Tech and Energy are Teaming Up A Market Review | Saudi Aramco to Invest $110B in Jafurah Unconventional Gas Field | Cimarex Ties Exec Compensation to Emission Reduction | Crazy Shale Growth is a Thing of the Past | Largest Bank in US WILL NOT fund Fossil Fuel Extraction in the Arctic National Wildlife Refuge | Democrats Courting Oklahomans seeking Limits on Oil & Gas Production | Big Money Still Loves Oil & Gas OGTW196
You're listening to the oil and gas this week podcast with Martin liqueur and decor vizo. Were busy or growth quickly. Want to keep their finger on the pulse of what's going on guys. Welcome back sued of oil and gas. This week. You said one ninety-six we are four away from two hundred mark. Yeah we have some plans for two hundred chooses not quite locked down yet but a Susan get locked down. We'll let our audience know 'cause we're planning to do something really cool and speaking of some really cool big shutout to how'd you first thing Jake. Raheel Raheel Garcia. He one of the IBM shirts and he was nice enough to snap a picture of it along with the OJ. Jian Tumbler and shoot out to us. And it's just really cool. He's a chemical engineering graduate student and he gives us big Kudos and also our sponsor. Ibm for keeping him updated as news and trends so big shoutout. We appreciate you wearing a shirt. And then Jake. I just came back from Calgary of doing the speaking for Ibero. In Calgary in one of the audience members had the shared. It's just cool to see our giveaways all over the world and people are happy to show off to us. That is pretty awesome and speaking of awesome. We also has some great reviews as you guys have left. Obviously that's the way you support us and keep us doing what we're doing. This one says excellent content for the latest news and trends in the oil and gas market five stars from Rob They write these guys on top the industry news and provide valuable insights breakdown current trends and you willing gas market super helpful. Keep the comic We will get to the news because we got something going on. It's affecting all of us right now. Yeah so I was Kinda looking forward to going to Sierra week this week and I just saw this morning as you did. Mark that Serre. Week is cancelled. Due to the CORONA VIRUS OUTBREAK HYSTERIA. That is spreading across the world. And we actually we were supposed to leave. Aberdeen Launch Sales and marketing. Podcast tomorrow and I actually cancel that trip. That won't be real clear here. I'm not worried about the virus at all. The virus is not that bad more people die of the flu by far than the crow. Vars the problem. Is that the news agencies overreacting like they do about everything and now. The government's are starting to overreact. And so the problem is the UK has just been stepped up to level three health threat by the CDC which means that when we come back from the UK. We could be quarantined if somebody in her plane is tested. Positive or looks like they have the quote of ours. And I just can't take that chance of me and my people some making decision to keep people safe not from the virus but for being quarantine when we come back and I totally get out. Seir we kind of make a judgment call. You know this is probably would guess. Millions of dollars lost revenue for the city of Houston and all the the hotels and restaurants and venues sorta stuff. There's also a lot of money being lost by. Ihs market who puts his thing on at the same time. They can't take that negative black. I in public or something bad would happen. It's hard call. It was a really hard. Call me today to cancel our trip. We lost some money on this but I thought was the right thing to do. My people safety comes first. I think that's what's going on here seer week. Which is a shame that the media on both political sides just loves to GRAB ANYTHING AT CAIN of blown out of proportion. Yeah it seems. Obviously there's been a lot of deaths but I think comparatively speaking I think it is a been blown a little bit out of proportion but you know I agree with. Ihs Is better than story. There was people from eighty different countries. We're supposed to be participating. Shell that travel and being on a lot of other people and whatnot who knows maybe the entire willingness to wipe out by Kern virus and just one event. Well I'll tell you what it's affecting the stock market like. I don't even want to look at my investment portfolio right now and I know it's a perception thing but perception in today's constant always on social media world. Perception can move the needle a lot. I mean this is a perfect example of it and that's Jake's Co host by the way you heard barking background so speaking of Tech. Let's a little happier technology. Teaming up creating a market that could grow five hundred percent in the next five years. The oil and gas energy tech community didn't really exist a few years ago. And so we've been talking about this for a long time saying that companies need to be focused more on digital services digital transformation most need to become data companies first and foremost not just any willing guests industry but everywhere and now we're seeing that was. Barkley's thing was one who did the reporting of