This was an absolute honor to have Nick Deiuliis, CEO of CNX (NYSE: CNX). Nick is an Industry Thought Leader who has looked at social issues and the Left’s negative impact on America. As a successful CEO for a leading low-cost U.S. energy provider, his management skills are evident in the companies performance and his thought processes in articles and his podcast.
Our discussion takes several turns around the energy and natural gas market, the Appalachian basin, the energy crisis, and social discord. It is important to have an open dialogue on all these topics, but even more important is to have solutions.
Nick is sending me a signed copy, and I will follow up with a full article and review of his book.
Please buy his book, reach out to him, and follow him on his website and LinkedIn.
Nick, Thank you again for stopping by the ENB podcast. I had an absolute blast and look forward to talking again. – Stu
Precipice: The Left’s Campaign to Destroy America
by Nicholas DeIuliis | Mar 29, 2022
Order Here On Amazon
https://www.cnx.com/
Nick’s Website and Industry Thought Leader Articles HERE
Precipice review by Dustin Bass, The Epoch Times
Bass comments, “[Deiuliis] lays out so many points on economic topics, including energy issues, that it’s difficult to call his book title hyperbolic. He tackles issues propagated and championed by the Left, ranging from climate change to public unions to taxing the rich, and presents these politically charged issues as simply that: politically charged.”
Sponsorships are available or get your own corporate brand produced by Sandstone Media.
David Blackmon LinkedIn
The Crude Truth with Rey Trevino
Rey Trevino LinkedIn
Energy Transition Weekly Conversation
David Blackmon LinkedIn
Irina Slav LinkedIn
Armando Cavanha LinkedIn
Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.
Stu Turley, CEO Sandstone Group: [00:00:03] Hey, everybody. Welcome to the Energy Newsbeat podcast. My name’s Stu Turley, president, CEO of the Sandstone Group. [00:00:09][6.4]
Stu Turley, CEO Sandstone Group: [00:00:10] Today is not just a great day. It’s a fabulous day. I get to do what I really enjoy doing. And we have a special guest today in the podcast. [00:00:18][7.5]
Stu Turley, CEO Sandstone Group: [00:00:19] He’s not only an attorney. He’s a CEO. He is an author. He’s an amazing guest that we’ve just been chit chatting. And I’ve had a lot of fun preparing for this interview. We have Nick Delirious. [00:00:32][13.1]
Stu Turley, CEO Sandstone Group: [00:00:34] I missed your name. We even talked about that, Nick. Have a great one. And we’re so glad you’re here. [00:00:38][4.9]
Nick Deiuliis, CEO CNX Resources: [00:00:39] Hey, Stu. An honor to be with you. And you did not mess my name up, so don’t worry about that. [00:00:43][3.5]
Stu Turley, CEO Sandstone Group: [00:00:44] Cool podcast over your walking out. Just. All right, We are going to have a great time, Nick. We were sitting here talking just before the chit chat and back, and as the CEO of I loved your Appalachia first slogan for CNN. Well, let’s start there first. You have CNX. [00:01:03][19.1]
Stu Turley, CEO Sandstone Group: [00:01:05] It’s been around for three years, I believe, if I remember correctly. [00:01:08][3.1]
Nick Deiuliis, CEO CNX Resources: [00:01:09] Yeah. So the company itself really has an interesting history. [00:01:12][3.0]
Nick Deiuliis, CEO CNX Resources: [00:01:13] CNX Resources has been around for a couple of years to a handful of years, as you said. But if you go back to our predecessor companies console energy before it, consolidation, call before that one. The total lineage of our corporation spans nearly 160 years. [00:01:29][15.9]
Nick Deiuliis, CEO CNX Resources: [00:01:30] There is a guy by the name of Lincoln in the White House when we were first incorporated, and historically, of course, it was a coal company. We started to pioneer technologies like coal bed Methane capture back in the 90s turned into sort of a coal bed methane coal entity, then a shale company with the Marcellus coming on around 2005 or so. [00:01:51][20.6]
Nick Deiuliis, CEO CNX Resources: [00:01:52] And today, of course, we’re, as you said, a pure play Appalachian ENP with midstream and upstream operations that are that are integrated together so it’s a in many ways a new innovative company. Right. With respect to what we’re doing when it comes to domestic energy. But you go back to that history of our corporation. Like I said, it’s coming up on I think it’s 158 years now, stretching close to 160. [00:02:13][21.0]
Stu Turley, CEO Sandstone Group: [00:02:14] Wow. I was around there when that was started. So, you know, I should have run into the guys. Just never mind. Okay. That was really pathetic joke. But as we’re sitting here and we were kind of teasing. So being an attorney, you’ve got this great thing. What prompted you to get into CNX or how did you get started at this great company? [00:02:36][21.6]
Nick Deiuliis, CEO CNX Resources: [00:02:37] It was one of those stories that’s very typical of Appalachia, western Pennsylvania. We’re out of the Pittsburgh area. I’m from the Pittsburgh region, originally grew up here and originally went off to college. [00:02:50][12.9]
Nick Deiuliis, CEO CNX Resources: [00:02:50] First one of my family to to go to college, which wasn’t all that rare of a situation of this region back in that time and ended up going for engineering. And I got out of the the four year program as a chemical engineer, and I had this desire to want to stay in the region that that I loved and that I was from. [00:03:07][17.1]
Nick Deiuliis, CEO CNX Resources: [00:03:08] And I historically thought of all those types of companies that would hire chemical engineers like the the chemistry industry and the chemicals industries and whatnot. And lo and behold, there was an opportunity to come work for, of all things at the time, Consolidation Coal Company, which was focused more on power plants in the power generation industry that they were looking for a chemical engineer to to fill that role with respect to. [00:03:31][23.2]
