Daily Energy Standup Episode #76 – Did sanctions kill the dollar? Hats off to OXY for the right path to ESG – EU LNG imports from Russia the highest in 3 years

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KEY POINTS Oxy CEO Vicki Hollub oversaw the No. 1-performing stock in the S&P 500 in 2022. The White House has pressured oil companies to produce more but Hollub says its capital spending plan will […]


Highlights of the Podcast

00:00 – Intro
03:03 – Eu`s LNG imports from Russia sees highest levels in three years
4:57 – Environmentalist sued to stop Gulf of Mexico and gas auction.
06:48 – Will Russia sanctions dethrone King Dollar?
10:51 – Biden Here’s Oval Office plea for Alaskan oil project and lobbying frenzy
13:26 – Oxy CEO, Vicki Hollub doesn’t seem to be worried about White House pressures on buybacks and oil prices
16:16 – Fed Chair Jerome Powell speaking in front of Congress today
16:38 – Market Update
18:02 – Natural Gas Update
19:35 – Outro

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

Michael Tanner [00:00:14] What is going on. Everybody, welcome into another edition of the Daily Energy News Beat Stand up here on this gorgeous Wednesday, March 8th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show that prepared the show and the director and publisher of the world’s greatest website, energynewsbeat.com, become Stuart Turley, my man. How we doing today?

Stuart Tur ley [00:00:37] S Beautiful Day neighborhood. And we got 1031 exchanges going on around here.

Michael Tanner [00:00:42] Yeah, you do. We’re swapping real estate for oil and gas. It’s a good day to day, man.

Stuart Tur ley [00:00:46] It is. You got to love it.

Michael Tanner [00:00:48] Yeah. And we also have a excellent show lined up for you guys. Some of the top stories that we’ll be covering today. Our first one use LNG imports from Russia, the highest levels in three years. Stu will break down what that means in the LNG markets next. Environmentalists sued to stop Gulf of Mexico oil and gas auction in something that everybody saw coming. It’ll be interesting to see now where prices are at, whether or not they did. Oil and gas companies just give into this are not. But still we’ll cover on what that means for the U.S. shale markets. Also, will Russia sanctions dethrone, quote, King dollar a currency question which is pretty interesting based upon what we thought was going to happen with shutting Russia off from Swift and what is unfortunately ruled out which their dollar, their Russian currencies actually held value fairly well due to moving to the gold standard. So Stu will cover how the Russian currency is doing next. We have Biden’s Here’s Oval Office plea for Alaska oil project in lobbying frenzy. Stu is very familiar with the North Slope. I know he has a personal connection to that area. So Stu will cover what’s going on in the Alaskan oil. You don’t hear much about that. So I’m excited to hear some updates there. And then finally, Oxy CEO Vicki Hollub doesn’t seem worried about White House pressure on buybacks or oil prices. That’s considering she was leading the best S&P 500 company last year. So she’s riding high. She has an interview with CNBC here at Ceraweek. Still will cover all things oxy. He’ll kick it over to me. I’ll keep it very brief covering what happened in the oil markets today. We traded down over from over $80 to begin with in the market trading session. Do now currently 7719 really due to some some interesting numbers. The API just dropped their forecast. As you guys listen to this on Wednesday, you should be expecting the crude oil inventories. I’ll cover all things that and on the natural gas side, not as spicy but I’ll cover that and a bag of chips, guys. But first again, check us out. World’s greatest website energynewsbeat.com Check out the description below. All the links that we are to articles that we were out to talk about are the that website dashboard.energynewsbeat.com it’s our combo data news at one. We are hard at work at v2 check us out again on www.energynewsbeat.com I’m out of breath. Those Stu Where do you want to begin?

Stuart Tur ley [00:02:59] Let’s start with the first story here. You can’t. You always got to love a good use. LNG imports from Russia sees highest levels in three years. Michael The the whole thing about Russia and it’s importing from natural gas or LNG is really confusing. And if you take a look at LNG, a lot of the LNG, I did not know this, but you can import LNG from the UK, from Britain and hustle it across the channel. I was like, All right, what does that got to do with anything? What it does do is that natural gas and LNG is still being bought by the EU in the UK from Russia. Let’s go through some of these numbers. The EU has not imposed all sanctions on Russian gas, so about 8% of EU gas imports still come from Russia. They’re down 80%, but they still are getting 8%, but they’re not counting that LNG portion of it. So it’s kind of they think they’ve done bad things. The other article we talk about is Russia’s going to have the last laugh.

