Exxon Doesn’t Want Hess??

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CERAWEEK-BIG OIL EXECUTIVES PUSH BACK AGAINST CALLS FOR FAST ENERGY TRANSITION

March 19, 2024 Mariel Alumit

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

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Michael Tanner: [00:00:15] What’s going on, everybody? Welcome into the Wednesday, March 20th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, big out of Ceraweek big oil executives push back against calls for fast energy transition. We will then move to up to 58GW of coal faces retirement in E, J m by 2030 without replacement capacity in sight, according to Market Monitor. Next up, Biden officials mull wicker death for U.S. coal power plants. And then finally, in the news segment. Energy guru Daniel Yergin quote, I’m sick of the energy transition stool. Then toss it over to me. I will quickly cover what’s going on in the oil and gas finance markets. I’ve got a couple things I want to talk about. Besides prices, the, the API, crude oil inventories, dropped yesterday. As you listen to this, you’ll find out what the EIA inventories are. We will cover them on Thursday show but give you a little sneak peek of what the EIA might do. ExxonMobil CEO Darren Woods comes out and quote says ExxonMobil has no interest in Hess despite Chevron purchase dispute, again according to Darren Woods. So we’ll dive into that. And then finally, wrapping it up back where we started at Ceraweek. TotalEnergies to acquire upstream portfolio in the Eagle Ford Shale. So very interesting. Wow. I have friends over at TotalEnergies. So we will cover all that and a bag of chips guys. As always I am Michael Tanner, joined by Stuart Turley. Where do you want to begin? [00:01:55][100.0]

Stuart Turley: [00:01:56] Hey, let’s head off to our buddies there and Ceraweek. Big oil executives push back against calls for fast energy transition. You know, transition is generally smooth. This is not going to be smooth. [00:02:10][14.1]

Michael Tanner: [00:02:10] So smooth as some of those self-driving Ubers down in Phenix. [00:02:14][4.0]

Stuart Turley: [00:02:15] Oh, yeah. Retro. Here’s where, I mean, here we already talked about this. We should abandon the fantasy of phasing out oil and gas. Instead, invest in them adequately to reflect and demand. How good is that? Let’s let the markets decide. That was a great quote right there. Despite the growth of electric vehicles, oil demand will reach a new record 104 million barrels per day this year. Peak oil still is not around the corner. [00:02:50][35.6]

Michael Tanner: [00:02:52] I love this quote. Meg O’Neill. She’s the CEO of Woodside Energy. She was on a panel and said, quote, you’re hearing some very pragmatic views up here. And, you know, they basically were saying we we need to reject what are, quote, these simplistic views that the transition to cleaner fuels can happen at an unrealistic pace. So that’s what’s interesting about this. You know, this is supposed to be the climate green, you know, event of the year, you know, sort of trying to center themselves as the summer cop 20. You know, another version of people are going after the energy transition here. It’s been good to see. We saw Petrobras CEO, ExxonMobil CEO, shell CEO all come out. It ceraweek and basically reject this quick energy transition. It’s been kind of crazy to see. [00:03:40][47.7]

Stuart Turley: [00:03:41] Yeah. And Jennifer Granholm, I still think that if she ever dated Federer, him, it’d be Federer. Graham. When, she says, that’s one opinion, she said of NASA’s prediction continuing long term for fossil. There’s been other studies that suggest the opposite, that oil and gas demand and fossil demand will beat by 2030. Whatever she smoking, I want to buy some because she is not clearly looking at the market data. Here’s what I mean. [00:04:13][31.9]

Michael Tanner: [00:04:13] She’s she’s clearly clinging to the the IEA’s interpretation that by 2030 we will have reached peak oil demand. So I mean, that’s the beautiful part about if you’re a politician, you’ve got the IEA to lean on and say, well, they’re telling me it’s their fault. [00:04:28][15.2]

Stuart Turley: [00:04:29] Right. And there’s not a lot of incentives to drive low carbon hydrogen fuel projects. And it’s unbelievable. Okay, let’s get rolling here. The next story here, up to 58 gigawatt faces retirement in PJM. By 2030, without replacement capacity in sight. This is nuts. So this goes hand in hand with this story. The next story that we’re going to cover, the PJM power plant owners said they will retire 4.3GW with an estimated 19 point. Point six gigawatts can retire for regulatory reasons before 2030, including 10.5 of coal. 33.8 may be uneconomic based on capacity. This is this is unbelievable. Do you know how many people are going to be without power? [00:05:37][68.2]

