In this Energy News Beat podcast, we visit with Steve Reese who is an industry leader in the oil & gas and midstream business. This is the second podcast that I have been able to have with Steve. We even have a little banter on our favorite football teams.
Steve, thanks for stopping by our podcast.
MEET STEVE REESE
As a popular social media blogger, Steve Reese has gained an exceptional following from oil and gas professionals across the country who follow his posts throughout the week. His mini-articles regularly trend among the top contributors in the energy industry with the news, information, and insight that’s made him a fresh thought-leader.
After successful careers with Getty Oil Company and Texaco, Steve Reese founded Reese Energy Consulting in 1994, which provides a broad range of oil, natural gas, NGLs. LNG and midstream services for producers, midstream firms, and end-users across the nation. Our team of industry experts and years of specialized experience are nationally recognized for our top-tier strengths in energy research and project planning; engineering and design; commodity marketing and commercial optimization; auditing; and strategic planning and financial forecasting.
*The automatic transcription is below. There may be some errors, and we hope they make the interview more interesting and funnier.
Stu Turley, Sandstone [00:00:03] Hey, Steve, thank you very much for stopping by. You and I had the pleasure of being on a podcast last year and it’s been a while since we checked in with you. How’s everything at risk? Consulting and restraining
Steve Reese, Reese Consulting [00:00:19] things are great. We continue to be busy and continue to bring on new clients and kind of go through. You know, what we’re seeing now is a lot of consolidation, changing of the guard, changing directions, and everything. But we’re excited to be in the middle of it.
Stu Turley, Sandstone [00:00:38] Oh, fantastic. I’ll tell you, I’ve really enjoyed your midstream report is absolutely an outstanding outreach of news in your industry expert. You also had on LinkedIn, if anybody’s not familiar with your LinkedIn industry, leadership will make sure your LinkedIn connection is here. And you put out this morning on deepwater connections. William’s company is about to expand its natural gas gathering’s out there. Could you give us a little heads up on what you were thinking on that one?
Steve Reese, Reese Consulting [00:01:13] Well, you know, what we’re seeing is it’s kind of the old saying that the rumors of my death are a little premature and that’s kind of the case in the midstream arena. There is activity, there are new projects going in. We’re seeing a lot of things with the Gulf, especially now with the federal judge blocking the Biden administration’s attempts to halt or delay federal leasing. That obviously affects the Gulf of Mexico quite a bit. And it’s not probably a coincidence that Williams made that announcement in the last forty-eight hours, too. So, yeah, that’s a big one. And of course, Williams being an Oklahoma company, we and of course, my media director, Vicki Dawkins, spent many years at Williams as their publicist and in their shop. So we follow Williams pretty closely
Stu Turley, Sandstone [00:02:13] and they’re kind of important to Oklahoma City.
Steve Reese, Reese Consulting [00:02:16] Yeah. You know, Tulsa has been hit pretty hard with a lot of companies moving out over the years. And Consolidation’s and Williams has stayed strong there and continues to be probably the leader. As far as the Tulsa energy corridor,
Stu Turley, Sandstone [00:02:32] that is extremely cool on those things we have. Williams has been a leader in a lot of things in the pipeline in midstream for years. When we take a look at, you know, after our last one, I think it’s kind of funny. We had questions about midstream and pipeline, and I know that drives you nuts. Pipelines and midstream are not necessarily the same thing, are they?
Steve Reese, Reese Consulting [00:02:56] No. And I love it that it’s driving me nuts because I have three copyrighted seminars that go through that specifically. And we’ve made a lot of money at teaching those to a lot of people over the years. But, you know, the way that we bifurcate the industry and this is kind of goes to our energy training and some of our classes we teach to a lot of the larger companies is, you know, the energy business is segmented into three segments. One is the midstream, which basically is from the wellhead to the major entry and intrastate pipelines. So basically gathering gas in the field and getting it processed. Then we have the pipeline side or what I refer to is the kind of the regulated transmission side, which are the large pipelines that move large volumes of gas from production areas to consumption areas. And then the third piece, of course, is the utility. Then that takes the gas from the transmission side into homes, businesses. You basically end users. But there’s a lot of the nomenclature is thrown around quite a bit, kind of haphazardly. And a lot of times its kind of hard to distinguish those differences.
Stu Turley, Sandstone [00:04:14] Oh, I know it. For someone that’s in the industry, it’s kind of like a midstream pipeline. But I got tickled after our last podcast. People were kind of bantering around and beating us up on Twitter. I’m like, let’s get the expert back on here to do this. And when you sit back and kind of think about it. So let’s talk pipeline and let’s talk midstream from a security standpoint, the way that Colonial had a nightmare from a pipeline standpoint, taking the product, the gasoline, and everything else, that was a disaster. Do you see more of the potential terrorist attacks? I have to call them terrorist attacks. If they’re cyber-attacks and they’re going after the midstream, is the midstream as vulnerable as the pipeline companies?