Michael Tanner [00:04:09] They will. I mean, I think this is a pretty this is an eye opening. But halfway down, the article says this is a reduction of 50% from a peak 1.3 billion per day in March of 2022. Right. In February, Russia earned 280 million per day from crude oil, 120 million from oil product, 60 million from pipeline gas and 60 million from coal and 40 million from LNG. Whew, That’s a good mix right there, folks. That’s a good mix.

Stuart Tur ley [00:04:35] It is. And now we use LNG imports from Russia and 2022 is up 35% compared to 2021. So it’s kind of like the old shell in the net game, somebody trying to hide a shell from inert in the net game.

Michael Tanner [00:04:51] So I think we found a nut.

Stuart Tur ley [00:04:53] Yeah, Yeah, that’s me. Okay, let’s go to the next one here. Environmentalist sued to stop Gulf of Mexico and gas auction. Okay. The lawsuit filed by Earthjustice, the Sierra Club, and other environmental groups in federal court. Seeks to stop the U.S. Interior Department from offering up drilling rights in 73.3 million acres in the oil rich region later this month. It would be the first police in the Gulf since 2021 and would supply a satisfy a provision in the Inflation Reduction Act. But this lawsuit’s trying to hold that up.

Michael Tanner [00:05:36] Yeah, I think it’s interesting that as part of the Reflation Reduction Act, there have to be federal lease auctions in the Gulf of Mexico by March 31st. It’s hilarious. So the Porkulus bill does at least help offshore drilling. So we have to we can give credit where credit is due, Stu. Now, obviously, these environmental groups trying to block it. I’ll be interested to see if this actually works. Clearly, there’s probably no standing to these lawsuits. They’ll probably get tossed, but they can at least make the press release, see what happens. I doubt this does anything. And I mean, we’re going to see these acreage. The rule question is, is anybody going to bid on these assets? I think the real the the second order thinking here is not, oh, they’re going to have a sale. It’s who will anybody bid on them and probably not. You might have one or two bids, but it’s not going to be anything like the magnitude of it was maybe ten, 15 years ago.

Stuart Tur ley [00:06:30] This would be one that if you bet on, you might get it. So be careful. Yes. So, no, that would I don’t know that.

Michael Tanner [00:06:38] I’d be I know a few companies that probably want to bid on it.

Stuart Tur ley [00:06:40] There you go. All right. Let’s go to the next one. Russia, Russia, Russia, Russia. Okay, it is. Will Russia sanctions dethrone King Dollar? Michael, we’ve been talking about this for a little while and the sanctions have actually done more harm to the U.S. dollar than they have anything else that we’ve tried to do to Russia. The dollar is trading at 1.5 today, I believe, is the dollar. But the U.S. has weaponized the dollar through its sanctions in China and everything else. Let’s go through some of these numbers here. Alicia Garza, we are clearly moving towards a more multilateral world, as shown by the falling shares of the U.S. dollar in Forex reserves in the past year. The incentives for countries to turbo charge that shift away from the dollar have only increased. So once out of swift, you lose the ability to transact across borders easily. So China’s the one is absolutely great for trading oil between countries that want to trade oil in China, but that’s not what makes the dollar flexible. The dollar is flexible across almost anything. However, it’s losing that elasticity across markets. So you’re about to see a big runway away from the dollar.

Michael Tanner [00:08:11] Okay. So I think there’s a there’s a lot we got to unpack here. First off, I do find it hilarious that you’re quoting as an expert. You’re quoting to support your idea, somebody who’s a senior fellow at a Brussels based think tank. You align with some you align with the Brussels based think tank. So just put that in perspective. You’re using a Brussels based think tank as your supporting art, your first reporting art, which is fine, I’m with you. I do agree that the dollar is weak at this point, but relative to other currencies, I think to say that the Russian sanctions, what they have shown specifically is how the gold standard is probably something people need to look at more closely. I think the dollar has gone beyond the fact where you can’t rein it in and the data really caught us there. So there’s you’re right. I see a little bit of what you’re saying, that the financialization of the dollar, which is weird to say because the dollar is the most, you know, medium of exchange. But the financialization of what the Fed has done with the dollar has moved it beyond the point where we could tie it back to goal. But what Russia’s saying, the sanctions of the Russia have shown, in my opinion, more so that the dollar is crumbling, which may or may not be true, more so that countries should move to the gold standard in order to stabilize their currencies. I think this opens up huge opportunity for countries that have wildly inflated and their currency goes always Turkey, for example. You know, countries that have the ability to go out and maybe get their hands on a little bit of gold to stabilize them because that’s what’s happened. The Russian currency has not dropped to the point where we thought it would based on these sanctions. It’s because they had huge gold reserves. Now, obviously, it’s because they also had physical commodities. So that also goes to tell you the thing, holding hard assets is always good. So whether or not it’s gold or physical assets, you can get away with it. So if you’re a country that has no assets or no like coal or oil or gas, what are you going to do? You got to buy gold. So I think it’s interesting. I do love it when QE2 agrees with the think tank out of Brussels. So that just brings pleasure to my mind.