Michael Tanner: [00:05:38] Yeah. I mean, unfortunately, they don’t have a clear line of sight to what’s going to backfill it, which I think is goes back to the things we’ve been covering. The grid is not ready for all of these retirements. We need to be able to, you know, make sure that these retirements I mean, you know, they the Market Monitor report did put out that these retirement estimates are uncertain and that if these if coal remains high in terms of, price or what, you know, what, what the PJM can get, they’re going to keep some of that capacity online. So there’s a little bit of both. But that’s absolutely incredible. If that were the case, the levels of potential fireman’s would match that from 2011 all the way to 2023, which is absolutely. Which gives you an idea of the speed at which they’re doing this. [00:06:28][49.7]

Stuart Turley: [00:06:29] That’s exactly right. And and when we take a look at data centers and we take a look at AI, the electricity demand is going up exponentially. And when you take a look at the Biden administration, that’s the next article. Biden officials more quicker death for U.S. coal power plants. They’re already trying to put a stake in these things. Listen to this one. A spokesperson for the EPA declined to comment on the substance. Potential changes. Okay, we’re just going to go ahead and say we’re going to make changes, but we’re not going to. But here’s a quote. These final carbon pollution standards will protect public health, reduce harmful pollutants, endeavor, deliver billions of dollars in climate and public health benefits, the agency said in an emailed statement. The EPA is working to issue this final rule later this spring. Here’s the problem, Michael. People are gonna die, and they’re gonna die because they don’t have enough electricity. It’s a security issue. Lights mean security. You’re gonna have refrigeration. You’re going to have the grid go down. [00:07:43][74.6]

Michael Tanner: [00:07:44] These rules were already rolled out. This quote unquote power plant rule already has been really, quote unquote, ruled out existing coal fired power plants basically need to get rid of all of their greenhouse gas emissions by 2040, or close the difference in what this new potential rule could do is say, no, no, no. Not only do you have to close by even a date before 2040, it’s not enough to reduce greenhouse and become net zero. You just have to shutter. So this this goes against the innovation in the technology that the energy industry is going to put into it. And this is the thing, if we can figure out a way, if we can actually obtain this net zero fantasy, why who might as well be part of the solution if we can get it out over there and you can actually prove that it’s net. So this just goes to show you they are just trying to get rid of coal, regardless of what they say about net zero. Yes it’s coal sounds nice. It’s really what they want to do is shift to other forms of energy that they control. [00:08:42][57.7]

Stuart Turley: [00:08:42] That they can control. You nailed it right there. They can go. No electricity for you. Boom. And that’s exactly what they want to do. So all right, let’s go to Daniel a year ago and energy guru Daniel Yergin quote I’m sick of the energy transition. Discuss discussion I like Daniel, I’ve had the fortune of talking to him a couple times, and he is when he was interviewing with David Blackmon. Love me some David Black. And he says, quote, I’m sick of the energy transition discussion. It sometimes loses touch with economic history and reality. If you look at the energy history of energy transition, transitions, they last for over a century. Try and make a change that happens in 25 years, or even half of that time is highly unlikely. He’s one cool cat. Yep. And he’s down there, speaking at it, if he says a long time ago, people seemed a lot more, optimistic. Well, it’s because we’ve become more electrified, and rely on the grid. It’s here now. [00:09:53][70.8]

Michael Tanner: [00:09:54] It’s in here. I mean, there’s not much to add to this article other than I would check it out. Guys, you can hit the description a little, but he he brings up some great points. This transition. If we’re even going to make the transition it’s going to be at least a century, let alone the 25 year quote unquote time frame. They got it here. You know he. Points out that I love, you know, we would. For all the hype of renewable energy, it’s only increased by 6% worldwide year over year. It’s not. [00:10:22][28.4]

Stuart Turley: [00:10:22] Much new. And when you take a look at, what has happened is the cost of energy from 2008. We covered this last week, I believe, 2008 to 2000 and, 23. The, the there it’s now 15% the do we had an increase. The power in California has increased to almost 98%. That’s nice. So after you. [00:10:52][29.5]