Nick Deiuliis, CEO CNX Resources: [00:03:32] So I started here in 1990 as a very young engineer and spent my entire career through that lineage of companies we’ve talked about coming up on 33 years now, was able to do a lot of different things over that time and was able to basically evolve from a career perspective as the company evolved, which again is sort of a mirror of what’s happened to this great region of Appalachia. [00:03:55][22.6]
Nick Deiuliis, CEO CNX Resources: [00:03:56] As it has evolved, as the different types of innovations and disruptive technologies have just sort of resurrected the middle class and manufacturing and the energy space that at least within this region. [00:04:05][9.8]
Stu Turley, CEO Sandstone Group: [00:04:07] Boy, you know, we’re going to get into that here in a little bit. But the whole energy crisis that’s going on is a whole different animal right now. But ahhh. [00:04:15][8.4]
Stu Turley, CEO Sandstone Group: [00:04:15] Talking about your financials out of 2020 to Q4, I was just going through them and you’ve had positive cash flow or free cash flow for since 2022, if I understood that correctly. [00:04:31][15.7]
Nick Deiuliis, CEO CNX Resources: [00:04:32] Through back to 2020. So. [00:04:33][1.2]
Stu Turley, CEO Sandstone Group: [00:04:34] Oh 20 number of Thank you. 2020 Yeah. [00:04:36][2.3]
Nick Deiuliis, CEO CNX Resources: [00:04:37] Yeah. Number of consecutive quarters that we’ve been sort of on the march with respect to and you mentioned free cash flow and free cash flow, free cash flow per share. That’s sort of our true north pair of metrics that we really focus upon. [00:04:50][12.3]
Nick Deiuliis, CEO CNX Resources: [00:04:51] And we’ve got a little bit of a different sort of capital allocation and strategy approach for our company compared to what you might find with most publicly traded ENP players in that we’re really looking at sort of growing the long term per share value of the company. [00:05:05][14.0]
Nick Deiuliis, CEO CNX Resources: [00:05:05] And we feel that we do that basically through creating a competitive moat when it comes to being a low cost producer and doing with regard to our shale stack plays in our integrated midstream and then generating that free cash flow, sort of making the balance sheet even stronger quarter by quarter with some debt paydown. [00:05:22][16.7]
Nick Deiuliis, CEO CNX Resources: [00:05:23] And then returning or looking at opportunities to return some of that free cash flow after we reinvest into the asset base and employee base back to the owners. And we’ve chosen based on the math and how our shares are trading versus what we think the intrinsic worth of those shares are. [00:05:38][15.1]
Stu Turley, CEO Sandstone Group: [00:05:39] Right. [00:05:39][0.0]
Nick Deiuliis, CEO CNX Resources: [00:05:39] Pick the avenue of return to shareholders via the share buybacks. So in a very short period of time, we basically have retired about a quarter of our company, about 25% of the shares outstanding, and we’ve been able to create a lot of long term value for the remaining owners. [00:05:54][14.6]
Nick Deiuliis, CEO CNX Resources: [00:05:54] So it’s a it’s a playbook, Stu, that’s been sort of utilized by many successful entities outside of the energy space, but very few, if any, have really applied it successfully within energy. Right now, we’re looking to to be the first to sort of replicate that within the energy space itself. [00:06:10][16.0]
Stu Turley, CEO Sandstone Group: [00:06:11] I’ll tell you what, this is huge and what we’ve seen and your book has covered that precipice in the whole different areas. And let’s back up and take a railroad trip off onto the dirt here for a second. [00:06:25][14.0]
Stu Turley, CEO Sandstone Group: [00:06:27] The ESG investing has really caused a lot of problems for oil and gas firms. It’s done great things over the course of the years and trying to say, hey, let’s help and, you know, the environment and all those things. [00:06:41][14.0]
Stu Turley, CEO Sandstone Group: [00:06:41] But boy, the big oil companies and public really traded companies were sitting there going, I got to give back money to the investors and not put any more money into drilling and everything else. And I have to hand it because the war that has been declared on the energy space by this current administration, the other oil, the other CEOs, you know, your your peers have been standing up. [00:07:08][26.4]
Stu Turley, CEO Sandstone Group: [00:07:09] And I am so proud of our oil and gas executives standing up and saying we’re going to produce more, but yet we’re going to give back to our investors. [00:07:18][9.3]
Stu Turley, CEO Sandstone Group: [00:07:19] That to me, your story, Nick, is what was just being exuded all across. You’re a CEO standing up for your shareholders and your investments very, very strong! [00:07:33][13.6]
Nick Deiuliis, CEO CNX Resources: [00:07:34] Yeah, I mean, still, it sort of goes back to some. Fundamental basics that I think a lot of our business leaders, a lot of political leaders, policymakers, we’ve lost track of that. You know, from a compass perspective, which is there is a moral and ethical obligation to basically lead and stand up for what you believe in. [00:07:53][18.7]
Nick Deiuliis, CEO CNX Resources: [00:07:53] And if you work within an industry where for a company like I do or domestic energy,. [00:07:57][4.1]
Stu Turley, CEO Sandstone Group: [00:07:58] Right. [00:07:58][0.0]
Nick Deiuliis, CEO CNX Resources: [00:07:58] Do you feel is just crucial to the betterment of society and economies in the world? [00:08:03][4.7]
Stu Turley, CEO Sandstone Group: [00:08:04] Right. [00:08:04][0.0]
