Saudi Aramco IPO rumors are swirling, Texas keeps winning, and US crude hits European shores for the first time in 40 years.
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#046: Saudi Aramco IPO? Really??
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US Crude Oil Hits European Shores For The 1st Time In 40 Years
Russia’s Prospects for a Pipeline to Europe Look Bleak
Why a Saudi Aramco IPO Makes Absolutely No Sense for Saudi Arabia
Biggest budget deficit in the history of Saudi Arabia
Oil slump is hitting other sectors
WoodMac: US$380 billion of projects on hold
Texas Economy Continues to Grow Despite Oil Field Job Cuts
Oil refiners thrive amid rout in Brent crude market
As Oil Crashed, Renewables Attracted Record $329 Billion
How one CIO left behind a diversity legacy at oil giant BP
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#046 This Week in O&G | Saudi Aramco IPO? Really??
Transcripts Courtesy Of
James: I’m James Hahn II.
Mark: And I’m Mark LaCour.
James: You’re listening to This Week in Oil & Gas, the show for busy oil pros who want to quickly keep their finger on the pulse of the industry, Episode 46. I am fired up, because that means we are only six weeks away from our own-year anniversary. I don’t know what we’re going to do yet, Mark, but it’s going to be huge. It’s going to be huge.
I just said, Mark, as always, I’m joined by the renaissance man himself, Mr. Mark LaCour. How are you feeling today, Mark?
Mark: I’m feeling good. I’m not sure about my renaissance man, but good to be here. You know what? We need to do something special for our one-year show, because we’ve been through a lot.
We have a great audience that follows us. We need to do something special for our listeners. Don’t know what yet, but we’ll come up with something good.
James: Let’s have some people tweet us. Join the LinkedIn group. Let’s get a conversation going, and let’s come up with something. We’ve got to get a get-together going or – didn’t you say that you can barbeque? But it’s still kind of cold for that. Maybe brisket will come in the summer.
Mark: Yeah. For anybody that’s listening outside of Houston, when James says it’s cold here, it’s like 55 degrees.
James: It is freezing.
Mark: It’s something we’d call a spring day. In Houston, it’s cold.
James: Right. If this is your first time listening, thank you for tuning in. As I said at the top, I’m James Hahn II. I’m the founder and CEO of Tribe Rocket, Inc. We’re a media company that creates oil and gas stories that sell. You can find us at triberocket.com. Mark LaCour.
Mark: Hey. Mark with modalpoint.com. We are the oil and gas sales experts.
James: They are. I called you a renaissance man because you had me dying laughing yesterday. You do this once every three or four months where you just drop this random fact on me about yourself, and yesterday, I found out that you’re a certified massage therapist. I also found out you bake cakes, that you were married in a gym, and your DJ was Tiesto. What other things are hiding back there that our listeners might like to know about?
Mark: I’m not really sure. I’ve led a very good, very fun, interesting life. I’ve been exposed to a lot of stuff. What happens is I forget that I’ve done something or have experience, and then you’ll say something. I’ll go “Oh, by the way, did you know…”
Probably the mixed martial arts thing. Probably our audience would not –
James: Yeah. Talk about that, then, because you’re a trainer?
Mark: No, no, no. I’m not a trainer. I’ve been involved in martial arts since I was 17 years old. My passion is judo, which is real popular all over the world except here in the US.
When I did a bunch of work in Brazil in the 90s, I got exposed to Brazilian Jiu jistu. In the mid-90s, I was in Atlanta in this event. It was something I’d never heard of before. It was called ultimate fighting.
James: Yeah. UFC. Isn’t that Royce Gracie? Judo?
Mark: This is way before UFC.
Mark: I’m watching this, and I’m thinking “You know, I can do this.”
The next event that was in Atlanta, I entered. I entered in the 198 pound weight class. It was double. I worked my way up, and I won.
James: I’ve never heard this story. Was it an octagon? What did it look like?
Mark: It wasn’t an octagon back then. It was a boxing ring. Before any of the stuff was invented – this is back when the original Gracies were dominating. Not that Brazilian jiu-jitsu was a better martial art, but nobody knows how to fight on the ground. In fact, our audience may not know this. Mixed martial arts, it looks brutal. It’s a thinking man’s game. It’s very, very strategic.