Barclays the report saying that the oil focused it'll services industry will grow from less than five billion dollar market today to more than thirty billion dollar market annually over the next five years in the upstream market alone leading to one hundred fifty billion in savings for oil producers. Thirty billion dollars just from the digital just from upstream. That's a big company. If you're thirty billion dollars a year company so that the potential there jake you and I and all of our peers have talk about this for years for years. So this is not news to you and me. I think it's interesting to see what I would consider. Almost a bit of a hypocritical approach so some of the really big technology vendors that are out there that are coming into the oil and Gas Industry. That are looking quite honestly to make money in our making money from us at the same time. Don't want it to publicly. That are doing work in our industry. That just bothers me right whether we have a difference in opinion on climate change in the how much hydrocarbons contribute to that and man's activity should be that. If you're coming in and helping US and making money off us be proud of it and if you think we're in this energy transition period a time be okay with helping the gas companies. Make that transition. If that's what really happens but don't hide from your shareholders and from your public and say that you don't support the hydrocarbon industry at the same time. You're spending money making money you know working in the oil and gas she's bought bothers me. Yeah the CEO of a cow. Which Company was Alabama? I can't think of his name is Sonya Nadalo them. It's Microsoft right with Microsoft. Yeah Yeah Yeah So. He was quoted as saying wasn't actually in this article. I read last week that big part of their cloud services offerings with their azure platform. He saw a lot of room for optimization through digitalization with things like their platform in the energy industry so actually that was kind of peculiar that he actually said that in a conference yet. It's interesting Eh. Don't WANNA get too deep into the names of the big tech companies. And who's doing what? But there's definitely a difference in approach in how they're dealing with US publicly and I think the ones that are able to come to the table. Say Yes we're working with Chevron or slumber J. or Halliburton or whatever and we're helping them and there'd be an open honest and transparent about I think we're GONNA get more business than the ones that publicly say. We don't like fossil fuels yet. Their sales teams are calling on the saints companies. So if you have an idea or something you want to pursue anyone guess industry. There's never been a better time than now. We've seen all the biggest waffled service companies As the Baker Hughes Halliburton all gearing up to become more of a digital service company than National Physical Service Company so the writings on the walls. We've had more and more venture capital flow into the space we've ever seen before we're seeing tons of exits so it's it's really really exciting time to be in the space. I know it's a lot of doom and gloom in the industry and we've been talking a lot of that but the means there's a lot of opportunity as well. Yeah I mean look at all. The big oil comes internal venture groups. They're not doing that to flip. Companies make a profit. They're doing that. Look if the next great thing to help them compete and they finally realized that the next great thing may not come from a large corporation may come from a two man startup in Lafayette Louisiana. Orrin somewhere Cairo Egypt or whatever so to your point you know if you have a good idea if you see a problem that you can solve and you understand at least at a high level how the oil and gas industry works and you have that entrepreneur. Spirit is probably the best time in history few to pursue absolutely Saudi Aramco is investing one hundred ten billion dollars today Jeff your unconventional gas field. So this is supposed to yield approximately eight point six billion dollars annually providing GDP with twenty billion dollars annually while creating job opportunities. Funny thing is I actually thought the markets were going to respond a little bit to this but however there's been practically no movement as a result of this announcement. Natural gas is interesting. It's definitely the fuel of the future is definitely a moneymaker in the future. But it's just the price is just so who low right now and that's part because it's hard to move around we'd have it built the LG factories that are needed to compress it a gas. We haven't built enough offloading terminals enough importing terminals enough regasification plants. Enough Ellen G offshore carriers. But we're come and that growth phase where we're building the infrastructure. They can the next couple of years as as more and more that infrastructure comes online. And you start moving more and more energy around the world. Think you could see the prices go up. It is interesting though because I was thinking about this other day. You know one of the projections that both BP. And Mackenzie is. They're looking at the future out to twenty fifty. And