Nick Deiuliis, CEO CNX Resources: [00:08:04] And there comes with it a duty and a responsibility to advocate respectfully with in a proper ways, but to advocate for the positions that you feel further, that benefit that you bring to society, and to basically rebut and debate or engage in debate with those positions that are very harmful to that. [00:08:23][18.9]
Nick Deiuliis, CEO CNX Resources: [00:08:24] And what we’re up against. To your point, I don’t know if it’s a war. I look at it almost more as an ideology or almost bordering on a religious ideology that oftentimes is based more on belief instead of fact or science. [00:08:36][12.4]
Stu Turley, CEO Sandstone Group: [00:08:36] Thats excellent! [00:08:36][-0.2]
Nick Deiuliis, CEO CNX Resources: [00:08:37] And that’s actually as an engineer and as a business leader. I think there, as I said, comes a responsibility both professionally and morally, to rebut that and to advocate for what we think is right in the interests of all those stakeholders that we hear about employees, the communities we operate within, the society and consumer base and industrial base that we serve,. [00:08:56][19.2]
Stu Turley, CEO Sandstone Group: [00:08:57] Right. [00:08:57][0.0]
Nick Deiuliis, CEO CNX Resources: [00:08:57] And all of those things that basically serve the individual and make make the United States the envy of the world. So that was sort of the the catalyst, so to speak, pun intended, I guess, as an engineer for writing a book. [00:09:10][13.3]
Stu Turley, CEO Sandstone Group: [00:09:10] Right. [00:09:10][0.0]
Nick Deiuliis, CEO CNX Resources: [00:09:11] Precipice The Left Campaign to Destroy America for doing and participating in platforms like this one with the great podcast that you put together and everything in between. It all starts with that. So it’s sort of basic when you think it through. But again,. [00:09:27][15.3]
Nick Deiuliis, CEO CNX Resources: [00:09:28] A lot of sort of leaders in really important areas of our economy and society. [00:09:33][5.0]
Stu Turley, CEO Sandstone Group: [00:09:35] Correct. [00:09:35][0.0]
Nick Deiuliis, CEO CNX Resources: [00:09:35] Lost that responsibility. And the more we can get back to that and just get back to the basics and then advocate from a position of fact and science that we’re all going to be. [00:09:43][8.5]
Stu Turley, CEO Sandstone Group: [00:09:44] Well, you know, you’re addressing, I think, the number one systemic problem that we have. And you nailed it as a religion. I applaud you in that that, you know, I’m over here calling it a war. You’re saying it’s rightfully so. It’s a religion based on non fact. And I, I think that. [00:10:04][20.0]
Stu Turley, CEO Sandstone Group: [00:10:06] That you’re picking up and writing the book on the left. And it I have I’m going to confess I did not read it yet I was scanning through it and I’m like I’m going to be reading that tonight, believe me. But I hate to confess my sins, but it looks fantastic. And I would, you know, leave a review on it when I get done. [00:10:27][21.0]
Stu Turley, CEO Sandstone Group: [00:10:27] But.. ahmm.. Your opinions are really looking strong and you base them on facts. [00:10:36][8.3]
Stu Turley, CEO Sandstone Group: [00:10:37] I mean, it’s kind of nice having facts to talk about. [00:10:39][2.7]
Nick Deiuliis, CEO CNX Resources: [00:10:40] Well, you know, the I like to say that when you look at things like math and physics and chemistry, they’re undefeated in the history of mankind. So their track record, their win loss column is pretty sound, particularly over the long term. [00:10:54][13.8]
Nick Deiuliis, CEO CNX Resources: [00:10:55] And a lot of what we do when it comes to domestic energy is just firmly rooted in grounded in chemistry and physics and math. And you look at things like our grid when it comes to the power system or like the transportation network or what basically drives GDP in the middle class and quality of life and all these wonderful things,. [00:11:16][21.1]
Nick Deiuliis, CEO CNX Resources: [00:11:17] It literally does go back to those basics of physics. One, two, one, chemistry, one, two, one in fundamental math. And when you start to add up sort of how these sort of proposals sort of backed by these ideologies that are being put forth and how they’re going to play out over a year or five years or ten years time,. [00:11:35][18.1]
Nick Deiuliis, CEO CNX Resources: [00:11:36] You suddenly you can’t make them sort of peacefully coexist with the physics one on one and the chemistry one on ones. And therein lies a massive problem because of these types of industries. And these types of sectors don’t function. [00:11:48][11.9]
Stu Turley, CEO Sandstone Group: [00:11:48] Right.,. [00:11:48][0.0]
Nick Deiuliis, CEO CNX Resources: [00:11:49] This isn’t this isn’t retail where, you know, if that brand of jeans or that fashion of clothes doesn’t play out, you’re out of money. It’s a bust. There are serious consequences for society if we can’t get energy. And the types of industries that are driven off of energy are right. [00:12:06][16.9]
Stu Turley, CEO Sandstone Group: [00:12:07] You know, this weekend I believe I read something that New York, you know, with New York having to import LNG, I believe it’s from the Boston Regasification plant area. It seems with Appalachia right there,. [00:12:22][14.9]
Stu Turley, CEO Sandstone Group: [00:12:23] The best gas field in the whole cotton picking world with our low cost great employees and our great, you know, energy employees and companies like yours. [00:12:33][10.1]
Stu Turley, CEO Sandstone Group: [00:12:34] Wouldn’t it be a lot better to put a pipe? Line right there, as opposed to bringing in LNG from was it Trinidad or the other ones? I believe we’ve had I think we had eight, nine, something like that. LNG carriers come in over the last couple of quarters. I mean, and that’s European prices. [00:12:54][20.0]