What the Gracies did is brought everybody to the ground where they didn’t know how to fight. Of course, they dominated. They outfought everybody. In my case, this amateur event in Atlanta, Georgia, the boxer – a collegiate boxer – almost knocked me out. He hit me, and then I went black, but I didn’t knock out.
As I was falling, I grabbed him. Anybody out there that knows BJJ or judo knows that the worst thing you want to do is let somebody get their hands on you. I brought him to the ground, and I made him tap out, and I won.
I’ve been doing it since then. I’m 50 years old. I’m in the masters class which is the old people – 40 years old above.
James: The beer league for the hockey guys.
Mark: Yeah. I do a lot of NAGA events, which is North American Grappling Association. It’s sort of like MMA with no strikes, because quite honestly, it takes me too long to recover now. I kind of hate to walk into a client’s office with two black eyes, then I have to tell the whole story.
I have a passion for it. Been doing it for a long time. It’s one of those parts of me a lot of people wouldn’t suspect.
James: That’s awesome. I’m going to look up at least one of those old clips of Royce Gracie, because you’d watch him come in, and what did he weigh? Like 150 pounds, maybe 175? Maybe?
Mark: Probably 130-135.
James: Yeah. Seriously. He would take down guys – they didn’t have any weight classes back then or anything. It was just, what is this thing happening? He would just choke out some guy that was seven feet tall, 350 pounds.
Mark: Yeah. Here’s the history of Brazilian jiu-jitsu. It’s really cool.
Brazilian jiu-jitsu, the original judo was brought by Conde Maeda to Brazil. Royce Gracie got exposed to it. What Royce Gracie did that was genius is he took everything out of the judo based jiu-jitsu that he was taught except for the stuff that helps a little guy dominate a big guy. That’s all he left.
The other thing he did that was genius is he scored the tournaments in a way that would be advantageous in a real fight. As you got more points in a tournament, it also would be things that would give you an advantage in a real fight.
That’s what makes BJJ so unique. Like I said earlier, the mistakes everybody made in the beginning is they let the BJJ guys bring them to the ground. The BJJ guys were really strong. But somebody that’s a striker like the 300-pound guy you’re talking about, his weight gives him an advantage when you’re standing up. His weight actually hurts him when he’s on the ground.
Just like me. I have a pretty long reach, which means I can hit you, but you can’t hit me. But you bring me to the ground – all of a sudden, my reach doesn’t matter anymore.
Like I said, it’s a very strategic sport, even though it looks brutal.
James: Okay. Well, I forgot to mention at the top, we are brought to you by Red Wing. Now, I’m rethinking my plans of stealing the Red Wing helicopter offshore bag from your house, because I don’t want a broken arm. You’ll have me tapping out pretty quickly.
Let’s get back on track. We’re here to discuss oil and gas. It’s been another wild week in the oil field. Let’s dive right in with the daily caller. The headline reads “US crude oil hits European shores for the first time in 40 years”. Walk us through this, Mark.
Mark: This is great stuff. Here’s some crude from our backyard, right here in Texas. Switzerland just bought it. It just arrived on their shores. The reason I say it’s great is multifold.
The first reason it’s great is it means that our oil producers can now export the crude and sell it for more money. This is going to drive the price of crude back up.
The second reason it’s great is Europe has been dependent on Russia. Russia’s basically had a chokehold on Europe to supply their energy. Well, guess what, Russia? Now, we can supply it.
It’s great for the industry, great for the world. It’s even great for US gas prices. Gas prices are actually going to go down because our refineries no longer have to try to refine the sweet crude that they can’t really refine. They can just buy the heavier crude that their refiners are geared for. Then the operators can sell their sweet crude to global market, and everybody makes money. It’s good stuff.
James: My mistake for saying “In history” upfront, because obviously, we know it’s been since the Iran hostage crisis, right?
Mark: It’s been since Arab oil border which I think was 1974, ’75.
James: Got it. That all kind of came in around at the same time.
James: Was it just bureaucracy that kept it in place for so long?
Mark: It’s US politics. The people that wanted to keep in place would then say “Oh, if you lift it, the price of gasoline would go up for the US people.” No politician, regardless of what side you’re on, would want that on his record, on his watch. That hurts people’s economic commissions.