Steve Reese, Reese Consulting [00:05:08] Well, I think it is from the standpoint that in the production areas, it’s as ubiquitous as our major pipelines. You’ve got gas plants and gathering systems and compressor stations all through 12 to 15 states, you know, from Wyoming to Pennsylvania to West Virginia to Oklahoma. And, you know, they’re actually harder to secure with respect to video and data and things because they’re so much more massive and not really in a straight line. When you look at the pipeline and pipeline industry, you’re going from usually point A to point B, and it’s I think it’s almost easier to track. So, yes, I’m aware, too, that more of the midstream entities are looking at more security procedures and strategies now because they are at risk. And there are areas in rural areas where anyone could. They go up and open up a valve and put some deleterious material there. There’s a lot of potentials there. And I think we do need to get our hands around that.
Stu Turley, Sandstone [00:06:24] Oh, fantastic. And, you know, you say that kind of thing, you never want any of that to happen. And so having the security is a big deal. And I think the cybersecurity issue is one that’s coming around the corner for everybody. But when we take a look at see how your employees out, knowing the midstream companies that you deal with on an on an all-time, you’ve got a who’s who of midstream companies out there. What kind of training processes do they need now with everything changing going on? What are you telling your clients as far as training is going? What are some of the needs that you’re needing to do right now in that area?
Steve Reese, Reese Consulting [00:07:09] Well, I think I think one of the things that they need to be trained on is a little bit of going back to the basics with respect to what we’re seeing as we did in the 80s. And I think that we did in the early 2000s, we’re seeing a changing of the guard. There’s a lot of guys with my color of hair or a lot of guys with your lack of hair,
Stu Turley, Sandstone [00:07:36] you know, that are going to,
Steve Reese, Reese Consulting [00:07:41] you know, see what happens when there’s a downturn. A lot of the more experienced, more well-compensated employees or let go. And you have a changing of the guard and you have a younger crowd, a less experienced crowd come in. So from the standpoint of education, the standpoint of a lot of virtual remote working scenarios, I think a lot of those people need to be schooled in the basics of the business. I think also in the financial scenarios of the business. And I think on a field level, they need a lot of expertise with regards to security and data protection. Almost all of these larger midstream complexes have remote schemata and large places where they have remote data and screens that control large control operating rooms. And I would assume that those are can be pretty vulnerable because they’re all driven by the Internet, all driven in large server rooms. So you’ve got that potential as well.
Stu Turley, Sandstone [00:08:54] Oh, you bet, I believe that, Sir Michael here.
Speaker 3 [00:08:57] Quick question, because I was watching online the other I think there’s like three or four days I saw a video of that the mini pipeline CEO was in front of one of the committees in the House. And it was a very interesting question got asked about is there a need for the employee base to actually be trained on how to operate these pipelines manually? I know you were kind of getting as someone who does this for a living understands and was around when these pipelines were off. Do you see a need and are you advising may be any of your clients to say, hey, we need you to need to train five percent of your workforce and how to operate a pipeline if it does go down in the event of something like this?
Steve Reese, Reese Consulting [00:09:35] Well, you know, we’re kind of ahead of that curve a little bit, Michael, from the standpoint that a lot of times when we’re engaged, even on commercial engagements, we fold in some field auditing and field training. And we invariably go to the steps of my engineers in the field actually doing some training to those field employees to show them mechanically how those things work. And, yeah, I think that’s very, very important because I think that should always be the default. Most of these automated control rooms have automatic flags and warnings. That can instantaneously shut off valve, turn off a compressor, shut a plant down, go to flare, take care of all these things, and in the wrong hands, you can shut down a lot of natural gas, natural gas, liquids, crude oil, whatever, just like we saw in the East Coast. Now, the midstream scenarios would be more localized, but the difference is in some so those scenarios, if you automatically just shut down a gas plant or some compressors without the right things happening, you don’t just cause a lack of flow or a lack of market product, but you create some physical safety issues that could kill some people. So your question is very germane. Absolutely.