Nick Deiuliis, CEO CNX Resources: [00:12:55] I think it might be better to build a pipeline of miles or so from Pennsylvania, the most prolific gas basin that you’ll find anywhere in the world to somewhere like Boston City Gate. And instead of doing that that way where you’re trusting sort of your energy security to Pennsylvanians, if you’re a Bostonian and looking at the sort of modest CO2 footprint that would emanate from it and all of the sort of cost effectiveness and affordability benefits that you would accrue from it. [00:13:25][29.9]
Nick Deiuliis, CEO CNX Resources: [00:13:25] Versus, you know, the Plan B under the ideology of the policies, which was let’s prohibit go out of our way to basically prohibit not, you know, not go with prohibit, stop arrest any sort of infrastructure investment. [00:13:38][12.3]
Nick Deiuliis, CEO CNX Resources: [00:13:39] It would be private sector for things like domestic natural gas pipelines. And instead, you know, when it gets really cold or it gets very hot in summer. Right. Let’s import LNG from thousands of miles away. And by the way, historically, many of those LNG cargoes came from Russia. So that was Putin natural gas in that. [00:13:56][17.6]
Stu Turley, CEO Sandstone Group: [00:13:57] Aint that Great. [00:13:57][0.2]
Nick Deiuliis, CEO CNX Resources: [00:13:57] And or long term, let’s bet at scale that all of our grid will be able to be power from things like wind and solar when we know, again, with respect to the nature of those types of energy forms and what their costs and their scalability, that under physics, chemistry, math and economics basis, that is not a winning formula or solution for a world class grid. [00:14:19][21.9]
Nick Deiuliis, CEO CNX Resources: [00:14:20] So there’s a short term problem that you’re seeing with places like Boston or Europe in the form of what’s going on with LNG and energy security in the near term in the pricing that comes with it. But there are even bigger, larger problems looming longer term because this is just the start when you start to run the things like wind and solar where you assume they’re 80 plus percent of the grid, that’s not going to work. [00:14:41][21.4]
Nick Deiuliis, CEO CNX Resources: [00:14:42] And on top of it, where all those things as materials and metals, where are they going to have to come from? Who controls the supply chains? Well, it’s things like the Chinese Communist Party and Russia, etc.. [00:14:53][10.8]
Nick Deiuliis, CEO CNX Resources: [00:14:53] So lots of issues, big types of concerns that are looming when it comes to energy and again, from a geopolitical national security perspective,. [00:15:01][8.4]
Stu Turley, CEO Sandstone Group: [00:15:03] Right. [00:15:03][0.0]
Nick Deiuliis, CEO CNX Resources: [00:15:03] You can’t get energy security right. You’re not going to get anything downstream of it or subsequent to it. Right. [00:15:07][4.3]
Stu Turley, CEO Sandstone Group: [00:15:08] I like the way you phrased that, Nick. That was fabulous. And you take a look at all of the critical minerals that are needed over in the Congo. [00:15:16][8.6]
Stu Turley, CEO Sandstone Group: [00:15:18] I believe there was a number saying like 400,000 kids are affected by that in the whole value chain, not value chain, but a chain to get those critical minerals in here. I mean, that’s just a staggering hit on humanity. I mean. [00:15:39][21.7]
Nick Deiuliis, CEO CNX Resources: [00:15:40] Well, this is the you know, this is the inconvenient truths of that that are basically running counter to or exposing the religion. [00:15:48][7.9]
Stu Turley, CEO Sandstone Group: [00:15:49] Right. [00:15:49][0.0]
Nick Deiuliis, CEO CNX Resources: [00:15:49] Ideology. And the religion says, you know, wind and solar are zero carbon. They’re absolutely not. When you do a carbon accounting or CO2 accounting of the supply chain of egregious CO2 footprints, you look at the human rights abuses that are tied not just to what’s going on in a Democratic Republic of Congo or in Zambia, but look at what’s going on with respect to certain certain provinces of China. [00:16:10][20.6]
Nick Deiuliis, CEO CNX Resources: [00:16:11] There’s not a solar panel on a rooftop in America where that homeowner today can assure with 100% certainty that there was not some form of a human rights abuse that went into the manufacture of that solar panel. [00:16:22][11.3]
Stu Turley, CEO Sandstone Group: [00:16:23] That is Correct.. [00:16:23][0.3]
Nick Deiuliis, CEO CNX Resources: [00:16:24] When you start to think about the environmental standards that are being applied in all of these different faraway places where the mining and the processing are occurring of all these metals and materials to manufacture the wind turbines and solar panels and EV batteries. [00:16:36][12.6]
Nick Deiuliis, CEO CNX Resources: [00:16:37] Do you think those environmental standards are at or above where the standards are within places like Pennsylvania or Texas when it comes to natural gas manufacturing, or do you think they’re far below that? And who’s paying the price when the standards are being set that low? Of course, it’s going to be the poorest, most vulnerable that you find across the planet. [00:16:55][18.0]
Nick Deiuliis, CEO CNX Resources: [00:16:56] So again, you start looking at the things that you’d want to solve for when it comes to values and principles, from CO2 footprint to human quality of life to affordability, reliability, everything, all of the above. It’s pretty clear under an objective, realistic assessment how domestic natural gas, as an example, is a bedrock form of the energy sort of power portfolio,. [00:17:19][23.2]
Stu Turley, CEO Sandstone Group: [00:17:20] Right. [00:17:20][0.0]
Nick Deiuliis, CEO CNX Resources: [00:17:20] Continue to play the leading role for decades and decades into the future. [00:17:24][3.4]
Stu Turley, CEO Sandstone Group: [00:17:25] You know, you can’t physics and you’re you know, you sit back as an engineer. I had a podcast with Meredith Angwin not too long ago. Shorting the grid. And she is a very, very nice lady. And I thought that her physics discussion was pretty wild. [00:17:45][19.9]
