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13 reasons fuel crisis persists in Nigeria
GE Oil & Gas signs partnership agreement with Iraq Ministry of Oil
Obama’s Controversial Offshore Drilling Proposal Rests On Research Funded By Fossil Fuel Industry
WHY ARE THEY HIDING THE GOOD NEWS ABOUT FRACKING?
Cuomo’s pipeline decision may have ripple effects for energy policy
3 Reasons Chevron Is Committed to the Permian Basin
Exxon Says ‘$25B Rule’ Will Sink Deepwater Oil Drilling
Will Railroads Survive the Coal and Oil Onslaught?
SunEdison files for bankruptcy protection
Cabot Oil & Gas: Without Constitution Pipeline?
Shale Gas a “Blessing” and “Will Come Back with Vengeance”
DNV Tests Drones For Hull Surveys
The Weekly Onion
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Transcripts Courtesy Of
James: I’m James Hahn II.
Mark: And I’m Mark LaCour.
James: You’re listening to the Oil and Gas This Week Podcast, Brought To You By Red Wing. This is the show for busy oil pros who want to quickly eat their finger on the pulse of the industry. Episode 61 right here on the cusp of the Offshore Technology Conference. Welcome, Mr. LaCour. How are you feeling this morning?
Mark: I’m doing awesome today. We were both well. We were sick.
James: Yes. This is the first. Yeah, it has been a few weeks, right?
Mark: The epic floods have subsided. So all good stuff.
James: All good stuff. All good stuff. Let’s kick it off with our good friend, Mr. Kirby Colvin. He’s hired.
Mark: Congratulations, Kirby.
James: He’s hired. Tell the story because you helped him much more than I did.
Mark: Kirby is one of our listeners. He reached out to us because he was interviewing. I don’t want to say the name of the company because we don’t have permission yet but it’s an oil and gas company. He wanted some help to get prep for his interview. So we helped him and he got a job. Way to go, Kirby. Congratulations. You’re moving to H-Town. It would be cool to actually meet you in person.
James: I can’t wait. We have a bit of a running section in the beginning of the show called We Stand Corrected. This week we do not stand corrected, Mark. I’ll let you take it from here.
Mark: I had this interesting Twitter conversation. We appreciate all of our listeners, even the ones that don’t agree with what we say. One of our listeners reached out on Twitter to me and said he doesn’t like it when I go off with the climate denial gibberish. Listener, you know I’ve never denied climate change. Climate change has been here way before humans. We fluctuate between ice ages and global warming. It’s happened for millions of years and it will happen for millions of years in the future. The only thing I question, and I’m not saying I don’t necessarily buy into them, I’m just questioning because I’m a researcher, is man’s contributing to the speeding up of global warming.
It was a great exchange for me as a researcher. It fascinates me how people make these emotional decisions and then believe it. In this Twitter exchange he called out that I had a bias because I’m getting paid by the oil and gas industry. As a listener you should know that I don’t make any money from the oil and gas industry. My clients tend to be technology companies that have tried to sell the oil and gas and failed, maybe need some help. That’s the first assumption he made.
He actually has what’s called a confirmation bias. That’s a bias where you believe that if other people talk about studies or facts or whatever that support the way you think about things then you naturally believe it’s truer than stuff that doesn’t support your background. It was a good great Twitter exchange because I get to see inside of how people emotionally attach themselves to things that the facts don’t necessarily support.
One of the things we went back and forth on was water vapor. Water vapor is 95% of global warming. CO2 is 4%. So if you look at it from a logic point of view you would want to address that 95%, right, James?
James: It seems logical. I was glad that you got to it because I was wondering if you could unpack that just a little bit because we have a lot of stories to get into.
Mark: Global warming is natural. Global warming happens for a bunch of reasons. One of the reasons is our atmosphere’s ability to trap eat from the sun. Those are called greenhouse gases. The most impactful greenhouse gas is water vapor. 95% of all global warming gases are caused by water vapor. My point is man’s activity has increased the amount of water vapor. Every time we take a shower, think of all the sprinklers out there, all the man-made fountains, all the man-made lakes and rivers, and every time you cook food, all that increases water vapor.
My question to the environmentalist is why don’t you talk about that? You never hear it. I know the answer. The answer is because there’s no money in it. There’s money in trying to mitigate CO2. There’s no money in trying to mitigate water vapor. Once again, as a researcher, I just question that. It’s fascinating to watch the emotional responses come back instead of the logical, clear thinking type of responses.
Once again, I appreciate our listener, I understand you have a different viewpoint than mine, it’s totally fine. One of the great things about living here in US is we can have these different viewpoints and we can talk about them openly.
James: One of the things that’s great about living in the US is that we have a consistent, steady, abundant supply of fuel now. Getting into our stories, that’s not happening in Nigeria. We’re following this story, following up on some things that we talked about a few episodes ago. Thirteen reasons fuel crisis persists in Nigeria.[0:05:06]
Mark: This is horrible for the Nigerian people. The President is working on this. If anybody’s old enough to remember the ‘70s oil embargo and the lines for gas, that’s every day in Nigeria right now, huge lines trying to get a few liters of fuel for your vehicle. It’s caused by a bunch of things but bottom line is corruption. They need to get corruption out of the system.