It was put in place during Arab oil embargo so that the US would not be so dependent on Middle East oil. It didn’t really work really well. Now that we have more oil and gas, we know what to do with it. It’s an antiquated law.
What was surprising to me is not only did it get sponsored, but it got voted on a pass by a bipartisan committee. Both democrats and republicans, which I think is really just awesome.
James: Do you remember the Arab oil embargo? Did you sit in lines in your parents’ car?
Mark: Yeah. I was a little kid then. I was about ten years old. But I remember it. It was so bad that dependent on your license plate, some cities in the US, you couldn’t get gas on certain days. It’s illegal. If you ended with an odd or even number, you could only get gas on Monday or Wednesdays.
It crippled the airline industry. You couldn’t fly anywhere. It hurt things like supermarkets, because over the road, trucks couldn’t get diesel fuel to bring produce around. It was horrible.
The reason that that happened was because once again it was politics. When the US propped up and stood up Israel, the Middle East didn’t like that. They decided to punish us by cutting off our energy supply. It really hurt the US.
James: Lot of geopolitics going in. I don’t want to go down that road too much, because we’re already ten minutes in almost. This is a great show we’ve got going so far. Dovetailing nicely with that, though, is a story from Stratfor. Russia’s prospects for a pipeline to Europe look bleak.
Mark: Yeah. Russia needs to get to its market with its product to sell it to make money. Their product is, of course, natural gas. Their market is Europe. The way they need to get that product to market is in a pipeline.
Now, unfortunately, because of what happened in Ukraine, Ukraine no longer will allow Russia to transport gas through to Ukraine which is the geographic route that makes the most sense.
There are several other pipeline projects in the works. Unfortunately, Russia has lost a lot of its ability to dictate both politics into buy stuff in that region of the world because of the sanctions that we’ve imposed that reduce the amount of money they’re making.
The bottom line is I don’t think any of these other pipeline alternatives ever get built, which then puts Russia in a very bad predicament as far as being able to bring its product to market. At the same time – and we just talked about this on the last report – at the same time, we’re now at the US starting to export stuff to Europe. We will reduce Russia’s chokehold on Europe. This is good for Europe. It’s not so good for Russia.
James: You just mentioned unfortunately what happened in Ukraine. Is it just a grudge thing? Can’t they charge them terminal fees or something like that and get some revenue off of that by letting Russia move through there? Or they just won’t do it on principle?
Mark: It’s not principle. Think about it. Russia attacked them. A lot of people don’t know this. The reason the Soviet Union fell is Ronald Raegan looked at the problem from the big picture and says “You know what? If we have a military action, maybe we’ll come out ahead, but it’ll be horrible for the planet. How do they fund their military growth?” It was through oil.
Raegan passed a bunch of laws that made the price of crude drop. It bankrupted the Soviet Union. It couldn’t spend money anymore. They literally went out of business, and the country fell. This is what Ukraine is trying to do to Russia.
Of course, Ukraine is so much smaller than Russia that they can’t bankrupt them. But if they can deny them that market, it hurts Russia. That’s what’s really going on.
James: Okay. Yeah. I was having trouble connecting the dots, but that makes perfect sense, then, if they’re their adversary, which I completely understand having watched – what was it? Winter on Fire? On Netflix. I put it in the show notes before. If you haven’t had a chance, go check it out.
Let’s move over to Saudi Arabia, specifically Saudi Aramco. Why a Saudi Aramco IPO makes absolutely no sense for Saudi Arabia? I didn’t even know there was talk about an IPO for Saudi Aramco.
Mark: Yeah. The rumor’s been flying for a while, and lately, it’s heated up a lot.
James: Catch me up.
Mark: This is a good article by Cyrus Sanati. There’s a lot of good facts here. I agree with this 100%. It makes no sense. I cannot see the royal family letting go of what has made them the royal family, kept them in power, and allowed them to buy $300,000 cars a year. It also gives them complete control over their population. There’s just no way they’re going to go public.
If Saudi Aramco went public, a lot of the corruption stuff would be exposed because it’s a public company now. That dries a lot of the commune there. Once again, I see no reason. The royal family makes so much money off of Saudi Aramco. Why would you go public with it?