Stu Turley, CEO Sandstone Group: [00:17:47] You can’t just sit there and say, Here’s a wind farm, here’s a windmill, and then say, here’s the megawatt output of this and say that it’s equal to a natural gas plant. Megawatt, Megawatt. Because I believe the formula was like and you have to correct me if I’m wrong, but it’s like a. [00:18:05][18.5]
Stu Turley, CEO Sandstone Group: [00:18:06] Normal load balance for a grid is 20%. You know, you take all the stuff you need and then add 20% and that’ll count for disasters and load time until you put renewables on. And then I think it’s 180%. So every one when farm you budget for, you have to have another hundred and 80 over here. And so this is an. [00:18:28][21.6]
Nick Deiuliis, CEO CNX Resources: [00:18:28] Incredibly efficient way to go about developing a power grid still. And and you bring up the load balancing concerns, which are legitimate concerns. [00:18:37][9.1]
Nick Deiuliis, CEO CNX Resources: [00:18:38] There’s also this issue of diminishing returns so what I mean by that is if you think of the wind turbines are the easiest example to think of. If you pick a spot like Pennsylvania or any other location for wind,. [00:18:48][9.8]
Stu Turley, CEO Sandstone Group: [00:18:48] Right,. [00:18:48][0.0]
Nick Deiuliis, CEO CNX Resources: [00:18:49] You put your first turbine in the windiest, most optimal spot you can. You put more and more wind turbines into a certain geographic area. There’s going to be the law of diminishing returns where it’s going to be a little bit less optimal than the prior location,. [00:19:03][14.2]
Stu Turley, CEO Sandstone Group: [00:19:03] Correct. [00:19:03][0.0]
Nick Deiuliis, CEO CNX Resources: [00:19:04] Frankly, where the efficiencies or the availabilities, whatever metric you’d want to define it as start to drop off. The same with solar, right? Solar in the middle of the desert in Arizona is, I’m sure, a wonderful application. Solar in Pennsylvania. We haven’t seen sun in two weeks here. It’s not going to work that well in a place like Pennsylvania. On top of that where you got maybe, you know, 10 hours of daylight in a given day this time of year. [00:19:25][21.6]
Nick Deiuliis, CEO CNX Resources: [00:19:26] So there’s this law of diminishing returns with those forms that are also going to play a major role as they scale up. [00:19:32][6.2]
Stu Turley, CEO Sandstone Group: [00:19:33] Right. [00:19:33][0.0]
Nick Deiuliis, CEO CNX Resources: [00:19:34] And then you’ve got the intermittent nature of it beyond load balancing and beyond the diminishing returns. We are going to need basically a duplicate system within the grid. And all of these things have a cost, an incremental CO2 footprint, an incremental environmental footprint tied to all of it. And there’s a much more efficient, much more better way to approach this through innovation and disruption of the private sector and of those doers. [00:19:59][25.6]
Stu Turley, CEO Sandstone Group: [00:20:00] Right. [00:20:00][0.0]
Nick Deiuliis, CEO CNX Resources: [00:20:01] The domestic energy industry. [00:20:02][0.9]
Stu Turley, CEO Sandstone Group: [00:20:03] You know, we sit here and we talk about that extra load balance and stuff and and the religion that you talk about. It would make sense in your article that you just had out here, the West in China, a rabbit that has been hypnotized by a snake. This is a good read this is gonna be in the length to this is going to be in the show notes. [00:20:29][25.6]
Stu Turley, CEO Sandstone Group: [00:20:29] And I love when you quoted in here at the last of it a wake up call from Sun. And I mean, that’s just amazing to me. Yeah, you nailed it right out of the thing here in my both my hairs were standing up and for my podcast listeners, I got a little light head, light haired up here like flesh color. But this really scared me. [00:20:50][21.2]
Stu Turley, CEO Sandstone Group: [00:20:51] This article is phenomenal, describing China and its relationships. What were you thinking about this article? [00:20:59][7.8]
Nick Deiuliis, CEO CNX Resources: [00:21:00] So the piece that you’re referencing, we just publish that on the website. Nick Deal dot com and you can see all the prior commentaries that we published on the website. But this goes back to big issues such as energy security. [00:21:13][12.8]
Nick Deiuliis, CEO CNX Resources: [00:21:14] And one of the things that is most troubling about maybe the perhaps the single largest concerning area with our energy policy these days is that we’re basically going from a situation where our energy security has been secured within domestic energy we become self-sufficient, which is just a key driver of all kinds of things when it comes to national security interests. [00:21:36][21.6]
Nick Deiuliis, CEO CNX Resources: [00:21:37] And now we’re by design, going to outsource that offshore it right into the lap of who controls the supply chains for wind solar batteries into the lap of the Chinese Communist Party. And you look at that within the energy context, but then you sort of take a broader step back and you start thinking about how we’ve approached the the economy of China and the Chinese Communist Party over the past number of decades. [00:22:02][25.9]
Nick Deiuliis, CEO CNX Resources: [00:22:03] There was a parallel in history with Khrushchev back in the days of the USSR, and he had sort of come up with this idea of a strategy of peaceful coexistence. [00:22:11][8.0]
Nick Deiuliis, CEO CNX Resources: [00:22:12] And the idea was that the Soviets were going to convince the West that, hey, we can all get along and let’s work together, at least on the surface with optics, and then underneath all that, we will be furthering our our bigger strategic aims, our real strategic aims to the detriment of the West. And it got some traction and then everybody forgot about it with the fall of the Soviet Union,. [00:22:32][19.8]