Crude oil is being stalled in the black market. The bad guys go to a crude oil pipeline, tap into it, offload the crude and go sell it. So that crude never make it to Nigerian refineries so they can refine it.
There are no new refineries because they don’t have the money to build new refineries. The existing refineries are not running at peak capacity. Even if they were, they couldn’t supply enough fuel that the country needs.
This is a mess. This is preventing prosperity. Nigeria needs to get a handle of this. Like I said, the President has come a long way. He’s working on this. I have full faith as long as he stays in office that somewhere down that Nigeria will be able to supply its own fuel needs.
James: I’m trying to bring together the words. You can’t see me because this is an audio show, not a video show. My jaw is on my desk as I read this particular sentence. The Minister of State for Petroleum Resources was stating the obvious when he said this week that at least 30% of fuel allocations meant for different parts of the country were diverted daily to neighboring countries, 30%. That’s not an outlier statistic.
Mark: That total is still not enough to supply everybody’s fuel requirement. So it makes that 30% even more impactful.
James: Wow! All right. Moving over to another story we continue to track which is who’s going to do business in Iraq. Who’s going to actually go ahead and get their toe in the water? GE Oil & Gas signs partnership agreement with Iraq Ministry of Oil.
Mark: I was waiting to see who was going to be first. It looks like GE’s first. I know GE. They’ve figured out what risk they’ll mitigate before they signed this agreement. They’re a big company. They’re a good company. I would not have partnered with Iraq right now. GE is going to face an uphill battle, corruption, security, the inability for Iraq to secure its borders. It is going to be a mess.
Now, the interesting thing is GE’s coming in at a high level. We’ve talked before about the internet-of-things in the digital oilfield. That’s actually what they’re partnering with the Minister of Oil in Iraq on. Literally they would build a system where there’s a bunch of sensors, everything from the oil that’s discovered in the ground until it’s actually refined or shipped out. The Iraqi government will be able to monitor that and see in real time where everything is.
If they’re able to pull this off that’s going to go a long way to help curb a lot of the corruption in the black market because they can track the oil and gas from the moment it come out of the ground until it ends up where it’s supposed to be. This is going to be a long term story that you and I are going to need to track. I don’t see GE doing this without any hitches. I think they’re going to have some hiccups and maybe even some major setbacks. Let’s see what happens because it’s a start in the right direction but it’s not something I would’ve done for sure.
James: It has a strong upside because the solution could translate into more than 200 megawatts per site and recovery of several thousand barrels per day of liquefied petroleum gas.
Mark: Easily. There is so much black market stuff going on over there. I don’t know what the number is and nobody else knows what the number is because they’re so corrupt. You can’t get a real number. A large portion of their production is hit in the black market which then means that the people of Iraq don’t receive the benefits from taxes and tariffs and everything because that oil is diverted. This is something that needs to be done.
We just finished talking about the corruption in Nigeria. Nigeria is s coming out of that mainly because of their President. Iraq hasn’t even started to come out of that yet.
James: I will put it in the extras in the show notes. I should’ve shared it with you. It was from VICE News. It was a raw footage of a GoPro camera on top of an ISIS fighter’s helmet. I’m not going to say anything more than that. Where do you think a lot of that oil is going? I do hope that they get this under control and that it prospers the right people in that region of the world.
All right. We have a little news from the International Business Times. I’m pretty sure you probably don’t like the way that this is written, I personally don’t but that’s why I want to talk about it. Obama’s Controversial Offshore Drilling Proposal Rests On Research Funded By Fossil Fuel Industry.[0:10:15]
Mark: This article sucks. It’s so leftwing written. It’s so slanted. This is the type of stuff I hate to see in the news because it’s not objective. This whole thing is written about how the evil fossil fuel industry is trying to destroy the planet. It’s not true.
The offshore drilling proposal that’s in front of Congress right now, if it gets approved, and I think it will, if it gets approved this’ll add another layer of cost that this industry doesn’t need especially in this low crude price market. I have nothing against our government, our senators and our representatives but they don’t know oil and gas at all.
James: Let’s clarify too. When we say they don’t we’re not only talking about one side.
Mark: Both sides. Neither side knows oil and gas industry. They’re politicians. They’ve never been offshore. If they’ve been offshore they have no idea what thru-tubing is or coiled tubing or what a blowout preventer is, they know none of that and yet they want to make laws to try to regulate something they know nothing about. That’s a recipe for disaster.
When the BP Macondo disaster happened the federal government wanted to step in. You can’t run the government, much less make sure our people are safe offshore. I’m on the Board of Directors with the American Petroleum Institute. We wrote something called the API Recommended Practice 75, API RP 75. The government took that and turn it literally verbatim into the Sims Law to prevent another BP Macondo disaster happening. That’s done, right?