Stu Turley, Sandstone [00:11:12] We know some of the things that are also like in the ERCOT, Texas, kind of a gig that just happened this year. When you take a look at natural gas, I couldn’t even because we’re almost on state, don’t you think? We’re on-demand almost from gas and a lot of ways. And they couldn’t even get the pumps working from the wells on through, so. Well, yeah,
Steve Reese, Reese Consulting [00:11:36] we were in the middle of that because a lot of natural gas, a lot of our producers that we handle their marketing for, especially in the Anadarko Basin, those wells are frozen and they could not produce at all. And that did exacerbate the problem in Texas and some other places. But so I’m the believer that we do need all types of energy. I don’t believe and I’m still not convinced that the renewables should be the, quote, baseload for our power needs. And if that was happening today in Texas this week, nobody would have any power. If you saw the data, the capacity for wind generation, it’s twenty-nine thousand megawatts. There are less than three hundred available because of what happens in Texas when it’s really hot, the window. Right. So we’ve got to pull off our political blinders and our differences and our agendas and sit down and look at the facts and see the best way to incorporate natural gas, nuclear, wind, solar, etc. And I think also if we have the right mix, I think that helps the potential of staying away from these potential issues as we had on the East Coast and security problems.
Stu Turley, Sandstone [00:13:04] You know, I’ve always been talking about the steam, especially for somebody of my hair color, which is flesh and age. The balanced diet of power, the balanced diet of power is anything that gives the lowest kilowatt per hour to all citizens and keeps the least amount of impact on the environment. Well, that means that you could use just about any form of energy to get it to the people so that people can be pulled out of poverty around the world. There are billions of people that need energy, but having it safe, secure, and transmitted, that streams pretty darn important. What do you see with the demands being placed on midstream for even coming into new projects? We saw what happened with the pipelines. We kind of talked about the different midstream and pipeline, but how our new area is going to be able to be done with the regulations because the Keystone was canceled. So was it the Atlantic, Steve? The other pipeline was canceled earlier this year, I believe. Right. And so you take a look at those. How is midstream being impacted by these regulation changes?
Steve Reese, Reese Consulting [00:14:24] Well, part of it does a little bit come down to state scenarios. Now, the one thing about the midstream business is it’s not regulated with respect to the rights, nor is it really regulated federally with respect to getting a permit to put a gathering system in like you do a large pipeline. However, the government has begun to look at mandating certain procedures and things as far as methane leaking, as far as the rights of way on federal land. So, you know, in New Mexico especially, there are areas where half of the surface is federal land where you’ve got to get right away to cross that. We’ve done projects even during. There are times where to get right away across federal lands could take six to nine months. Well, that’s how that’s going to continue to get worse. So it adds to the cost, right? To a lot of that. And who pays for the cost? Well, you and I do eventually. So I don’t know from a federal level other than the things you’re looking at as far as methane leaking and et cetera, and carbon capture, a lot of it does kind of go back to substate scenarios, too. But it is a concern and it’s something that, you know, continues to be somewhat of a hurdle from time to time.
Stu Turley, Sandstone [00:16:02] You know, that Clean Air Act that was just signed into law is really changing. That energy has a total I mean, it is just saying that we’ve got to have all of the oil wells and all the emissions monitored at any given time. It’s pretty interesting to see how those federal regulations are changing across all industries.
Steve Reese, Reese Consulting [00:16:26] So absolutely.
Stu Turley, Sandstone [00:16:28] And it’s just nutty. So if you were a company and you’ve got assets, let’s say that you’re a drilling operator and there is a state, there’s a ton of things that are going to be coming up for sale. We’re talking people. The majors are going to be getting our assets are going to be coming up for sale. A lot of people are going to be able to get bargain things. Do you all come in and do due diligence to help with that kind of stuff? Or how do you see this M&A activity going on in the midstream area?
Steve Reese, Reese Consulting [00:17:03] Yeah, we have you know, we do a lot of due diligence, both on the midstream side and the upstream side. So if we’re producing company is going to purchase another company or a large amount of production or whatever, you know, we, of course, look at all their marketing arrangements. We look at any pipelines involved. We help them with the financial analysis as well. And the same on midstream. And we do feel that there’s some midstream consolidation coming. The thing that’s kind of up in the air right now is a lot of the private equity companies are going to be doing with respect to their midstream assets because what, of course, their plan over the last 15 years has been we’re going to do a few deals, build it up, and we’re going to flip it, you know, and make a huge return for our investors. Well, those days right now are pretty much done. And a lot of these PE firms are going, well, we didn’t sign up to operate some of these midstream assets for 10 or 20 years. And what we’re seeing, of course, is some consolidation even within the same PE-backed companies. We’ll see them basically mix together management teams to save some duplication. And we’re seeing that with Tailwater Capital. We’ll see in some of that, like with Flat Rock and some of the ones that have multiple management entities in the midstream space. In the other is, you know. If there are expansions to be had, who’s going to fund those, because a lot of the PR firms are going, well, we’ve got to do green, our investors want to go green and all that. So there’s a little bit of consternation about if drilling continues to take off the in the Permian, which it is today, you know, who’s going to pay for those expansions out there? You know, is are these PE firms? They’re hesitant because they’re not able to turn around and make these massive returns. So there’s a little bit of a pause right now with respect to midstream growth. The consolidation is happening and making sense in some areas, but new capital for some larger projects is harder to find than it was even twenty-four to thirty-six months ago.