Michael Tanner: [00:10:53] Yeah. Well, we’ll go ahead and run it over to finance guys. But before we do that, as always, we got to pay the bills here. Check us out. www.Energynewsbeat.com the best place for all your energy and oil and gas. Do stay in the team. Do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy business. Hit the description below. As I just mentioned, for all the links to the timestamps in all of the articles, you can also check out dashboard.energynewsbeat.com. Go ahead and and check out our data news combo. We really appreciate that. You can email the show questions@EnergyNewsbeat.com. I’m recording a podcast tomorrow with John Farrell over at one database covering court and enter plus and then we will be doing next week an overview of the equity equity deal. So check that out on the deal spotlight. We’re going to be really be pushing that part as well. Again guys all with all of this info is available www.energynewsbeat.com. [00:11:53][60.1]

Michael Tanner: [00:11:55] I think you know from an overall market standpoint we saw the S&P 500 up about a half a percentage point. Nasdaq only about two 2/10 of a percentage point. I was mainly because of of some. Yeah. A little in the a press release gaffe that happened this morning. So Nasdaq trails a little bit. But in Divi already up $20 from its relative early morning trading. So not much not much interesting going on there. We saw ten year two year and ten year yields basically move absolutely nowhere. So 4.6 for the ten year and 4.2 excuse me 4.6 for the two year. And the ten year sits at 4.29. We saw Bitcoin down $3,000 again off record highs down to 63,911. So still still obviously fairly high up there. Crude oil really having its basically multi-month high sitting there at 8273 for for crude oil WTI Brant sitting at 8726. Main reason for that is, is, is these Ukrainian attacks on Russian refineries. You know, the forward looking thesis is that Russia is going to have to, because of this, be decreasing a lot of their outward oil flows. Which is going to again help or higher oil prices. You know, there’s this, what’s his name in here? Hodge Stone ex energy analyst Alex Hodge. He’s got some calculations out there that says the attacks on Russia refineries could decrease, of around 350,000 barrels of global oil and petroleum supplies and boost US crude prices from today’s level by about $3 per barrel, which would put a somewhere in the $85 range, which is kind of at the upper end of where that bandwidth is. So, could be interesting. That would also push Brant oil prices above 90, which is a, a key marker that a lot of these Middle Eastern countries are looking for. We’ve seen OPEC continue to cut, cut, cut. And you know where they saw no signs at Ceraweek of saying they’re going to they’re going to pump more. So they’re absolutely continuing to pump their you know, real quick as you guys listen to this, on Wednesday, you’ll be privy to what’s going on with the EIA crude oil storage inventories. The API yesterday went ahead and released their forward looking, guesstimate at what those as what those commercial reserves might be. They predict a 1.5 million barrel draw from the strategic petroleum reserves and commercial reserves, relative to a basically a flat forecasted build. So, very interesting. They’re also helping support oil prices. You know, the other thing I found interesting, stew is, is, is, we’ve got two basically ceraweek stories to wrap up. Exxon Mobil quote has no interest in has a mid Chevron lease dispute, according to their CEO. They give you a quick headline. The boss over there at ExxonMobil, Darren Woods, said on Monday that he has no interest in buying Hess Corporation outright despite Chevron Corporation’s attempt to take it over. They’re currently sitting in arbitration over its proposed $52 billion merger with the company. I love this quote. So if we were interested in doing something with Hess, we wouldn’t have waited for Chevron. [00:15:03][187.7]

Stuart Turley: [00:15:04] Nice. [00:15:04][0.0]

Michael Tanner: [00:15:06] But he did say that they aim to secure and confirm their preemptive rights to understand the value implied by the Chevron deal. And make sure they do right by the ExxonMobil shareholders. And this is actually fairly brilliant. This is a little bit of shade at the, at the the Chevron folks, they basically said, yeah, we could have bought in Hess anytime we wanted to and we haven’t. So good luck with Hess. Well, we deserve the right to do is understand what the value of Guyana of Hess’s Guyana assets are, because we technically have the first right of refusal. So, sure, you can take Hess, but we’re going to take the more valuable stuff, which is Guyana, which, you know, what I find funny is there’s got to be some. Whoever negotiated this deal for Chevron, the lawyers, they bet they’re going to be looking for jobs. Do. [00:15:51][45.1]