I’m not sure why the IPO rumors are swirling now. I would not be surprised if Saudi Aramco looked at their business and took a piece of it and made that public, because that way, they get a whole bunch of cash at one time. They can keep control over 51% of the stock, let the rest go public, investors pop a lot of money into it. I could see that happening, but not all of Saudi Aramco. No way.
James: But when you’re talking about a monarch that has control like that, you and I have had offline discussions about having investors in your business, even if it’s only 5-10%, you still don’t have that monarchical, God-given control that you have over a population if you have no one else involved.
Is there any more to this story than…? For me, it sounds like something they just wouldn’t do.
Mark: Yeah. It is something they wouldn’t do. Not all of Saudi Aramco. I could see them taking a piece of it and going public, like I said, just to raise cash. But there’s no way they’re doing IPO for all of Saudi Aramco. It’s just not going to happen.
James: Speaking of Saudi Arabia, the biggest budget deficit in the history of Saudi Arabia’s being posted.
Mark: Yeah. We talked about this on past shows. Right now, because of low crude price which has nothing to do with Saudi Arabia trying to put American frackers out of business, Saudi Arabia is not making as much money. In fact, they’re having to dip into their savings account.
One of the things that goes on there that a lot of Americans and Europeans don’t understand is even though they have all this money – they have these huge social programs that cost a fortune – the social programs keep their people employed, especially their young people.
If they cancel the social programs and the young people are not employed, they’re at much higher risk to go extremist and then revolt against the monarchy. They know that. What they’re having to do is to keep these social programs running this year, dipping into their savings account.
This year, it looks like they’re almost at $100 billion deficit. That means they’ve spent $100 billion more than they actually brought in, and that difference is made up from their investment account. They can’t keep doing that forever, but they can keep doing it for a while.
August 2016, I think the price will be back at $60, and this won’t really matter that much anymore.
James: Well, now I’m just jealous, because when’s the last time we had $100 billion budget deficit? It’s been a while, but that’s why I threw it in there, because they had this specific number, and it was fascinating to me that this is their first budget deficit at $100 million.
You look at that ticker that they have in – what is it? Times Square or Wall Street or wherever – counting up the national debt, and $100 billion sounds pretty good right now.
One of the other things I wanted to talk about here is the fact that they say they strengthen the efficiency of non-oil revenue. What non-oil revenue could they have in Saudi Arabia?
James: Oh, okay. Is that it?
Mark: Yeah. They don’t have much of anything else. They have to import almost everything. They don’t manufacture anything other than crude oil. Now, of course, they manufacture crude oil better than anybody else in the world. Basically, all the have to do is pump a gallon of sea water in the ground, and a gallon of oil comes up. Their cost is the cheapest in the world. And there’s tourism, and that’s about it.
James: All right. We’re talking about budget deficits and slumps. I sent this to you last night, because I don’t want to come across on this show like we’re ostriches burying our heads in the sand, pretending like everything is okay, because we do talk so much about how there is so much more money to be had over here or over here.
Maybe just pause for a second with this one from khou.com. Houston, Texas oil slump is hitting other sectors.
Mark: Yeah. This is true. There’s a ripple effect as the upstream and the service industry slow down and stop, or even start going backwards. It affects other things. Think about if some guy gets laid off. He does pay for child care. He doesn’t go out to eat pizza as much.
There’s some good numbers in here. Basically, if you look at the oil and gas industry, in the last year, they’ve laid off around 200,000 people. Now, they’ve also hired about 90,000 people, so that net loss is about 110,000 jobs.
What’s interesting is because oil and gas employees are so high paid, the rippling effect is much bigger than anything else. For every oil and gas person that loses a job, it leads to 3.4 other jobs in some other sector being lost.
James: Wait. Back that up. One rig hand loses his job, one geologist loses their job – that’s equal to 3.4 in other sectors?
Mark: No, 3.4 other people will lose their job because that one guy got laid off.
James: Wow. Can you unpack that?
Mark: I’ll give you a prime example. Look at me. I have maids. I have a lawn man. I have interns. I have special teaching for my ten-year-old, special class he goes to. All that’s extra. That’s money that I don’t need to spend, but I do.