Stu Turley, Sandstone [00:19:38] Yes. Do you think this sudden revitalization of interest in money with the commodities, with hyperinflation and all the buzzword of oil in the last week, will have any lasting effect? Or do you think it is just a fad?
Steve Reese, Reese Consulting [00:19:56] Well, oil’s not going away, regardless of what certain portions of the public think. Matter of fact, I don’t know if you saw the poll that was done earlier in the week and I can’t remember it was The Wall Street Journal or whoever, but they polled the American public about how do you favor the oil and gas industry? It was about seventy-five percent positive, you know. And do you want energy independence? It should be drilling. And it was about seventy-five percent positive oil and oil demand. If you look at the analysts today, right now, oil demand is going to do nothing but go up probably at least through the end of the decade, regardless, regardless of solar panels or wind farms or whatever. So you made a great point, an analogy a little bit ago about the lowest court cost kilowatt-hour going to the people that can afford it the least. And it’s the same. Oil and gas are in place. And if you begin to put billions or trillions of dollars trying to replace that with wind and solar, that really shouldn’t be the baseload power in poorer areas and poorer countries. You’re going to hurt the people that are going to have access to that.
Stu Turley, Sandstone [00:21:21] And, boy, you just nailed it again, Steve. And it’s just amazing, the whole balance of power, having a plan. You know, it’s kind of like in Oklahoma, you can sit down and talk to somebody that you can talk to anybody on the street now actually respond to, you know, like New York City or some places. So I just lost all of my listeners in New York City.
Steve Reese, Reese Consulting [00:21:46] So they have great food. So we’ll leave it
Stu Turley, Sandstone [00:21:51] at that now that we can go back there with the Kabbage and everything else. What is coming around the corner for the risk consulting team? What do you have coming around the corner?
Steve Reese, Reese Consulting [00:22:06] We were starting to see interest again and were going in for upstream producers and auditing their midstream contracts. So I think it’s, again, the time we’re seeing, you know, there’s not a lot of them drilling them on. A lot of them have settled in after an acquisition or consolidation. And we’re beginning to go audit their contracts, audit their midstream production, their midstream measurement, and their sampling techniques, and their assets. We just started two large engagements for pretty large producers for that. We’re also what’s interesting also is we’re beginning to get some pings from some people that want us to look at helping them actually market their products. In other words, almost like a manufacturer’s rep, vessels, leak detection, different types of processes. So we’re beginning to look at those as well that, you know, we continue to have our bread and butter and helping the producers move their product.
Stu Turley, Sandstone [00:23:14] Well, that sounds great. And you have new classes coming around the corner.
Steve Reese, Reese Consulting [00:23:19] We’re starting to definitely get a lot more interest in our training. We’re still not doing ones that are listed just to the public, but we are beginning to get the ones that want us to come in and teach directly to them. So anybody that wants to look at those is just Reise energy training, dotcom. And we’ve taught every to five hundred energy firm on the planet. We’ve done classes for them from mom and pop oil to BP, to Shell to whoever. And so we enjoy those quite a bit.
Stu Turley, Sandstone [00:23:54] Well, you know, any last words, I’m going to give you one last shot to take me out with a hair comment. Come on. I mean, you got to do it. Just get back. Thank you very much. And I want to give you the last shot for the day. And again, I really appreciate you in the whole risk consulting team.
Steve Reese, Reese Consulting [00:24:13] Well, I want to say congratulations to the Oklahoma Sooners Women’s National Champions College softball team. It’s very exciting. That stadium, Stuart, is actually about three miles from my house.
Stu Turley, Sandstone [00:24:26] Nice.
Steve Reese, Reese Consulting [00:24:28] So with that was very exciting. And we’re looking towards football season as well. So we will hopefully try to take you on your cowboys. As always, let’s get beat up by your big brother.
Stu Turley, Sandstone [00:24:43] But I love my cowboys and I am a diehard Cowboys fan, but I root for you when they’re playing somebody else.
Steve Reese, Reese Consulting [00:24:51] Well, and you’re not supposed to lie on a Thursday, so watch out.
Stu Turley, Sandstone [00:24:55] Well, there’s no lightning bolt. If I get hit by a lightning bolt, we know that somebody else was.
Steve Reese, Reese Consulting [00:25:01] So we love coming on and we love we’d love to engage any of your listeners so they can always reach me. And you’re always free to give them my contact info. And we’re just we thank the good Lord we’re staying busy and still put food on the table.
Stu Turley, Sandstone [00:25:18] Sounds fantastic. Well, Steve, thank you for stopping by. And we’ll have all this out in the show notes.
Steve Reese, Reese Consulting [00:25:25] Sounds good. Thanks, guys.