they're projecting there's GONNA be a decline in the need for fuels from hydrocarbons gasoline. Diesel that sort of stuff and the reason I think there's GonNa be a decline is the increase in electric vehicles. And this is kind of in the back of my head for a while. It's like you know when I think about breakthroughs in technology. So you think about the Ubers of the world does that cause people to use less vehicles of more vehicles as the price comes down and as get easier to use something. Think of your cell phone as the prices come down because it's not that long ago where it's very expensive to call. Cellphone and dad was prohibitively expensive as the price is down. Do More people use it? So I'M GONNA actually go on record and I think that as we move in the future. I think the demand for fuels from from hydrocarbons is actually GONNA go up. I think with things like ride shared smart cars self driving cars. More people have access to it and I think it's good drive. The demand up electrical vehicles are great. They really are. We need a breakthrough battery technology. But because you don't have that transmission because you have a hundred percent torque at one. Pm The motor could be connected directly to wheel. You'll have that twenty percent loss and then you're not dumping all that wasted energy as heat. We need a battery breakthrough. But you know the more I think about. It becomes cheaper and cheaper and easier easier. I think the opposites gap. I don't think the demand for vehicles that RUN INTERNAL COMBUSTION. Engines are actually can make up. Let's see if I'm still around twenty fifty from right all right. Speaking of emissions in natural gas denver-based summarize energy use operations are concentrated in the Permian Basin and mid continent wasn't active participant in how national policies are set for environmental stewardship. But I want to walk the why. And so they are actually going to be tying executive compensation directly to reducing their emissions. What do you think about that Jake? I think it's a smart move. I think ties into a bigger conversation. On governance and how executives have been compensated. Think it's just kind of basic psychology compensate people based on things that are actually good for the company. Good for the people get for the environment. Yeah we hope that. They're tying it to other things just emissions natural gas flaring. But I think this is a step in the right direction. So it's not the only that we've seen do this. There's been a few others so far camera off top my head but I think it's a step in the right direction. Yeah so I agree with you. This is a bit surprising. And of course we know why they're doing this because public perception. But I like the idea. I like the idea of tying executive compensation all gases something other than growth. Would this have been my first one? No would have been in my top ten list. I think it would have been because it's such an issue in the public right so I liked it. They're doing this. It is GonNa be interesting to see what happens. Does this affect the business in a positive way? You know. It's SORTA like hsen metrics for Very Long Time. People said that if you ran a solid HSE program with no loss time incidents it slowed down and eventually it was proven at the opposite. It's more efficient operation when people don't get hurt so this is sort of the same thing is by tying their executive competition to reducing emissions that make the company better and they perform better which would be better for their shareholders and their employees. Let's keep island because this is something different and I like the fact. They're willing to try some different public about slumber. J. Chief says that crazy show growth is a thing of the past. Obviously we saw a cruiserweight approaching gross seen in the US shale last five years. I was butcher his name. But I think it's Olivier Pugh view only people the US at watch cartoons twenty years ago. What you're talking about which should be most people so the growth rate will slow considerably to six hundred thousand seven hundred thousand per day this year and even worse to just two hundred thousand barrels per day in twenty twenty one is what they are estimating and that strictly from Schlumberger. So I'M GONNA disagree with him. It's number one unfortunately. I love slumber. J. They're literally right down the street from our house. There north hecklers number one. They've done horrible in the. Us they do really well internationally but their business practices and needed to change compared to competitors and honestly Jake there dude. They're doing some stuff that just wild news. Actually in my predictions two years ago they started renting their tools competitors so they know they need to change in. They're trying to change. We'll production go down. I think production growth is going to slow down. Production itself is going to go down. I don't think so. I'm firmly convinced. His gooby new breakthroughs and processes and technology this year next year and the year after which continue to lower costs and drive efficiencies. Now will we ever see the growth in shale like we did ten years ago? No but you gotta take that in context. It's