Daily Energy Standup Episode #134 – Fueling Progress: Biden-McCarthy Debt Deal Supercharges Mountain Valley Gas Pipeline and Energizes Chevron PDC Deal

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Biden, McCarthy debt deal would speed up Mountain Valley gas pipeline

WASHINGTON, May 28 (Reuters) – U.S. energy company Equitrans Midstream Corp’s (ETRN.N) long-delayed $6.6 billion Mountain Valley natural gas pipeline could win federal approval as part of Washington’s debt limit deal. Streamlined federal approval for the 303-mile […]

Chevron PDC Deal About Addition, Not Substitution

Oil and gas acquisitions in the era of capital discipline have often been a matter of “high-grading” portfolios by pushing out lower-return, more carbon-intensive assets. But Chevron CEO Mike Wirth tells Energy Intelligence that his firm’s agreed […]

Highlights of the Podcast

00:00 – Intro
02:15 – Biden, McCarthy debt deal would speed up Mountain Valley gas pipeline
08:14 – Market Updates
08:49 – Chevron PDC Deal About Addition, Not Substitution
10:12 – Outro

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

Michael Tanner: [00:00:15] What is going on, Everybody? Welcome into another edition of the Daily Energy News Beat Stand Up here on this gorgeous Wednesday, May 31st, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas. Stu is out on assignment so I’m rocking a solo show, but we still have an excellent lineup. [00:00:35][20.0]

Michael Tanner: [00:00:35] It’s going to be fairly brief I really just want to mainly cover this debt ceiling debacle that’s going on right now is it on? Is it off? I’ll bring you the latest details as we know them right now. Talk about how that’s impacting oil prices specifically and then specifically the Mountain Valley pipeline, which is a crucial infrastructure project going on right now in West Virginia. And I yeah, in that East Coast, I don’t know if it’s quite West Virginia. [00:00:56][21.2]

Michael Tanner: [00:00:57] I say all that to say this debt deal is important, the fallout is critical we also have some interesting thoughts. I saw a new article on the Chevron PDC deal it has some extremely interesting numbers specifically and expected synergies column with means one thing, layoffs. [00:01:13][16.3]

Michael Tanner: [00:01:15] But we will cover all that and a bag of chips, guys but first, as always, these stories are brought to you by the world’s greatest website, www.EnergyNewsBeat.com the best place for all of your oil and gas news. Stuart has a great job of curating that website making sure all the top news is there on a daily basis. [00:01:31][16.2]

Michael Tanner: [00:01:31] Dashboard.EnergyNewsBeat.com the best place for all your oil and gas data news combo combined. It is definitely going behind a paywall so if you like that dashboard, we appreciate it. It is going some point behind a paywall, so just take a deep breath, soak that in and just understand that it’s definitely going behind a paywall. So if and maybe not a paywall but a log and while some sort of we’re going to make you give up a little bit because that dashboard is awesome, we appreciate you guys taking a look at Dashboard.EnergyNewsBeat.com but let’s dive into it. [00:02:03][31.8]

Michael Tanner: [00:02:04] All right? Everybody’s talking about this debt deal negotiation thing, and I think it’s helpful to sort of just walk through like what’s happening right now. I mean, right now there’s been an agreement between our President Joe Biden and House Speaker Kevin McCarthy there’s this Monday deadline next week. Yeah, it’s a Monday deadline of next week in order to make sure that this all gets sanctified. [00:02:27][23.8]

Michael Tanner: [00:02:28] So they have a little bit of time. But the key is this has to go from committee out of this. You know, the Rules committee, this 13 member committee, everything comes down to committee. It’s even the US government. You think it comes down to committees at your job, even in the US government, it comes down to committee. [00:02:42][14.5]

Michael Tanner: [00:02:43] So we’ve got a committee of 13 people who then swing it out and say, okay, now we can bring it to the floor. A key Republican swing vote, Republican Thomas Massie, said he was inclined to support the bill, which had been briefly imperiled earlier after two consecutive days after two of the conservatives said they plan to vote against it. [00:03:00][17.3]