Stuart Tur ley [00:10:12] That’s okay, because that thinktank in Brussels is also looking at the overall weaponization of the Biden administration and what they’ve done horribly to the incomplete infrastructure of the dollar. So they are forcing the dollar into the tank.

Michael Tanner [00:10:29] You guys think Bear Country is somewhere in the woods up in Oklahoma? You’re wrong. It’s Brussels. Stu’s actually in a little flat in Brussels right now. He goes hangs out at the World Bank all day. Him and Klaus Schwab, Sharon office.

Stuart Tur ley [00:10:41] Know that we’re at.

Michael Tanner [00:10:44] Other. That’s a joke, obviously.

Stuart Tur ley [00:10:46] What’s next year for sure. Okay, here we go. Biden Here’s Oval Office plea for Alaskan oil project and lobbying frenzy. Okay. The North Slope, when you take a look at the Willow project, it is a $8 billion project is forecasted to yield 180,000 barrels of crude per day, about 1.6% of the current U.S. production. That’s a lot. And here’s the problem. The president has all the information he needs to make the right decision for Alaska. That’s if he can find his ice cream cone. Willow Project admin alternative without delay. I’m sorry. The man can’t even go to the bathroom by himself. Environmentalists, advocates and lawmakers have been outlining options. This is horrific from the standpoint it’s not. He’s not going to sign it. And I can guarantee you right now it’s it’s dead meat. And this is despicable because the Alaska pipeline is operating. I believe it’s only a four or 5%, 10%, whatever the number is. It is absolutely pathetic. This thing could dump in the Alaska pipeline and bring it right on out of Alaska. And that is oil We would not need to import and we would it’s easy money right there from that. And then I’m going to call him our beloved chowder head is not going to be able to even make up his mind on this one.

Michael Tanner [00:12:23] He won’t sign it. There’s no way. First of you have a close relationship with the North Slope. What is it? You’re you’re you’re your great great grandfather. Twice removed, Discovered it. What’s. What’s the. You? You told me this multiple times.

Stuart Tur ley [00:12:35] My granddad is credited with being one of the key discovering persons of the North Slope. He was one of the he was the chief geologist for Sinclair. And when Sinclair, he told the Sinclair that they had to buy all the rights that they could up there. They said no. And he said, You’re going to go out of business. And sure enough, they went out of business and Exxon bought all the rights and the rest is history.

Michael Tanner [00:13:00] When I think of Sinclair, I think of a sketchy gas station in which there’s usually a drug deal going on. And that’s what Sinclair they could have. They could have owned the North Slope. And now three high schoolers are exchanging a quarter gram of weed in the parking lot at 2 a.m. and.

Stuart Tur ley [00:13:16] Aberdeen being I got pictures of me in that great big green dinosaur.

Michael Tanner [00:13:21] What a time. What’s next?

Stuart Tur ley [00:13:22] Do okay, let’s get through with that and let’s go to my favorite Oxy CEO, Vicki Hollub does not doesn’t seem to be worried about White House pressures on buybacks and oil prices. I love you know I absolutely think the world of Vicki she we talked about this yesterday. She took the holistic approach of, hey, I’m going to be an oil person, but I’m going to tap into the carbon capture game, which is a multitrillion dollar market. And she was the top player in the fortune in the S&P 500 last year. That’s not bad. You’re out of town. You’re not.

