seven thousand people, largely whom are
loyalists to the current regime because they actually fired all
of the previous employees back in the two thousands under
Hugoshaves and since then there have been a number of
issues with accidents, with corruption, and that refinery's capacity has
dropped in the year since then. So like that's kind
of just it's not even just an equipment issue. It's
like a human capital thing too. I mean, I think
when we think about the immigration crisis that we saw
at Venezuela, I mean, these are you know, these are
experts in the oil industry. Is their primary expert that
we're leaving the country and or you know, Texas is
presumably benefiting from that in some way. Also, there are
Venezuelans that live in the Midland and Odessa area that
I've talked to that you know, work in the oil fields,
and you know that is not an e thing to
just quickly reverse. And so yeah, like it's it's you
need these advanced refineries that Texas has that Venezuela doesn't
really have in a big way. So if we are
going to see heavy increased exports of heavy oil from Venezuela,
it's probably probably gonna have to be come into the Gulf.
Speaker 1: Interesting Jack, when if we sort of think separate from Venezuela,
or if we're like being realistic that Venezuela is not
likely to be a major you know, shifting majorly. What
is happening in the Permian base and in Texas's oil economy.
What are the challenges that Texas's oil economy faces, sort
of separate from the Venezuela question. What were the issues
beforehand and what are the prognosis.
Speaker 4: Well, I think the Permian is is still going great guns,
but it is it is. I don't know whether it's
peaked yet or whether it is on a decline. I
know that the prediction is that the whales in the
Permian will continue to decline. But I think what we
always forget about when we think about the decline of
oil and gas production, we forget how important technology is
and innovation is, and how that can change the outlook overnight.
That's certainly what happened with fracking, with horizontal wells. We
went into shales which before nobody could could get the
crew or the gas out of those those were That's
kind of where the where the where the products actually
were born originated. So I think the outlook for the
industry is great. I heard an economist with Golden and
Sacks last week say that the outlook in Texas for
the Texas only gas industry in twenty twenty six is excellent.
So my expectation is that the industry will continue to thrive,
it will continue to innovate, and I think we're in
pretty good shape.
Speaker 2: And I think that's that's kind of like one as
long as we're comparing Texas and Venezuela. I mean, the
Texas drilling industry is one of the most, if not
the most advanced in the world. I mean, there there
are these refineries we've discussed, but I think even just
thinking about like the state, how big the economy is
in the state of Texas. You know, we've got the roads,
we've got the power lines, we've got the ports, we've
got the refineries, we've got advanced technology that is allowing
us to find and discover oil and gas in new ways.
You know, this this is not a market that can
be undercut very easily.
Speaker 1: And stability, which I think you has both sort of said,
was a key difference there. I mean, even as Texas
is becoming a leader in a lot of different renewable energies,
the state has made it clear they really continue to
want to continue to prioritize and invest in oil in
a big way exactly one thing and then please go ahead.
Speaker 4: No, I'm sorry. Well, not only are we the largest
oil and gas producer in the US, but we're also
the largest producer of renewable energy in the US. So
I think these two are these I think these these
two different types of energy production or living side by
side and doing so very well.
Speaker 1: Right, just uh, Texas the energy hub, you know, no
caveat needed, right, We're not being picky about what kind
of energy we're creating.
Speaker 3: We just have a lot of it, just a lot
of energy.
Speaker 1: Yeah, well, I mean on that and Paul, you've this
is a slight pivot, but you've written about recently sort
of this demand for more energy coming out of data
centers AI. I mean, what is the the outlook there
in terms of what Texas will need energy, whether it's oil,
renewables or anything in the coming years.
Speaker 2: Well, the forecasts are pretty eye popping. You know Urkott,
who is our nonprofit that basically manages the grade in
the state of Texas.
Speaker 1: After the last week, everybody knows Arcott. If you forgot Urkott,
you were never Kot.
Speaker 2: After the last couple of days, it was there was
I was talking to somebody about this. There was a
time in twenty twenty where no one had ever heard
of her. Now I'm from Texas and I had never
heard Arcott. No.
Speaker 3: Urkott would have preferred that.