If I would lose my job, I would not be able to afford a maid, my lawn guy, the teachers for my child, any of that stuff. You can see how that would ripple through the economy.
James: One of the things that was interesting to me is toward the top of the article where they talk about the airlines losing money because executives aren’t flying around for meeting.
Mark: Yeah. That’s real big here in Houston. Houston as a whole, the population is going up because a lot of oil and gas companies are closing remote offices and bring the people back here. Houston economy’s actually doing well.
But when you look at the airline section here in Houston, they’re actually shuttling some flights, because not as many oil and gas executives are flying. That’s lost revenue.
James: Backing this up a little bit from the big picture view, I think – and this is me talking – my personal opinion on economics is that in economy, you have growth, and you have contraction, and that’s normal. I feel like if you have that sort of an understanding of just the way economies work, that you’re able to distance yourself more emotionally from these things and understand that this is just how it works.
It doesn’t matter what segment or sector you’re in, whether it’s oil and gas or, in my case, coming from Michigan, cars, and so forth, that you’re going to have time of growth and times of slowdown.
I feel like sometimes, we met get entitled to feeling like we should be working at one job or doing whatever. If we saw ourselves more as every employee saw themselves as an entrepreneur moving around wherever they need to go to get the money, then we wouldn’t have so much doom and gloom.
Mark: It’s part of the culture. We’ve talked about this before how if you grow up in upstream and you lose your job, you only look for jobs in upstream, whereas if you would back up and look at big picture, your same skill sets are in high demand in downstream, it would be easy to get a job there.
That’s changing. A lot of the millennials, we’ll see they’re coming into oil and gas, have that entrepreneurial mindset. I think it’s going to fundamentally change the culture of the oil and gas industry the next 20 years. I think it’s a good change.
James: Yeah. We have a couple entrepreneurs jumping on board with the team right now. Let’s take a moment to talk about that. James Gordy, we’ve welcomed him before. He’s produced the last couple shows, but he’s actually taking over to do the show notes as well so that every show gets published on time, Mark. What do you think about that?
Mark: Not only is that great because we have not been religious about getting things published on time, but he also is doing a really good job. Welcome, James. We’re glad to have you in as a producer. Welcome to the family.
James: Yeah. Then also Dave Weaver is joining us to be our editor. He’s going to be getting together all of the links and tweeting them out through the week through Tribe Rocket as well as my account. We’ll get back to that practice of basing the content of the show around what y’all are clicking on. I thought that was a really good way of doing it, because that’s just a leading indicator of what you want us to talk about, and what you want to hear about.
Mark: Yes. Dave, welcome to the family. You’re now our official editor. You are making sure everything we do is right and correct, and we have all the information, the research we need to give good information out to audience. Welcome aboard, Dave.
James: Definitely. Speaking of research, we’ve got Wood Mac. We’ve talked a lot about the amount of money that’s sitting on the side. We don’t need to go deep into that, but this did actually give a number to that conversation.
Wood Mac, US, 380 billion in projects on hold.
Mark: You actually talk about two different things. In the past, we talked about money on the side. That was investment money. That is billions of dollars. Waiting to pick up distressed companies for pennies on the dollar.
This is about projects that are getting pushed out. We’ve talked about this before. With the low crude price, expensive oil – oil sands and deep water and ultra deep water – aren’t viable. These projects won’t get cancelled, because the scope is so long. An ultra deep water project from first oil to deep commissioning may be 50 years. Because of that, a two-year blip, and the prices are really affected, but it’s going to push it out.
This is talking about how all these deep water projects around the world are getting pushed out. Now, the ramifications of that for some parts of our industry are severe. The subsea manufacturers, the guys that make the stuff that sits on the ocean floor either while they’re drilling like a blowout preventer or while they’re in production like a tree – all of their projects get pushed out.
Companies like Cameron, GE Oil and Gas, Acker, FMC Technologies – it hasn’t gotten bad for them. It’s getting ready to get really bad for them, because their revenue streams could shrink by 30-40%.
Unfortunately for them, because of what they do, because of the scope of these projects, Anadarko may need 30 trees for just one field in the Gulf of Mexico. Each one of those trees may be between $2-10 million each and take three years to build.
Because of what they do, when the price of crude comes back, there’ll be a delay that affects their business. There’s a lot of expensive projects being pushed because of low crude price.