sort of like if you have one dollar so gives you another dollar where you just grow that. One hundred percent sounds like a lot but it's only two dollars right so I think the growth rate will absolutely sit on Hasta. We'd have to have this market corrections happening right. Now do everything. It's going to decline. No Yeah I would have to agree with you. He's kind of saying the obvious but I wouldn't take it Definitely wouldn't say it's going to decrease Russians Wall but say what eleven if you'd like to come on our show and talk about it me. Jake could fit you in our schedule. Promise speaking of things like this largest bank in the. Us will not fund fossil fuel extraction in the Arctic National Wildlife Refuge. Just that title alone is a little bit biased but it ties into the bigger conversation around. Jp Morgan which JP Morgan has funded more willing gas exploration than anybody ever by a long shot. It's like almost double testing on this. So this is GonNa be the first domino to fall In the Arctic National Wildlife Refuge. And my guess is that this is not going to be the last year about this. This is going to expand as more banks more. Investors are wanting to divest at of oil and gas investments to meet. Es G quote unquote concerns. Yeah Jake so this is sorta like you and me and the rest of the OJ. Jian game going. Look we're drawn a line in the sand. We want support the environment. And we're pledging right now. Not Invest any money in Jilin. Toil in Hawaii. Well what's funny about that is? You're not going to draw our Hawaii right. You're just not GonNa do it so it's really easy to put our foot down. We're not GONNA do it. One of our listeners. Probably knows this but whatever the cost of crude has to be to make it economically viable to drill produced in the Arctic has to be around one hundred dollars a barrel. I mean maybe even more. The environment is so extreme logistics almost nonexistent the mount of redundancy and protection. You're going to have just to even drill. There is just drive costs route. I don't think anybody could do an Arctic. Now here's the flipside with though. Is that if anybody does drill an Arctic. It's most probably it'd be China and Russia can ask this question all the time. Have you ever heard of a Chinese or Russian oil spill answers? No that means one of two things that means one. They're better at it than American European companies or they don't tell so if anybody drills and Orrick you would want it to be one of the American League European you'd want it to be Shell or Exxon or BP or Chevron or whatever because if something bad happens not only with tell they'll spend the money in the time to clean it up and fix it. Where's the Russian Chinese companies won't and this is I think is a bit of a pure thing from J. P. Morgan Chase J. P. Morgan chases in the business of making money and if an all gas project makes money for them. They're going to do it but to your point Jake. It's getting to the point now that these conversations are moving the needle enough. It's perception is not reality. But it's moving the needle enough that big companies are making decisions that will affect their shareholders. But once again. This is a bit of a pure stunt. Nobody's looking to drill in the Arctic. National Wildlife Refuge now anyway but it will keep an eye on. This really doesn't mean much of anything. Some kind of on the same topic. Democratic presidential candidates are courting Oklahomans for votes. We've seen that Elizabeth Warren we've seen Bernie Sanders. Actually think almost everybody who has been a Democratic candidate. Even Pete Budi who I guess just dropped. That is well is calling for some sort of ban on fracking or anything having to do with oil and Gas Brush in Charlotte. I don't get me started. You remember rusted. This year's Year muck of shy away from politics. I saw your facebook. You're like I'm double talk want superfluid. This is ridiculous number one. It won't happen right the moment. You can't heat your home the moment you can't afford gasoline your car. You vote for somebody else. Just ask the people in California that moving to Texas the reason to move to Texas. They can't afford living their own state anymore. The reason they can't afford to live on their own state is because the politics they support drops the cost of living to the roof right so then they have to move out of their own state because of the way they approach politics all of the democratic nominees are future nominees all support some type of attack on the oil and gas industry. And it's just it's just ask tonight. Yes absolutely religious. It's just posturing and literally they don't understand business and it drives me crazy and I know why they are doing it. Drives me crazy is people that should be more intellectual about it art. It's an emotional response to support this type of stuff and it just. It just needs to stop. Do I think it's GonNa Stop? No Do I think that all guests entreat has got to the point where there's tired of this. Yeah we're actually working on something. That probably won't come out until twenty twenty one whereas the organization is go head to head with these guys. 