The law is in place. It’s well-written. It’s very safe. We don’t need another layer of regulation put on the offshore industry in oil and gas. We just don’t, not in this low crude price, not ever actually. Once again, it’s a step politically by a part of our government who wants to appease a lot of its constituents that they are doing something to help protect the environment. We’re over that hump, people. Our air and water pollution peaked in 1978. We got it down right.
If you really want to protect the planet go look at China or the developing countries where you never hear about them having oil spill. They do but you never hear about it. We got this down. I don’t like the article. I don’t like where it went. I don’t like how they misconstrued facts. It just basically sucks.
James: Thank you for that. You said the story about the Macondo disaster and how the API wrote it and put it into law. Anyone who is opposed to this industry would be listening to the show right now and go “Well, the fossil fuel industry, the evil, corrupt people that they are wrote that then it went into law.” I just want to talk through the logic of that real quick.
Mark: Who will be better off making sure that another Macondo disaster doesn’t happen? Politicians or subsea engineers? It’s just common sense.
James: Let’s take it in another direction though. Let’s change up the headline a little bit. Controversial proposal on brushing teeth written by dentists. We have a particular target on our back. If the government is going to pass something about, I don’t know, healthcare, not that they ever do that, do they get doctors involved or do they go out to a Reiki specialist and things like that and get them to tell us? Do you know what I mean? Do you want to base it in science of the people who know what they’re talking about or just anybody you could get off the street?
Mark: The dentist analogy is a perfect one. Of course you’d want dentists to talk about how to properly take care of your teeth. That’s what dentists do. That’s a good analogy because the only people that really understand this industry are the people that work in it and actually do this for a living. Once again, this article is so slanted. It’s not even funny.
James: As I say, I’m from Michigan. The only thing I knew was that you had to change oil every 3,000 miles. The only people in this industry that know how it works are the people in this industry and the people that have been in this industry for a long time. I’m still learning on this show every week in every day of my life. Everybody in the industry that you talk to, even 30-year veterans go “Yeah, man. I learn something new every single day.”[0:15:08]
Mark: This industry wants to keep its people safe. This industry wants to keep the environment safe. Nobody wants it more than us. Anyway, this article just kind of sucks, like I said.
James: All right. So we’re going to flip the script on them because we have one that we have some confirmation bias with, with Newsweek. Why are they hiding the good news about fracking?
Mark: This is a great article, James. It’s a good one that you found. This is in Newsweek. They’re talking about how people when they do research around fracking, and if the research comes back and it says that fracking has never contaminated drinking water that they don’t want to report on it because it’s not what they wanted to say. The interesting thing about this is that this is another third-party. This research was funded by an environmental group. They wanted to show that fracking contaminate drinking water. The research came back saying that it didn’t, zero, not a bit, nothing.
I appreciate the people that are worried about contamination of drinking water. It’s important. Clean water is a right that every American should have access to and every human should have access to. Let me throw a couple of numbers out there. Fracking has not been proven to contaminate water one time. Last year the US agriculture industry, particularly pig farms, contaminate drinking water 619 times. If you’re really sincerely worried about drinking water go look at agriculture. Leave us alone. We don’t contaminate drinking water.
James: But leave my bacon alone, all right, Mark? Leave my bacon alone. It’s on sale at Fiesta right now.
Mark: Another point where people make emotional decisions instead of logical decisions, and then they believe because they have that bias because it confirms what they believe in, they believe that what they’re doing is the right thing. If you sincerely want to make sure that the US has less drinking water contamination go look at agriculture. It’s a magnitude, huge, much more contributor to contaminated drinking water than the oil and gas industry.
James: All right. Continuing on our emotional roller coaster here we have Cuomo’s pipeline decision may have ripple effects for energy policy. We’re talking about emotion versus facts. Mark and I, we’re actually using Evernote while we’re talking about these stories and so forth. That’s where I make the blog post off of and all these things. So I went out to the official energy government website and looked up natural gas consumption by end use, New York. Why don’t we let that statistic guide our conversation, Mark?
Mark: New York uses a ton of natural gas. It’s their state. I’m a big believer in state rights. If this is how they want to run the state I totally support it. Their politicians say that fracking is evil, it’s bad. So they banned it in New York yet they have no problem buying the natural gas from fracking which makes me look at them as a bunch of hypocrites. This is another place where politics are impacting the population in a negative way.
They basically have denied Cabot the ability to build this pipeline. This pipeline would transport the fracked gas that New York doesn’t say is good for them but they want to buy it from the surrounding states to New York to keep their fuel prices low, to keep their electrical grid up and to reduce air pollution because you switch from coal to natural gas and you automatically reduce air pollution by 60%, and yet they deny this pipeline even though all studies said it was totally fine. It’s hypocritical.