Michael Tanner [00:14:03] At all. Not at all. I think it’s and I think another interesting thing to point out is the fact that Oxy, they took a different approach to the ESG game, whereas the super majors, you know, you could consider Oxy as a supermajor or not. They’re not Nessus. They don’t they’re not necessarily fully integrated downstream. But I mean, they do have Oxy cam, you know, they do have a little bit of a midstream interest, so they do a little bit. They, unlike their peers, BP and Equinor and Total, instead of investing in wind and solar projects, they went to what you said, the carbon capture market much more contiguous or analogous with the oil and gas business then is trying to build offshore wind farms, which is a whole new business, like it’s literally relearning how to do everything. So it’s really smart. There’s a reason they were the number one performing stock both in the S&P, Anderson, oil and gas for that reason. And I think they were the best performing oil and gas stock because they have really good rock. They have really good acreage in West Texas. They have really good Colorado acreage, very close with the Colorado team up there. They have very good returns on that. I know it’s been lightly marketed a few times and they haven’t come close. Seeing anything in which would come a decent offer for that acreage. I mean, it’s a very healthy cut to their bottom line, but they’re also the way they’ve been number one. That’s why they’ve been number one in the oil and gas space. In terms of returns in the overall markets, Obviously, oil and gas has done really well. But you add on top of that, investors see them as both green quote unquote, and having actual sound fundamentals with oil. So I think it’s great. There’s a reason Warren Buffett invested in them. He’s made a boatload of this good for him.

Stuart Tur ley [00:15:41] And they had 12, 12% production growth last year. Michael, that’s even with giving their money back and everything else. So if you take.

Michael Tanner [00:15:50] A crazy oh.

Stuart Tur ley [00:15:51] Percent production growth with a lower CapEx, holy smokes, that’s they’re.

Michael Tanner [00:15:58] Drilling they’re drilling four mile laterals up in Colorado.

Stuart Tur ley [00:16:01] Wow. That’s now that’s talent right there. All right. Hey, well, that’s it for me, man.

Michael Tanner [00:16:08] All right. Well, finance wise, I mean, unfortunately, it was a little ominous today. We had chair Fed Chair Jerome Powell speaking in front of Congress today. I got to watch some of that. And the sentiment out of that was, where’s the quote? Let me pull the quote up here. The quote specifically, which is is powerful Congress that the Fed would likely need to increase rates more than expected in light of recent strong economic data, which clearly led markets and the dollar to drop, which in turn led commodities to drop. What’s on the S&P 500 drop about 1.5 percentage points, Nasdaq down 1.2 percentage points. And as I mentioned, crude oil tumbled from about $81 all the way down to its current resting spot here at about 638 here on March 7th at about 7724. So obviously, the market reacting specifically to that news with the 50 basis point hike expected. The odds have now it’s basically at about 50% odds of a rate increase of 50% or 50 basis points versus 25. So the futures markets are pointing towards that very strongly. I think on the you know, on the supply side, we did see the API on this evening as you guys listen to this, sort of be the night before I dropped a minus a there guesstimate of the EIA crude oil stock reserves what you guys will learn today 3.83 million barrel draw versus a forecasted basically 300,000 barrel draw. So that’s actually really good. You know, I mean, from the standpoint of we’ve been seeing a lot of big builds to see a little bit of a draw was expected fairly flat. But we will see the EIA confirming that as you guys. So when and where when you guys listeners a bit past 10 a.m. go look EIA dot gov check out their petroleum status report or check out dashboard that energy Newsweek.com. I’m for the latest updates. We pipe their API right into the dashboard so you get oh the moment it’s updated you see it folks frictionless. That’s the goal for the app friction less natural gas side things again are still unwinding from the cold weather that’s really turning into a little bit of a warmer streak that’s rolling through cash. Markets currently trading about $2.64. You know, there is some LNG exports happening, but right now the weather is continuing to point to a more bullish draw as things balance out. There was an interesting quote in R in one of my favorite articles that I read every single day, which is over at nat Gas until the only time I’ll endorse another website other than ours. Give it up for nat gas until they quote MOBAs risk group said there was a most consistent theme for the North American natural gas market this winter has been the, quote, broken promise of colder temperatures and thus slash expectations for heating demand, which includes the latest estimates, including a whopping 60 Bcf of demand erased from marketing expectations, which quote, understandably puts nightmare prices decisively on the defense, according to Mobius. I know actually I had a couple of guys that I was in some classes with back in college who now work at Mobius. They do good work over there. So, yeah, you’re talking about colder weather slashing demand. And that’s you know, that’s a recipe for disaster spikes going to fall over and kill me. But, you know, I mean that’s really, really what’s been holding natural gas prices down. I think that $3 mark is kind of the capital read to see again how it all plays out. But as we move into the summer, I would be bearish versus bullish. What do you guys do? What do we miss? What’s going on?

Stuart Tur ley [00:19:22] Oh, I don’t know. It’ll be a beautiful day tomorrow.

Michael Tanner [00:19:24] Yeah, hopefully. Well, we won’t keep you guys. Then we’ll let you get out of here. Get back to work. We hope it’s a great day. We appreciate you taking time out to check us out. For Stuart Turley, I’m Michael Tanner. Folks, we’ll see you tomorrow.