Nick Deiuliis, CEO CNX Resources: [00:22:33] And now, here comes China playing an even longer game. Even more long term focused, even more adept at this and you start thinking about our energy policy and the run to things like wind, solar needs and you start thinking about how the capital markets have invested heavily in China and what China’s done with those proceeds. [00:22:50][17.2]
Nick Deiuliis, CEO CNX Resources: [00:22:51] You start thinking about academia and what’s going on with sort of knowhow and innovative and technology transfer between academe, academia and maybe Chinese nationalist interest. And you start adding all of this up in media and Hollywood, right, in many ways. [00:23:06][14.5]
Stu Turley, CEO Sandstone Group: [00:23:07] Right. [00:23:07][0.0]
Nick Deiuliis, CEO CNX Resources: [00:23:07] Entities in China are the biggest directors in terms of content of Hollywood production these days, in terms of anybody else. You start adding all this up and it looks to me as if this concept of peaceful coexistence has been sort of run to perfection by the Chinese Communist Party. [00:23:23][15.9]
Stu Turley, CEO Sandstone Group: [00:23:24] Wow. [00:23:24][0.0]
Nick Deiuliis, CEO CNX Resources: [00:23:24] And cuts across a lot of different key segments of our society and our economy. But in many ways, energy sort of ground zero with respect to that, when you look at our energy policies. [00:23:33][9.2]
Stu Turley, CEO Sandstone Group: [00:23:35] Wow. [00:23:35][0.0]
Nick Deiuliis, CEO CNX Resources: [00:23:35] Through, you know, what does that mean from a geopolitical and from a national interest, national security perspective? [00:23:40][5.3]
Stu Turley, CEO Sandstone Group: [00:23:43] Well, you know, we sit back and I’m sitting here, my head just explode because that is some cool stuff. I mean, that was really you sit back and kind of go, energy is the underlying thing between geopolitical people will fight for energy and food. [00:23:58][15.6]
Stu Turley, CEO Sandstone Group: [00:23:59] And in the religion that we’ve been talking about, it’s a never ending cycle because when you get on that rabbit trail, if you would, and you start running down that road, you’re going to print money to build more renewable energy and then you’re going to cause inflation to rise and then that technology’s not there in order to sustain it so then you’re going to print more money, inflation is going to go up and then Mormons are going to happen. [00:24:28][28.8]
Stu Turley, CEO Sandstone Group: [00:24:29] It sounds kind of like what we’re in now. [00:24:31][2.1]
Nick Deiuliis, CEO CNX Resources: [00:24:32] Climate climate policies have basically stoked energy scarcity, energy inflation. [00:24:37][5.3]
Stu Turley, CEO Sandstone Group: [00:24:38] Right. [00:24:38][0.0]
Nick Deiuliis, CEO CNX Resources: [00:24:39] And has stoked, to your point, general inflation, because energy and natural gas are the biggest single inputs into agriculture and crop yields and fertilizer and everything else and the supply chains tied to them. [00:24:52][12.9]
Nick Deiuliis, CEO CNX Resources: [00:24:52] And you’re right, when you look at food security or food insecurity and you look at overall energy scarcity or energy abundance and energy inflation, that goes with it,. [00:25:01][8.2]
Stu Turley, CEO Sandstone Group: [00:25:01] Right [00:25:01][0.0]
Nick Deiuliis, CEO CNX Resources: [00:25:01] Those are crucial not just to economic well-being, but the national well-being. And when you go from a position of enjoying energy independence and what was brought, that it was basically the private sector and disruptive technology and innovation and you consciously trade it for a situation of energy insecurity that is behind and worse yet, on sort of your adversarial counterparts on the global map. [00:25:26][24.3]
Stu Turley, CEO Sandstone Group: [00:25:27] Right. [00:25:27][0.0]
Nick Deiuliis, CEO CNX Resources: [00:25:27] That defies sort of any logic that that I can figure out now. Again, the explanation was we’ve got a code red, we need to reduce CO2 footprint. But again, when you do the carbon accounting, the CO2 math, it’s ascribed to the life cycle of wind power or solar power or EVs from life cycle perspectives. This is not making atmospheric CO2 levels better. It’s making atmospheric CO2 levels worse. [00:25:52][25.2]
Nick Deiuliis, CEO CNX Resources: [00:25:53] So you’re not you’re not solving that problem. In fact, you’re worsening it. [00:25:56][3.0]
Stu Turley, CEO Sandstone Group: [00:25:57] You know, back in COP 26, I found in some of their information and nobody was covering it back then that natural gas was going to be quietly inserted as part of acceptable renewables, because even back then they realized they needed it. [00:26:16][19.3]
Stu Turley, CEO Sandstone Group: [00:26:17] And then that language was put in front into the infrastructure bill. And it was about this long economy and it was barely in there. And then COP 27 rolls around and yep, sure enough, natural gas, the stigmatism is rolling off of natural gas we’re not there yet. and your education that you’re doing, I think is the most critical to spread the word. That’s a kink in the armor in order to get that there, don’t you think? [00:26:46][29.3]
Nick Deiuliis, CEO CNX Resources: [00:26:47] I totally agree. And it’s sort of like sum it up this way long term. I’m so optimistic and so bullish that we get this right. Right. Because it’s physics and it’s chemistry. It has to turn out this way. [00:26:58][11.2]
Stu Turley, CEO Sandstone Group: [00:26:58] Right. [00:26:58][0.0]
Nick Deiuliis, CEO CNX Resources: [00:26:59] But in the short term, I am in the intermediate term, I’m terrified. [00:27:02][3.0]
Nick Deiuliis, CEO CNX Resources: [00:27:03] And the reason. So how can you be so long term bullish but terrified in the short or intermediate term? [00:27:07][4.1]