We’ve talked about this before. You don’t see this in other political movements. You don’t see the PETA people wearing fur. They believe in what they do. They believe in protecting the animals. They aren’t hypocrites. This is the equivalent of something like that group wearing fur. You’re denying the ability to import gas but your state runs on it and you buy it. Once again, this is just a bad political decision. The people that are suffering are the population of New York. Electrical price going up is the direct result of that.
Mark: All right. We’re going to get more into that Cabot story later. I will hold my analogy that I have in my mind for then. Let’s go back up in the roller coaster here in terms of some better news to talk about. Three Reasons Chevron is Committed to the Permian Basin. Who doesn’t love talking about the Permian Basin, Mark?[0:20:00]
Mark: I love talking about the Permian Basin and Chevron. Chevron is one of my favorite companies. Internally, this is Chevron’s mid-continent OPCO or business unit that has all these acreages in the Permian. The reason they have all these acreages in the Permian is because it makes money for Chevron. Maybe not today but in a couple of months, a couple of years. Permian is very cost competitive. It’s very inexpensive. The geology there is just awesome.
Chevron has some enormous stakes out there. They didn’t do real well with this in the beginning but they’re learning how to be profitable in the shale fields because it’s different than offshore where Chevron’s used to making money. Offshore, it’s all about hitting project start dates and deliverables because all the math and finance stuff is done up front. You know what you need to do to make money in just a matter being able to deliver them whereas in the shale field it’s all about efficiencies. How can you punch holes in the ground with the efficiency of, say, Toyota builds Camries. It’s about factoring that type of production. So Chevron is getting really good at this.
Now, it’s interesting that this is an investor story. If you can look at Chevron long term wise, right now they’re not doing great, but if you look at them in long term wise they have positioned themselves from a shareholder value point of view to really excel when the price of crude comes back. This story is just one of those things that Chevron’s done really well that will help them and help their shareholders and help their employees when crude rebounds.
James: What’s interesting to me is some of the breakevens they talk about here. Because of favorable geology, some parts of the basin, such as certain counties over the Wolfcamp or Spraberry, have breakevens of well below $35 per barrel. Overall, 18 out of the 22 counties that cover the Permian have breakevens below $45 per barrel. Give us an idea of what those breakeven’s looked like 10, 15 years ago.
Mark: Let’s not even go 10 or 15 years ago. Let’s go five years ago. Those breakeven’s were $75, $80, $85 a barrel because they were learning how to efficiently extract crude and gas from shale. We’ve learned how to do it, and we’re very, very good at it. I know some players out there that they have some properties, and their breakeven point is in the teens.
James: That’s silly is what that is.
Mark: That’s because the increase in knowledge and the use of new technology allows you to drive costs down. We’ve talked about this before. In the old age you had to go stand up a rig. It was, I don’t know how many diesel trucks worth of stuff, 30 or whatever, to go stack this rig, Now the rig stacks itself. The rig walks to the next drill pad. Our ability to understand the geology has been greatly enhanced. In fact you and I were at Drillinginfo’s road tour yesterday. They talked a little bit about that, how that data or those plays allow operators to be much more efficient.
This is all really good stuff. I fully expect that once price rebounds Chevron’s going to dump a bunch of money in the Permian and you can see a lot of production come out of there.
James: All right. We’re back to the bottom with Exxon Says ‘$25 Billion Rule’ Will Sink Deepwater Oil Drilling. I have thoughts on this. I’ll let you share yours first.
Mark: We talked about this earlier, about the White House’s controversial offshore ruling. This is Exxon who, in my humble opinion, is the best oil and gas engineering company on the planet. Nobody, and I mean nobody knows oil and gas like Exxon does. So when Exxon comes out says, “Hey, you pass this law and you could kill the Gulf of Mexico drilling in the US,” they’re probably right. I don’t think that this law is going to pass. We’ll see. I’ve been wrong about a couple of things in our political system.
James: Or a couple of things on the show in last couple of weeks.
Mark: Yeah. I sure as heck hope this doesn’t pass. Once again, we don’t need this in this low crude price environment. You’re talking about people’s jobs, their livelihood, their families’ financial security. Don’t lay another layer of federal profitability on our industry. We got enough. This just needs to stop.
James: It needs to stop. I’m going to call us out though because if it doesn’t stop it’s our fault because what we do in this industry is we do nothing and then we blame everyone besides ourselves for everything that happens to us. If we don’t learn how to speak to human beings as human beings and let them know that we are not big oil, we are hard working Americans, it just so happens to be that our work makes their work possible, if we can’t connect that message across the board, you and I were talking about this yesterday, we can look at outliers.
Shell is really great at this. There are other companies that are really great at this but I maybe can name them on one hand. If we don’t take this seriously as an industry we’re going to be regulated out of business 30 years from now. Thirty years from now our coffin will be wrapped in red tape and lowered into Mother Earth.[0:25:18]
That’s not a place that I want to be because I’m not selfish person that says, “30 years from now I’ll be retiring.” Thirty years from now my son will be 35 years old. I would like him to have affordable energy as well.