'cause this is this hurts every by now who wins. The election is force Republican or Democrats. That's still a wait and see where that goes up. Put my two cents already on trump and I don't like the guy a whole bunch. I like a lot of stuff he does but Jake let me ask you. This voted early. Sub Voted early last week. Did you even know? There's any republicans run against trump. Now I didn't I didn't either tell it to vote like that's how big a lead has mindshare. He has in my head. I didn't even know there. Other Republicans running and there are so you know. Let's see where this goes. The problem with the Democratic Party in the Republican Party has had the same problem the probably Democrat Party. Is You have an extremist which is sanders and what he's going to do if he captures enough attention enough of the votes. He's GonNa Split the party up which then decreases their ability to put. Somebody in office will definitely decrease their ability to hold the house. So I think they're their own worst enemy and I think some of the moderate Democrats no it and by the way people. I'm not a staunch Republican. I'm a moderate. Socially of extremely liberal believe in smaller government believe in good fiscal policies. Good national protection but socially I very very liberal about stuff so you know this whole attack all gas industry. You'd think advise votes just needs a stop absolutely and on the last article of this week. That's Kinda end on a high note. This article titled Big Money Still Oil and gas so while shale is obviously having a hard time. There have a whole retransmission pass onto investors in that part of the industry. There's still a lot of ways to make money in this industry which talked about that will keep losing sight of that perception that shale is all oil and gas. And that's just not the truth and so the fact that matters that it is hard to kind of find the same kind of returns that you would find with some of the oil and gas projects especially in the US British inside that. You really don't find those anywhere else as I. She's talking about some investors from the UK. And I haven't followed anything with your economy on that side but apparently it's extremely hard even to get like a five or six percent return on anything over there due to the kind of stuff and so all these guys are coming to the United States looking to will and gas industry saying we want you know a lot of guys are getting out. We want at and so two thousand eighteen alone. Oil and gas firms raised six hundred seventeen point four billion dollars in capital which is up seven percent on the year with loans and bonds accounting for ninety two percent of capital. Raised in the other thing. Is You a lot of people? Just keep country on upstream. Big Shout Meridian Group. They're building new. Davis refinery in North Dakota getting rebuild. The same thing in the Permian and this is a brand new refinery that super mind Super Super High Tech Very few people. They're they're GONNA make a hell return on their investment because you're using technology to do something that a lot of people don't think of the only GASINCI which is to turn hydrocarbons in something you can sell and they've totally modernize the process which is just genius. So they're still money to be made in this industry that five percent return UK. That's silly I can make more that just through and stuff into my mutual funds. It is interesting though to watch. What's GonNa Happen it upstream? I think we're GONNA see a bunch of consolidation in this pop my head other day. Jake and I sure hope I'm wrong about this. If you were a super major and you know that at some point in the future because things are imploded in the shell fields in North America. Let's say shall fills in the US in the All Saints and Canada. Would it be beneficial to you to help stroke the beliefs that there's no money to be made in upstream so there's investor so that the people get bought quicker Make sense of wrong about that. Just pop miss that. You know if I was a super major in my business plan isn't next quarter. Next year to next decade. I would be okay of stuff happened to make that more tank quicker second pickup assets for pennies on the dollar you know and once again. I don't know if that's happening. I don't know how you do that as long as it's legal though it would be fair in business as long as it's ethical. If that's sort of things going on it just you know it's the same way. We picked up a competitor. We would want them to be as least valuables possible so he could pick them up for the least amount of cash our pocket so just popped my head. Have you know data new conversations of support that but I'm starting to take all of these doom and gloom shell fields articles with a grain of salt? Because that one thing because I know I know the super majors are making money in the shell fields and I know they just started and they have a lot of plans for growth and expansion and they wanna do it as cheap as possible because they want to make sure they're doing right by their investors and their shoulders their employees. So keep an eye on this but I think for my predictions for twenty twenty one. This might work. Its way in their absolutely and that wraps up all the stories for