Stuart Turley: [00:15:51] Oh, they just. [00:15:52][0.4]

Michael Tanner: [00:15:52] Hire them at all because they swung it, missed it. This one and are probably going to put Chevron on the hook for a couple billion dollar breakup fee because they’re going to be liable. [00:16:02][10.5]

Stuart Turley: [00:16:03] So friends Michael. [00:16:04][0.8]

Michael Tanner: [00:16:05] Well, we’ll never know the land and legal team that put this deal together for Chevron. But they’re going to be in the bread lines with the rest of us because, hey, they swung and missed. [00:16:14][9.2]

Stuart Turley: [00:16:14] Let me give you another one. Woods, said this week, he also said, Exxon CEO says hydrogen project at risk without I.R.A. tax credits. They’re really having a problem with multiple big oil companies around. This is in a different article on Bloomberg. And there’s so many different, companies that are getting away from green, going green, you know, in hydrogen and everything else because there’s no, support from the financial side to do this. So I found it funny that in that same speech that he gave at Ceraweek, he was begging is is urgent. [00:16:59][44.8]

Michael Tanner: [00:17:00] Yeah. The other headline I saw coming out of Ceraweek was TotalEnergies acquiring upstream position in Eagle Ford Shale. This didn’t have this on as you like to say. Didn’t have this on my bingo card. [00:17:11][11.4]

Stuart Turley: [00:17:13] I would not have either you know had. No. Yeah they’ve. [00:17:16][3.4]

Michael Tanner: [00:17:16] Not TotalEnergies. It’s in the space and acquiring a non-operated which is again interesting. one operated upstream acquisition in the Eagle Ford Shale. It’s basically owned and it’s owned by Lewis Energy Group and operated by EOG. To give you an idea, this is in Webb County down there, and this is mainly to support the Rio Grande LNG terminal. So they’re basically getting it as a non-operating partner, attempting to secure some marketing for their LNG assets, but also taking, again that non-operated position and taking it off Lewis Energy Group. And so so very interesting. Remember today is your deal that total has with next decade. To basically export about 5.4 million tons per year of LNG, which they’ll luckily be able to sneak through because they’ve already started building it. They that investment decision or that FID final investment decision was made in 2023 to build out that first phase, which should have the total production capacity about 17 point 6 million mega or million tons per year. So absolutely unbelievable. But total energy they, they go ahead and get in on the the non side. Very interesting. I would not have guesses. They’re not immune and they’re not idiots when it comes to upstream. But they haven’t operated upstream in or in in the United States in a long time. So it’s going to be very interesting to see how this works out. [00:18:43][87.2]

Stuart Turley: [00:18:44] They did buy the, all the, natural gas power plants enough for two nuclear reactors in gigawatts being produced so that they own a lot of power plants. So they’re buying the whole food chain in Texas. [00:19:00][16.1]

Michael Tanner: [00:19:01] 1.21GW. [00:19:01][0.0]

Stuart Turley: [00:19:04] If I only had hair, I would use that line. [00:19:05][1.7]

Michael Tanner: [00:19:07] If only you did, you will dog. Why? What else do we’re about to finish up? [00:19:11][4.9]

Stuart Turley: [00:19:12] Oh, no. Just more entertainment. Looking forward to some great things going on around the corner. [00:19:16][3.6]

Michael Tanner: [00:19:16] Yeah, absolutely. Hey guys appreciate everybody. Oh go ahead and. [00:19:19][2.9]

Stuart Turley: [00:19:20] Check out our Doomburg and Chris Wright episode today. And then to on Friday we have Robert Bryce going out. So we love big boys. [00:19:32][12.6]

Michael Tanner: [00:19:33] We love Chris right. We love Dune Berg and we do love Robert Bryce. So check that out all and podcast Spotify, YouTube, Apple Podcast wherever you get your podcasts. And as always at www.energynewsbeat.com with that guys we’ll go ahead and let you get out of here. Get back to work. Appreciate you checking us out. Energy news Beat podcast for Stuart Turley I’m Michael Tanner. We’ll see you tomorrow folks. [00:19:33][0.0][1129.6]

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