Mark: You and I both on the show stay away from politics. Let me say one thing about this. Vote. People get out and vote. I don’t care what your beliefs are but make a difference. Raise your hand. Say this is enough. Learn what your politicians are doing. Learn which ones are helping your industry. And then don’t vote for them. I’ll get off my soapbox. I’m a very patriotic person. I have four years in Marine Corps. I love my country to death. One of things I’m disappointed is the lack of people going out and voting.
James: We definitely got to vote and we definitely have to take responsibility for telling our story and getting the truth out there. We have a lot of people, we have plenty of groups that are supporting the industry that have all kinds of publications but they’re all so damn divisive. It’s all sensationalists. It’s all reactionary.
Mark: It’s all old school commercial type stuff instead of actually talking to the people, being real, being transparent. I agree with you. My own organization, API, is bad about that. We spend hundreds of millions of dollars on marketing and stuff like that but the message basically is just discounted because it’s so big marketing, fake, not real type of thing. We need to change that.
James: One story that will help that in this vein is our next one, Will Railroads Survive the Coal and Oil Onslaught. This directly proves what we were just talking about in terms of our work making other people’s work possible.
Mark: This is an interesting article. What they’re basically saying is that the railroads make money by moving stuff. They’re basically like huge logistics mesh network in the US. They move stuff from one place to another. Because we’re reducing the amount of coal that we use the railroad’s losing that revenue from shipping coal from where coal is produced to the power plants because we’re switching to natural gas. That’s hurting the railroads. I’ve never even thought about that until I read this article that you found.
There are other things going on. With the increased number of pipelines less crude is being moved. Even from agriculture point of view. The oil and gas industry is in a slump but a lot of people realize that all commodities are, sugar, wheat, corn, copper, whatever. Once again, the railroad companies move that stuff around and make money. So there’s less of it being moved around because of low prices.
The railroad industry is not in a great place right now. Typically when you have that type of scenario that’s what starts the whole mergers and acquisitions things. Unfortunately for the railroad industry because of regulation and old school laws in place it’s a bit harder for them to do mergers and acquisitions. They talk about failed mergers of Canadian Pacific trying to pick up Norfolk. It’s going to be interesting to see what happens long term wise.
Now, I don’t think the railroad industry is going to disappear because it’s so darn cheap to move stuff on a train. It’s ridiculous. But I do think there are going to be some mergers and acquisitions and probably some new technologies. GE’s looking at natural gas-powered locomotives. Once again, how cool is that, using a cheap abundant natural gas which will reduce the cost for the railroad industry so they can continue to make money even in this lower price environment that they’re in.
James: Let’s go from talking about coal to talking about solar.
Mark: This is a good article.
James: Let me tee it up real quick. SunEdison filed for bankruptcy. SunEdison is another very subsidized and very champion company by a certain individual and administration. Go ahead, Mark.
Mark: Let’s back up a little bit before I get in this. A lot of people believe that the oil and gas industry has subsidies, and they believe that because politicians that don’t know Jack say that out loud so people just assume it’s true. It’s not true. We get tax breaks, the manufacturing side of oil and gas. It’s the same tax breaks like automobile manufactures. But we’re not subsidized at all. In fact we pay more than our fair share of taxes compared to other verticals.
However, the solar industry, in particular, in the US is subsidized. It’s heavily subsidized. The wind industry is as well but it’s not as heavily subsidized. In some states like our great state of Texas, there is no subsidy for wind. We’re the number one wind generator, folks, state of Texas, not California, not New York, Texas. We’re the number one wind generator because they do it out of profits, they make money at it which is how it’s supposed to work with the free market aside.[0:30:15]
SunEdison filed for bankruptcy because quite frankly their business model doesn’t work even though it was heavily subsidized. They should go out of business. I have nothing against solar. In the right place it makes total sense. I don’t want my tax dollars to go to prop up industry that can’t make it in the free market. That’s just a total waste of money. That’s what’s going on with SunEdison.
James: I want to unpack that point a little bit more. We talked about Alex Epstein being there at the Senate hearing about whatever. Go to the previous show and figure it out. That’s all they talked about was the “subsidies” for the oil and gas industry. Can you unpack what it means when you say the manufacturing side and it’s just like auto? Can you kind of just let us know a little bit more about that?
Mark: We’ll take somebody like Chevrolet. When Chevrolet builds a new plant and they have all the machines that build cars, welders and robots and whatever, they get to depreciate that over a period of time. They get a tax break on that because US government say, “You know what. We’ll help you. We’ll give you a tax break to build this plant because you employ people and you help the economy. That’s a good thing.” That’s how it should be done.
Oil and gas industry has the same exact depreciation for manufacturing. Companies like FMC, Cameron, GE Oil & Gas, Aker, blah-blah-blah, the companies that make stuff like oil and gas when they build their factory they get to depreciate that equipment but it’s the same rate as what other manufacturers do. It’s for the same reason. If somebody like Cameron opens up a new plant building trees or whatever, think of all the all people it hire which is good for the people and good for the economy.