Speaker 2: Yes, absolutely, But you know, so they had this this
forecast a couple of years ago that the Texas is
going to I have a demand of about one hundred
and fifty gigawatts, which may you know, just one fifty
one hundred and fifty gigawatts is one thousand megawatts, and
you know, we keep kind of building this out from there,
but like that is a huge amount of energy demand.
And our peak that we have ever had, our record
peak is about eighty five gigawatts, So we.
Speaker 1: Will need one hundred and fifty gigawatts and our peak
has been eighty five five.
Speaker 2: Right, so quite a bit more jump, yes, quite a jump.
And this is by twenty thirty and this is this
is driven, like you said, by data centers. Texas has
also become recently the crypto capital of the world, ever
since China banned the practice a number of years ago.
And so basically, like there there is an acknowledgment that
we need a lot more power and it really doesn't
matter where it comes from, you know. I think sort
of the politicking over fossil fuels versus renewable energy is
really not something that you hear when you talk to
these folks. You know, they're kind of just trying to
make it work to have a diverse grid. I think
something that a lot of folks aren't thinking about right
now too, tied to data centers, is the growth of
storage capacity of batteries that the technology around battery storage
has just jumped by leaps and bounds over it just
like the last five years. And we now have the
ability to put these batteries on the grid that can
hold like one hundred megawats, two hundred megawats, three hundred
megawatts of power, and they can just basically, like think
in a twenty twenty one ury situation that when we
start losing generation capacity because oil pipelines are freezing or
because solar panels are covered in snow, these batteries can
turn on in the blink of an eye and suddenly
be providing that power to give or cut time to
sort of manage whatever situation is happening. And so that
is also becoming a huge thing, and they played a
big part this weekend coming online in situations where there
was strain on the grid. These batteries now really provide
a pretty significant to what we're doing. So I think
there are a lot of exciting things happening right now.
I think that you know, we have a market that
is truly free in the Texas energy market, and it
currently looks like it's meeting these demands and sort of
new and advanced ways. But you know, I think we
have along road ahead of us the next five years.
And then there's also like a lot of questions about,
you know, how how legit are these forecasts going to be.
I think there's a lot of a lot of building
that is happening right now from these data centers, But
you know, will all of that materialize? You know, where
where will the AI industry go from here over the
next five years? You know, I think there's been a
lot of questions over a bubble. It certainly seems like
it is a very very valuable industry one way or
the other. But you know, is it going to be
a further what is it sixty five gigawatts of generation valuable?
I'm not totally sure, but it's it's definitely something that
at this point in time the grid operators are meeting. Jack.
Speaker 1: Is that your sense that we're sort of and expanding
are all different forms of energy in a way to
sort of meet the demand that Texas is going to
pose or Texas gonna require in the coming years.
Speaker 4: Yeah, and I think Paul did a good job outlining it.
I think the numbers are huge. Are they real? That's
the other question I think not I think they're probably overinflated.
I think when it comes right down to it in
terms of actually, you know, moving putting the shovel in
the ground and moving the dirt, I think the numbers
are going to be less than that, and I think
Texas is well poised to probably meet that demand.
Speaker 3: Yeah, I'll tell you.
Speaker 1: I mean I was out in West Texas for like
another story, and you know it's oil Derek's next to
the wind turbines, next to the data centers, next to
the solar farms. It's just all sort of coming online
or remaining online.
Speaker 2: And there's probably a battery in there too.
Speaker 1: Absolutely, Yeah, they're building battery farms. Yeah, it's really amazing
to see.
Speaker 3: Great. Well, this has been wonderful. I think we'll leave
it there.
Speaker 1: But you know, if we suddenly start investing billions of
dollars in Venezuela, we'll bring you guys back and talk
about you know what that future looks like.
Speaker 3: Thank you so much, Jack for joining us.
Speaker 4: We appreciate it, Thank you my pleasure, really appreciate it.
Speaker 1: Yeahs Paul, thanks for being here and putting on hard pants,
and we will leave it there. You can get the
trip cast anywhere you get your podcast. We're also available
on YouTube. Our producers are Rob and Chris. They also
wrote the theme music and we will see you next week.