Michael Tanner: [00:03:00] So really can get out of committee, can knock it out of committee, really again, we’re facing this Monday deadline. If it gets to the House floor, it’s probably going to pass I don’t think Kevin McCarthy is going to bring anything to the floor that he doesn’t think can pass. It will then, you know, you know, if you go to Energy News Beat you check this article out. [00:03:16][16.1]

Michael Tanner: [00:03:18] I think in terms of what’s happening, you’ll see that then the Senate will vote they’re most likely going to approve it. You know, there are more liberals or conservatives, so they will most likely approve whatever deal gets done in the House because it is most likely this deal is going to favor or Democrats in this scenario. [00:03:34][16.3]

Michael Tanner: [00:03:35] Some interesting fallout from this deal, though, was permitting and, you know, clean energy and infrastructure reform. Remember, one of the key key bills that was passed by the Biden administration was the Inflation Reduction Act, which had an insane amount of spending on clean, you know, clean energy, things that, you know, when Stu and I joked about the original Porkulus bill, this was the Porkulus bill on steroids I mean, some of the stuff in there. [00:03:59][25.0]

Michael Tanner: [00:04:00] But what was what we liked about the bill was it’s permitting reform and it’s streamlined approach to say, okay, if we need all this infrastructure for clean energy, for solar, for wind, you know, because that’s the issue. [00:04:12][12.0]

Michael Tanner: [00:04:12] The issue is not whether can we build enough solar to collect. Yeah, probably can we build enough wind? I don’t know how many wells you want to kill. If you’re me, might as well just kill them all at this point. No, I say that in jest Stu gives me a hard time about the whales? [00:04:25][12.7]

Michael Tanner: [00:04:25] But let’s just say for a fact you could solve the problem right now with wind and solar where are you going to put it? All the battery technology, There’s the group we’ve talked at length and on this podcast held The grid is not stable and can’t necessarily hold that you still need that dispatchable energy. So unless we want to go a nuclear route and so and I’m not going to, you know, thank goodness Stu is not here because he’d be going off on some small modular nuclear reactor scheme. [00:04:49][23.3]

Michael Tanner: [00:04:51] We got to move to natural gas, got to get off coal, and we’ve got to use specifically the CLI, you know, use things like carbon capture to be able to do to achieve this stuff. But again, getting the grid and upgrading the grid can go a long way in, dwarfs shifting to whatever clean energy future there is. [00:05:08][17.6]

Michael Tanner: [00:05:09] So specifically let let’s go to the Mountain Valley natural gas pipeline. You can check this article out, EnergyNewsBeat.com. You know, in this whole game of will the debt ceiling get move, will it not? Regardless of what happens, this pipeline has been included in the current deal that’s sitting in Congress right now, which is critical. [00:05:27][17.4]

Michael Tanner: [00:05:27] This 303 mile pipeline was placed in the budget between US President Joe Biden and Kevin McCarthy. It’s backed by Joe Manchin, who is a Democratic senator out there in West Virginia. And again, his vote is going to be heavily needed if if because the Republicans are minority in the Senate. [00:05:46][19.4]

Michael Tanner: [00:05:47] So there’s a bunch of negative court rulings the project’s been delayed. You know, the equities midstream, you know, they thought they were going be able to finish it by 2030, 2023. But there CEO had a quote that said there remains significant risk and uncertainty, including regarding and likely the litigation so they’re expecting litigation to come down. [00:06:07][20.1]

Michael Tanner: [00:06:08] Now, if we can get this approved, it’ll be very can be or if this debt approval moves forward, hopefully this can get streamlined, get this turned on, you know, alleviate some of that refined product issue. Again, this is going to alleviate gas prices, best thing to do for gas prices, build pipelines in here, the best thing you can get rid of the Jones Act but Stu’s not here, so we’ll just we will only get to talk about it once you’re never going to beat it but I do agree, Stu is that from the beginning, the Jones Act. [00:06:33][25.4]