This industry pays more than its fair share of taxes. If you want a look at who makes the most money in the US on oil and gas it’s the federal government. It’s Exxon. It’s not Shell. The federal government is the biggest moneymaker from oil and has and yet our current administration sometimes goes out of its way to try to hurt the industry that funds them which is just silly.
James: We’ve talked about this before. I’ve mentioned this particular statistic before. The government makes more money from Exxon Mobil’s operations than Exxon Mobil does.
Mark: Of course. I’ve get to hear a politician talk about that on either side.
James: We are so boxing like crazy this week. I love it. We’re going back to the Constitution pipeline. Only one Seeking Alpha story this week. Cabot Oil & Gas: Without Constitution Pipeline? What does it look like for them?
Mark: This is going to hurt their balance sheet. They were banking on this going through. They did everything. They crossed all the t’s, dotted all the i’s. They jumped through all the freaking hoops that the state of New York made them jump through. And then the state of New York made a political decision, no pipeline. This is going to hurt their balance sheet for a while.
They took a risk. They knew their risk. This one of the things that happens when you’re an oil and gas company is that sometimes, especially in the US and in Europe where you can’t always control politics, you may have a project that makes total sense, that is totally good for the environment, that helps your local populations with jobs and prosperity, everything, and then some politician just pulls the plug. You’re sitting there high and dry. That’s what happened to Cabot.
I feel for them. Quite honestly, I know that the price of energy will go up in New York because of this pipeline being not approved. Let them pay for it. It’s their choice.
James: I said analogy but it’s really more of a question. It has to do with the fact that the natural gas has to move somehow. They’re producing it. New York is still going to consume it. It’s going to get there by truck, by rail.
Mark: It’s going to get there by a more expensive method when that cost is passed on to the people of New York. This is their choice. Honestly, I’m really fine with this. I hate to see this happen for Cabot. Like we talked about earlier, I’m a big believer in states rights. If this is how New York’s population wants to run their state, I’m fine with that.
James: I’m fine with it too. I guess I wanted to make that point though that they’re still going to get the gas. It’s going to happen. It’s just not going to happen through a pipeline.
Mark: They could get it a more expensive method. There are existing pipelines that can’t increase their capacity. So what happens is the price starts going up. Once you’re a pipeline company and you’re maxed out on transport you just go up on your prices. Once again, those prices are passed on to the people of New York. It’s not the pipeline companies that are going to eat that cost. No way.[0:35:06]
James: We will continue to follow that story. We’ll see what electricity looks like in six or 12 months in New York. Talking about Cabot, I have to give a big shout. I’m good friends with Brittany Thomas, Coordinator of External Affairs over there. We like to talk hockey. She happens to be, unfortunately, a Pittsburgh Penguins fan. Her baby boy, Sidney Crosby, is about to be crashed by Alexandra Ovechkin in round two of the NHL Stanley Cup Playoffs 2016.
Anyway, George Stark and her do a great job for Cabot. They have a story here on natural gas now. Shale Gas a “Blessing” and “Will Come Back with Vengeance.”
Mark: I agree 100% with this. So you’re starting to see the price of natural gas go up. You’re starting to see gas come out of storage. What’s going to happen is eventually that oversupply will disappear and shale will come back with a vengeance. I absolutely agree with a bang.
Now, our gas prices in US are to stay low for the next several hundred years because we have so much natural gas here. We don’t know what to do with it. Right now people aren’t drilling gas wells. There are some very forward-looking companies out there that see price come back so they’re actually drilling wells right now trying to get ahead of the curve but most people aren’t drilling new gas wells. As soon as the price rebounds they’ll start drilling new gas wells.
Right now it’s famine. There are not enough people out there on the rigs. People aren’t working. The service companies are hurting. To feast where you have the exact opposite. You got people aren’t going to be able to get rigs because they’re all going to be utilized. The service companies aren’t going to be able to hire enough people. It’s coming.
James: It’s coming. One thing that needs to come to your balance sheet is efficiency. Look at that. I’m getting really good at this, Mark. INTECH is committed to driving efficiencies into your business. They have a white paper. I’m going to let Mark talk to you about it.
Mark: If you’re an operator out in the field anywhere, and you want to see how you can decrease your operating cost, go download this white paper. INTECHs are experts of this. They wrote this just for our audience. It talks about how they can help you with fuel automation in all kinds of ways, things you may not even thought about. How do you predict that maybe one of your mud pumps is going out? Think how much money you lose when that mud pump goes down. You got to get somebody to hotshot another one out there. You have no production for three, four, five days. INTECH can make sure that never happens.
A great company. A great resource. They provide to you free. They could sell you this. They’re giving it to our audience for free. Go download it. It’s a great read. I hope you reduce your cost out there in the field.