Stu Turley, CEO Sandstone Group: [00:27:08] Right. [00:27:08][0.0]
Nick Deiuliis, CEO CNX Resources: [00:27:08] You don’t know how much pain, how many hard lessons do we need to learn before we reverse this course that we’re on and lead to the habitable answers of things like natural gas? [00:27:20][11.1]
Nick Deiuliis, CEO CNX Resources: [00:27:21] We could go through a tremendous amount of pain and suffering, not just as a nation, but frankly, across the globe before we realize the error of our ways. Right? So in some ways, like I said, over the long term, our view is going to prevail because it’s just math and physics. [00:27:36][15.3]
Nick Deiuliis, CEO CNX Resources: [00:27:37] But in the short term and in the intermediate term, policymakers and political leaders, they can get us into situations that are epically damaging and of great concern for the human condition. [00:27:48][11.8]
Nick Deiuliis, CEO CNX Resources: [00:27:49] So the sooner we wake up to this, the better. And that goes back to advocacy and the duty to sort of perform the advocacy, because if you can shorten that time and de-risk the path to to rational decision making and policy, you could literally be looking at millions of lives at stake. [00:28:07][17.7]
Stu Turley, CEO Sandstone Group: [00:28:08] Oh, absolutely. Boy, you said it right. Nick, what’s coming around? We got a few more minutes left in our podcast, but we really want to know what’s next for CNX and what’s next for Nick. [00:28:23][14.6]
Stu Turley, CEO Sandstone Group: [00:28:23] So it’s a really two part question what’s coming and then personally, what’s around the corner for Nick? [00:28:29][6.0]
Nick Deiuliis, CEO CNX Resources: [00:28:30] Yeah. So on the CNX front, couple things. Again, we’ve got a very simple but an effective business model. So I think the prognosis for us in the coming year and coming couple of years, we’re definitely focused on unlocking the next prolific horizon here in Appalachia, right below the Marcellus, the Utica Shale horizon,. [00:28:48][17.9]
Nick Deiuliis, CEO CNX Resources: [00:28:49] And looking at the Marcellus and Utica in tandem together, we think when you add those two up, the Appalachian gas field between those two horizons represents perhaps the second most prolific gas field in the world. [00:29:00][11.1]
Nick Deiuliis, CEO CNX Resources: [00:29:01] So pay particular attention what we’ve got going on with the Utica and how we’re showing how that can sort of integrate and be coordinated with the Marcellus in addition to it, that’s going to, I think, transform a lot of things in the energy space. Also,. [00:29:13][12.5]
Nick Deiuliis, CEO CNX Resources: [00:29:14] A lot of efforts we’ve got going on with some new technology development innovation with respect to transforming how the ERP industry goes through certain operations and activities to manufacture natural gas will greatly simplify it and also reduce its CO2 footprint. [00:29:30][15.9]
Nick Deiuliis, CEO CNX Resources: [00:29:31] And also how some of these very same technologies can be utilized to basically put natural gas in domestic natural gas in particular, into a position to start displacing foreign soil sources of diesel and of oil and of gasoline for everything from aviation to ground transportation. [00:29:50][18.6]
Nick Deiuliis, CEO CNX Resources: [00:29:50] So there’s there’s another big market opportunity, we believe, through some innovative technology that will harness some of the potential energy of how natural gas is manufactured in places like Appalachia and really help basically build upon our energy independence. [00:30:05][14.1]
Nick Deiuliis, CEO CNX Resources: [00:30:05] So that’s what’s going on with the company perspective. We’re still going to generate free cash flow and return a lot of free cash flow to shareholders. The really exciting time for CNX resources. [00:30:12][6.7]
Nick Deiuliis, CEO CNX Resources: [00:30:14] I’m on the personal side, you know, if you want to sort of keep pace with what I’m up to and I’ll be pretty active here through the balance of of 23 and beyond on Twitter, you can follow me there at Delius putting out some some thoughts that are energy policy centric. [00:30:29][15.5]
Stu Turley, CEO Sandstone Group: [00:30:30] Right. [00:30:30][0.0]
Nick Deiuliis, CEO CNX Resources: [00:30:30] Website we mentioned Nick Julius dot com We’re always posting information there you can find me on LinkedIn and that book you know Precipice the Last Campaign to Destroy America. If you’re interested in that type of sort of policy views of of how and what makes value traders really hum and the threats that they’re facing today. [00:30:47][17.1]
Nick Deiuliis, CEO CNX Resources: [00:30:49] Give it a look on Amazon or Barnes and Noble. If you want to buy a copy,.all the proceeds go to our Foundations Mentorship Academy. So it goes to a great time. [00:30:56][8.0]
Stu Turley, CEO Sandstone Group: [00:30:58] Okay, you open up a squirrel can a squirrel chatter because when you said ESG, natural gas and making fuel and everything else, can you tease us a little bit because I want to have you back and really talk about that in the future because, I mean, I get excited about natural gas in the development of gasoline or diesel or those things. [00:31:20][21.9]
Stu Turley, CEO Sandstone Group: [00:31:21] So is that almost in production? Do you have how’s the testing going? [00:31:26][5.1]
Nick Deiuliis, CEO CNX Resources: [00:31:26] They’re testing is going quite well. It is sort of in a demonstration phase of the technology. And here’s how to to think of it from a market perspective. A lot of people in the industry and I get it it’s it’s an area to pay attention to they think of natural gas, at least domestically, where the growth opportunities for that product is to export it to other nations to Poland, to Japan, to India. [00:31:48][21.5]