this week. You guys know what's happening next week. I Freddie a so many questions please write in. Don't try to stump us. What's at answering for you and we're going to give away. Obviously Raheel got a shirt These shirts are really cool that we spent money on their cut for both men and women. They have a print of Antique Pump. Jack on the front though gene logo on one shoulder IBM logo and other shoulder. And the most valuable thing is under the left part of the pump. Jack print is a unique. Cyril reach a unique number. Which makes it instantly collectible and me. Jacobs start giving away some really cool stuff basement number so if you have that shirt you might want to save it you know. Ask Your Wife where she preserved for wedding dresses. Bring Your Obgyn shirt preserved just like our wedding dress but then write that number down so that you know what? That number is funny shaky. Watch you and I regret not winning the shirt five years now. What people are selling for twenty thousand dollars each and Jake and I can't win them under the rules because obviously IBM's a sponsor for the show which by the way big shadow to IBM. I spent some time with some of their leaders in Calgary after the conference that we spoke out and Jake. They're doing some incredible stuff at one of the things I really like about that. They're so under the radar. They have so much domain expertise. I literally had a room full of geoscientists. Petroleum engineers geophysicist in August project manage that worked for. Ibm talk about how we can work together and help promote more stuff they were doing. It was just amazing to see August expertise on. Ibm's payroll big shout. They're they're doing some really cool stuff. We've got more to come from them. And then St teams join a street team. We're finally getting some swag big shout. The Catherine an attempt for getting the logo work completed for the street team shirts at is stunningly cool. Go to facebook. Join the Group Oji Street team easy to find all we ask you do help us with our social media. We asked for an hour's worth of work a week. But if you can't do it because life gets away we don't care. We knew how life is and what the monthly August events e Mail. Go to the show notes links in there. We don't charge you for. Put All guests events of one place in your inbox. And sometimes you get cold stuff like free passes or insider stuff that nobody else knows about. And then if you want jake to come speak at your sales and marketing kickoff your young Professionals Group your school group would ever let us know. We got a bunch of stuff book for this year but we have some spaces leftist reach. I'll be happy to share the details. Jake talked about the first Friday. The other things go join Arlington Group. I don't even know what it's up to. It's like a ton of people and it's growing like crazy just another way to stay touch our jake. Who had a lot stuff done today? We need to get out of here. Do it remember folks do Great Work? Pay It forward and we will see next time. Hey everybody Alex here. With the events on deck for the next month we have some exciting things coming up to happy hours one in Pittsburgh and one in Denver so the first one will be happening on March twenty second at Bubbas Gourmet Burgers and beer. This event will be from four to seven and will feature a live recording oil and gas this week with Jake Corley and Markor so be sure to check that out. You can sign up for our social media's we haven't met bright sign up and should be good to go from there. The next event will be a happy hour in Denver at Liberty Oilfield Services on April second once again check our social media for the event bright sign up and sign up there as some of our social media followers may know we are headed to Aberdeen Scotland. The first week of March in a couple of days actually for Dokan con creating high impact sales and Energy Dokru is excited to launch. Its very first sales development conference and mark and Patrick will be hosting a panel and recording alive podcasts. That we're really excited to be joining map. The leaders in industry luncheon is on March eleventh at the Petroleum Club of Houston. Port of the future is happening on March tenth and Eleventh in Houston your registration to the port of the future conference also allows you access to exclusive events including TSA security and terrorism research showcase and many more so be sure to view the agenda and see what they are offering the Houston energy. Breakfast will be on March twentieth at the Conference Center in Houston the API Energy Houston three gun. Chapter will be on March Twentieth. This amount is filling up very quickly so make sure to get a team in as soon as possible. The BP Energy Outlook Two thousand twenty edition will be April twenty. First it's happening online and this event is about transitions that will take place to a low carbon energy system. That's offered this month. Everybody hope you guys have a good month and check back in next month to see what events were having thanked tune in next week for another informative and entertaining episode of Oil and gas this week. Podcast a product of the oil and gas global network learn more at ORLAND DOT com.