James: You can get that at intechwww.com/podcast. We’re going to talk about the LinkedIn group at the end but we have to give a big, a big, big, big, big shout out to — oh, my goodness. Am I losing his name? Really? It’s in the text message. It’s not in the Evernote, Mark. So I’m going to pull up the text that I sent you earlier because it is Jerry, I know that much. He works for Transocean. Oh, my goodness. I don’t want to cut and edit so I’m going to find it. Jerry Levine, Senior Project Engineer and Project Lead Mechanical at Transocean. He was our 1,000th LinkedIn member, Mark.
Mark: Awesome, dude. Thank you. Welcome to the family. Welcome to the Tribe.
James: We crossed 1,000. He asked us if we’ve ever thought about talking more about ROVs. We have touched on it in previous episodes. He found a particular story on The Maritime Executive from back in December. DNV Test Drones for Hull Surveys. We’re running short on time but as quickly as you can, give us an idea of what this whole segment of the industry is about.
Mark: You know what’s cool about that you don’t know? I actually have a press interview scheduled with DNV at OTC next week.
James: That’s awesome! With your press pass no less.
Mark: This is talking about how drones are used in the industry. The growth of drones used in this industry skyrocketed. It literally came from nowhere two years ago to it’s all over the place. When I say drone most people think of aircraft. Schlumberger has this whole robotic fish thing going on out there. There are drones that actually crawl in pipelines. They’re all over the place. What it is? It’s just a better, cheaper, less of a safety concern way of doing business.
This a great article about DNV, how they’re using drones to actually a survey hulls for ships and large boats and that sort of stuff. Great read. If you’re a drone manufacturer and you’re not looking at oil and gas, you’re crazy. You need to look at oil and gas because that market is growing like gangbusters.
James: Yeah. You probably need to talk to Mark. Thanks so much, Jerry, for the article. All of these articles and everything are in the show notes. This is episode 61 so it’s triberocket.com/tw61.[0:40:10]
Given all of our rants, maybe I’ll get a chuckle. I don’t know. This is the onion of the week by the way. Study Finds Controlled Washington, D.C. Wildfires Crucial for Restoring Healthy Political Environment.
Mark: I like the idea. I don’t think it’s funny.
James: I like the idea. We could use some controlled burns out there. We must move on because, as I said, we’re short on time. Oh, my goodness. OTC is coming up. I’m too excited. We have a winner for our Red Wing offshore bag that I’m getting compliments all over Houston for. Who is that?
Mark: Our winner is Sandra Mann, Instructor of Drilling Engineer at Australian School of Petroleum. Congratulations, Sandra. You’re going to love this bag. It’s an awesome bag.
James: How cool is that? She’s an instructor in Australia. How did we have listeners in Australia? It just blows my mind. It’s so cool. This medium and this technology is just amazing.
Mark: It’s also our industry too, James. Oil and gas industry is global. You and I both know we have listeners all over the world.
James: It’s still really cool to me. Just yesterday a guy reached out to me on LinkedIn. He’s from Massachusetts. He actually sell solar. He’s been interested in drilling for quite a while. I’m like “Gosh. This solar sales guy out in Massachusetts driving around doing sales calls listening to us.” It’s just really funny. Who wants to hear me talk anyway? Here’s the thing. Red Wing will be at OTC, right, Mark?
Mark: Yeah. Red Wing is going to have a booth there. If you’d like to meet the people behind these cool offshore bags — actually they had a global sales. Tito Warren will be there who’s a buddy of ours and a big fan of the show. I think, James, you’re actually going to do an interview at OTC with Tito, right?
James: That’s right. We’re going to doing a .5 episode interview with Red Wing. It’s going to be with Tito and Jim. I can’t remember his last name, so apologies to Jim already. We have everything lined up. It’s going to be really busy but very fun week.
Mark: If you’re a listener and you’d like to meet the people at Red Wing or James and I or just get together and say hi, let us know. We’ll be at OTC all week. Probably the best thing is to hit us up on Twitter. We would love to meet you in person.
James: If you want find us on Twitter I’m @JamesHahnII. Mark is @Mark_LaCour. It is properly capitalized because I thought him how to do that.
Mark: He did actually.
James: Event on Deck. We’ve talked plenty about OTC. Not everybody listens to the show as soon as it comes out. Maybe some people will not hear this until next week or three years from now. Who knows? What do they need to be prepared for tomorrow? Give us a weather update.
Mark: What we’re talking about now is a rig tour. It’s taking place tomorrow at 10: 00 AM. If you’ve never been to a rig or would like to see what a real offshore rig, come join us. Now, the weather is forecast to be horrible but we’re going on with the rig tour anyway. Darn it. We’re in the oil and gas industry. A little rain doesn’t hurt anybody. We have a huge covered space, 200,000 square feet. So if it rains we have a place where you can stay dry. As long as there’s not lightning the rig tour is going to go on. We take groups of 20. If you’re going you need to wear long pants, totally close shoes and no heels, ladies, no open-toe shoes.
James: No flip-flop, guys. Come on.