Nick Deiuliis, CEO CNX Resources: [00:31:49] And certainly that’s an opportunity. But when you think of sort of market growth avenues,. [00:31:53][4.3]
Stu Turley, CEO Sandstone Group: [00:31:54] Right,. [00:31:54][0.0]
Nick Deiuliis, CEO CNX Resources: [00:31:54] Think of them in sequence. The next most logical market to try to go tackle and sort of get get inserted into when it comes to domestic natural gas. [00:32:04][9.2]
Stu Turley, CEO Sandstone Group: [00:32:04] Right. [00:32:04][0.0]
Nick Deiuliis, CEO CNX Resources: [00:32:05] Would be displacing those sources of energy that are currently coming from thousands of miles away. Right. So this would be the gasoline, diesel and oil from places like the Middle East. [00:32:15][10.6]
Nick Deiuliis, CEO CNX Resources: [00:32:16] And there’s a huge cost differential incentive to look at that nice suspect what we could deliver for. And there’s also a CO2 benefit, of course, and everything in between, a sort of energy security supply chain, all those benefits. [00:32:28][12.2]
Nick Deiuliis, CEO CNX Resources: [00:32:29] And really the secrets of how that would work is being able to manufacture the CNG or the LNG right outside basis or on a pad basis instead of at a large right capitalized facility. And the way you would do that efficiently and elegantly would be to harness, as I referenced, some of that potential energy on pad or at the wellhead. [00:32:50][21.2]
Nick Deiuliis, CEO CNX Resources: [00:32:51] And that potential energy is really in the form of the pressure sort of regime that you’re operating in for horizon specific like the Utica. [00:32:58][6.6]
Nick Deiuliis, CEO CNX Resources: [00:32:58] So the Utica is one of those high pressure gas reservoirs. And if you can find a way to harness that pressure right, then you can use that to basically transform the gaseous methane into CNG and LNG quite efficiently. [00:33:11][12.8]
Nick Deiuliis, CEO CNX Resources: [00:33:12] Once you have the CNG and LNG manufactured on PAD, well then being able to displace and utilize it for ground transportation fleets instead of gasoline or diesel or for aviation instead of jet fuel, it becomes a much more straightforward effort. So. [00:33:28][15.4]
Stu Turley, CEO Sandstone Group: [00:33:29] Wow. [00:33:29][0.0]
Nick Deiuliis, CEO CNX Resources: [00:33:29] Perspective. I think that’s the next big horizon for domestic natural gas. It’s it’s these transportation fuels and having natural gas transformed into the form of CNG and LNG. [00:33:39][9.9]
Nick Deiuliis, CEO CNX Resources: [00:33:40] And then when you look at the cost benefits and the CO2 benefits and the supply chain benefits right now, the employment tax base benefits, by doing it here instead of importing it from faraway lands. [00:33:49][9.7]
Nick Deiuliis, CEO CNX Resources: [00:33:50] That’s basically the Appalachia first vision that that you alluded to, which you guys can can do that on our company website or on what we call positive energy hub. [00:33:59][8.2]
Stu Turley, CEO Sandstone Group: [00:33:59] I’m getting real excited. You should have never mentioned this because this is cool. [00:34:03][3.2]
Stu Turley, CEO Sandstone Group: [00:34:04] You know what? One of the biggest things, this education process, everything I is get excited because guess what? There have been no new refineries made since 1977 or 78. The only changes that they have had or upgrades and they’ve just had Exxon just announced a new one. [00:34:22][18.4]
Stu Turley, CEO Sandstone Group: [00:34:23] There are two sets of rules out there for the big ones and then the little ones. So ethanol is may and you have to menu. You have to when the big ones make ethanol, those rules apply, but the little ones can get by with not making ethanol and ethanol’s bad. We’re in a food crisis coming up. It’s harder on the engines and everything else. [00:34:46][23.8]
Stu Turley, CEO Sandstone Group: [00:34:47] So I just I heard as LNG and CNG, compressed natural gas on the well pad doesn’t need a refinery all of a sudden you’re I mean this is bonus round. I’m sorry, Nick, this is cool because you’re going to bypass that whole problem of having a large refinery. [00:35:06][19.2]
Stu Turley, CEO Sandstone Group: [00:35:08] And then that cost savings that you’re going to have by going because it’s twice as much energy to go make ethanol as it is to use compressed natural gas. This is huge! [00:35:20][12.6]
Nick Deiuliis, CEO CNX Resources: [00:35:21] Huge. And, you know, our company has a history in this type of innovation. We innovated coal bed methane capture back in the day. We were part of the shale revolution with the Marcellus. [00:35:30][8.2]
Nick Deiuliis, CEO CNX Resources: [00:35:31] This is we need you to be the next chapter. And I think, again, it will rewrite and write some new history with respect to the energy books when it comes to what’s going on with global energy markets in the United States, in places like Appalachia and sort of similar basins. [00:35:45][14.5]
Stu Turley, CEO Sandstone Group: [00:35:46] Right. [00:35:46][0.0]
Nick Deiuliis, CEO CNX Resources: [00:35:46] Really the key pole position to make all that happen. And boy, the benefits right there are almost impossible to add up because the numbers get so large. [00:35:54][7.8]
Stu Turley, CEO Sandstone Group: [00:35:55] You know, you sit back and go pipelines are needed. But you you just describe by going around the whole downstream model is a bazillions of dollars. I mean, it is also eliminating so much pollution and everything else. My head just exploded. This is.cool! [00:36:15][19.4]
Stu Turley, CEO Sandstone Group: [00:36:15] Collusion. Yup. [00:36:16][0.7]
Stu Turley, CEO Sandstone Group: [00:36:18] Thank you so much for stopping by. I really appreciate your neck. And thank we have all your information in the show notes. [00:36:24][5.9]
Stu Turley, CEO Sandstone Group: [00:36:24] Stu loved it. Thanks for the opportunity. [00:36:24][0.0]