Michael Tanner: [00:06:33] You know, the other thing that this that this oil price or the you know, I sort of spilled the beans there before I said it but what this debt ceiling is also impacting is oil prices. You know, we saw oil prices fall more than 4% today, mainly on whether or not what’s going to happen. I mean, obviously, I think we’re going to pass this the real question is what passes? And I think that’s what the street is, is wondering. [00:06:56][22.0]

Michael Tanner: [00:06:56] You know, Kevin McCarthy originally came out and said, hey, there’s a chance that we do a raise that gets us through the next presidential cycle. Well, that alleviates a lot of concern for the markets and helped to global institutions kick the can down the road as well as we’ll deal with it later. We do it, you know, when you’re five years old, he’s out with it tomorrow and you realize, oh, well, showed up tomorrow it’s like Friday. Do you do you work on Friday? You leave it for Monday they get done over the weekend. So might just figure out the problem now so you don’t have to have the problem on Monday or whatever. [00:07:24][27.8]

Michael Tanner: [00:07:25] You know, some sort of analogy of that point where if that’s what happens, we kick the can down the road years. Great. The market’s going to view that as, okay, relax, we can now, we can now chill out we can get back to worrying about other things, get back to growth, get back to everything. [00:07:37][12.3]

Michael Tanner: [00:07:38] If the agreement is, hey, we’re only going to go to the end of the month, we’re only going to get into the year, well, then everybody’s still on edge because it’s we’ve just now moved the needle just a little bit for we haven’t solved the underlying issue of what’s going to happen. Congress appropriates more money than that it wants to legally be allowed to spend. I mean, the 14th Amendment is an option that’s out there it hasn’t necessarily been signaled by the Biden administration that they want to go that route, but they could if they really wanted to. [00:08:02][24.4]

Michael Tanner: [00:08:02] So now they’ve said they don’t want to do that because it likely will get challenged and you’re talking about going to the Supreme Court and all this other stuff. So the point of all that is nobody knows what’s going to happen and that’s part of the reason why you’re seeing weakness. [00:08:13][11.1]

Michael Tanner: [00:08:14] Oil prices currently trading at 6959 open today above $73. You know, and, you know, again, that is all due to the fact that it is, you know, some very interesting comments. You know, on the supply side, we will see EIA forecasts on Thursday, so not tomorrow we will know the API index tomorrow. So if you listen in to tomorrow or not tomorrow, Yes tomorrow’s episode for you guys will definitely have the API numbers for that and we will make sure to cover all of that. [00:08:43][28.8]

Michael Tanner: [00:08:43] I thought the only other thing that was interesting to cover about was this. I have a quote from the PDC Chevron deal. They had a little deal by the numbers this came off their investor slide. One of the board points out expected synergies, 100 million in annual operating expenditures, 400 million in annual capital expenditures. [00:09:01][18.5]

Michael Tanner: [00:09:02] What does that mean? Layoffs, baby? Unfortunately so that’s one of the ways you accrete, you know, you, you apply economics of scale you take the same team, you just have to manage a little bit more. [00:09:11][9.4]

Michael Tanner: [00:09:12] So unfortunately, I think we’re going to see some of that that PDC team in Denver, I think you’re going to see unfortunately, I think I think it’s going to be a slaughter. And I, you know, hopefully, hopefully not. But, you know, if if they’re throwing down 100 million annual operational expenditures, I don’t know where else that’s coming from, 400 million CapEx, that makes sense you know, that’s a little bit different. You’ve got service vendors out there that you work with that 100 million in an annual operating spenditure you mean annual? What is What’s that mean? What’s that mean? What’s that annual mean? Where’s does that number. Annual that’s from an annual salary. [00:09:42][30.5]

Michael Tanner: [00:09:43] So it’s unfortunate but Chevron coming in, they’re in really taken over, becoming really one of those major players in Colorado. It’s kind of interesting to see see what all happed. So well, I appreciate it, guys that’s all I’ve got for you again www.EnergyNewsBeat.com otherwise, I will let you guys get out of here we’ll talk to you tomorrow, See you! [00:09:43][0.0]