Mark: If you have your own hardhat and safety glasses, I’d appreciate it if you bring them. If not, we should have enough there to borrow and use. We are going to make a decision first thing tomorrow morning on whether we’re going to go forward with this. As long as it’s not dangerous we are going to go forward with it. Here’s your last chance to actually come to a rig tour. Saturday.
James: Saturday, April 30th. Anybody who’s hearing this today is going to know about this. If you hear about it next week, you might hear an update from us on possibly sunnier day one, Mark.
Mark: I don’t really want to spend too much time on this because we don’t know this. We may actually do a rig tour 2 on another date depending on what happens tomorrow. So it’s a possibility.
James: All right. We’ll just leave that open. If you’re hearing this today and you’re coming to the rig tour be prepared with your long pants and your closed-toe shoes and so forth. The next First Friday Q&A, Mark, might be our best and longest. We have a lot of questions but we still don’t have a voicemail.
Mark: Come on, people. Leave us a voicemail. It makes James happy. Make him edit it into the podcast. Somebody go to website and leave us a voicemail but ask a good question. Don’t just leave us a voicemail.[0:45:05]
James: Don’t just leave a voicemail. I’ve had that happen actually. I’ve never told you about it. You can go to triberocket.com anywhere, triberocket.com on a laptop or a desktop. It’s not on your mobile phone because it covers up half of the screen if it is. If you go on a desktop or a laptop you’ll see an orange button on the right, it says send voicemail. We’d love to hear from you. As we talked about, the LinkedIn group is blowing up. We’re at 1,012 as of this recording. How can people join and why should they?
Mark: You should join because it’s a companion to this podcast, to our career podcast, to our future podcast that you don’t know about yet. It’s sort of like the sister to the podcast. If you listen to podcast, go join the LinkedIn group. Why should you join it? Because it’s the most awesome LinkedIn group out there especially if you’re in the industry. We help. There are a lot of conversations going on. Our members are very active. If you need something, if you want to understand something — I just recently connected a reservoir engineer with one of our members who’s trying to figure out how you evaluate the reserves. Go join. It’ll take you about two minutes. You’ll be glad you did.
James: Triberocket.com/LinkedIn will take you straight there. If you’re searching for it on LinkedIn, it’s Global Oil and Gas Networks, because that is the name of the network that our next show and all future shows will go on, and we own that domain. So get excited.
Mark, wrapping things up, reviews. We had a record week for reviews. We got five. I’m going to go through these as quickly as I can because I want to be respectful of our listeners’ time. We have to go through them because they are fantastic.
J. Levine, April 22nd, five stars. Great podcast. Learn something new with each episode! Thank you, Mr. Levine.
Leeinnola. Helpful and Entertaining. Five stars. There is a lot of news and even more opinions about what is going on in this volatile oil and gas market. Each week, Mark LaCour and James Hahn II choose several articles on topics of significance and help us to disseminate the facts from the B.S. Mark LaCour is truly an expert in oil and gas, but what makes him unique is he has a very thorough and up-to-date understanding of upstream, midstream and downstream. Even the most seasoned and technically proficient in this field will learn something from him (and they will call him out when he is wrong, which he usually admits in the following week’s podcast).
Mark: Not usually.
James: I do love it. I love it. James Hahn II does not have the technical expertise of Mark LaCour, but if he did, the show would very likely be well over my head. Although he is silly at times, he asks the questions we all want to know but we are afraid to ask. Many thanks to Mark and James. That is an amazing review. Thank you for that. That’s just awesome.
Mark: And how much do you want to make a bet that Lee actually lives in New Orleans?
James: How did I miss that? High tech app for CrossFit is the name of the next person. Exactly what I’ve been looking for. Five stars. As a petroleum landman I receive eight to nine emails per day containing four to five articles a piece about the industry. These guys get to the point quick without wasting a lot of time on personal stories or poor attempts at humor like most other podcasts. Wow! So my poor attempts aren’t that poor. Their material is backed with facts, intuition, experience and very little speculation. I get a synopsis of several publications and can determine which articles I want to research further. Keep up the good work, guys. Thank you, high tech app for CrossFit. That’s an awesome name.
All right. Two more. Going quickly. VJtres. Highly recommended. I love these guys. Highly informative, yet laid back. Side note, sound quality and production quality is awesome too.
Mark: James works hard on that production quality. So thanks for pointing that out.
James: I was geeking out on that one. So five stars from there and five stars from Bruno CRC. Superb job, guys! In this downturn is important to be aware of every link of the industry chain. You help us with that. I’m an Argentinian geophysicist working for a Californian company. Keep on like this, guys! That’s amazing.
All right. We got to go. If you’ve made it this far in the show, please share it with your friends. You can do that by going to triberocket.com/shareli, that’ll share it straight to LinkedIn, /sharetw will share it straight to Twitter, and /sharefb will share it straight to Facebook. Let’s go, Mark.[0:50:07]
Mark: Do great work. Pay it forward. We will see you next time.
James: Go find some grease, guys.