James: Did this happen toward the end of 2015 where everyone was setting their budgets, and they said “Yeah, we’re not going to gamble on crude coming back. We’re going to push this out to 2017.” These are the type of decisions where they push them three, five longer years.
Mark: Yeah. The operators wish it was that easy. What happens is they have contractual agreements in place already with the drillship, with the subsea manufacturers, the lease, wherever it is in the world. They have to weigh “Okay, if we push this project back, will we be penalized contractually because we agreed to lease this drillship?
James: You having a party over there, Mark?
Mark: Yeah. It’s one of those things. That was my ten-year-old. Lord knows what he’s doing. Playing Minecraft. It’s one of those things where they have to weigh the potential fines versus the potential uptick in revenue down the road. It’s no one-size-fit-all. Every company does it a little bit different. Shell was probably one of the first ones to go out there and push out some deep water projects. Chevron, on the other hand, started buying deep water leases, because it’s using its cash as an advantage. It’s a project by project case.
James: Okay. Let’s talk about some good things. Texas economy continue to grow despite oil field job cuts from Breitbart.
Mark: That’s so funny. I was just talking to the guy at lunch about this, about how Texas runs its economics like a business better than any other state.
This is a good reflection of this. Our economy in Texas, the growth is slowing, but it’s still growing, which is a great thing. In here, they’re talking about how BP is announcing they cut 4,000 jobs. Well, it’s not really accurate. What’s really accurate is that BG’s cut 4,000 upstream jobs. They’re hiring like crazy downstream right now.
There’s a net effect that if you lose two jobs in upstream in Houston or Texas, then in downstream you pick up two jobs, it’s net. But this is an article showing how the upstream and the service company slowdown is affecting the economy of Texas.
Like I said, it’s not going backwards. We’re still growing. But our growth has slowed.
James: The nice thing also about Texas is I think there’s probably a lot of people that see Texas as a bit of a Saudi Arabia of America in that it’s all oil, but we have a very, very diverse economy in this state.
Mark: This is what I was telling the guy at lunch today, which is really cool. There’s this organization in the Texas government that’s a bunch of business leaders. They serve a tenured term, and their charter is to look out over the next 20 years to figure out economically what’s going to be big business in 20 years, and then figure out how to get that to Texas.
Anybody that lives here in Houston that’s into oil and gas, you go downtown, and you notice that all the oil and gas companies are on a street called Louisiana Avenue. There’s a historical reason. The reason is up until the 1970s and 80s, all those companies were headquartered in Louisiana.
But that committee that’s in the state government said “You know what? In the 1990s and 2000s, oil is going to be big business. Let’s see what we have to do to get the oil companies here.” They gave them tax incentives, and they all moved here except Chevron. Chevron stayed headquartered in San Ramon.
That same group about ten years ago looked out 20 years, which would be like 2025-2030, and said “You know what’s going to be big? Medical. Especially biomedical research.” They gave tax incentives to biomedical research companies.
Now, Texas, Houston is on its way to be the number one biomedical research headquarters in the world. Same Aerospace and Defense and NASA. We have some of the biggest deep water ports in the world. I’d go on and on, but it’s all down to the fact that Texas state government looks at its government as a business, not as a politician’s toehold for free stuff.
James: Lesson learned. You need to move to Texas or come here and figure out how we do it and go do it in your state.
James: Okay. We were going to talk EOG. I’m going to skip that, because I’m looking at the time. Let’s go downstream. Oil refiners thrive amid drought in Brent crude market. Not anything new to this show, but it did go with the last one, so let’s talk about it.
Mark: Yeah. Its downstream is on fire. It’s crazy. The amount of money they’re making is great. They’re hiring. They’re growing. Good, good stuff. Those margins that allow them to do that are going to stay that way for a very long time.
James: Can you talk about the margins? Because that was one of the things that I wanted to get you to unpack here, because you have talked about margins, growth, in the past, in downstream. Can you unpack that and what you mean and what it says here in this article?
Mark: Yeah. When I say “downstream“, a lot of people think “fuel”. Diesel, jet fuel, gasoline. Those margins are relatively slim, because it’s basically a commodity, although even the fuel margins in the US have risen, even though the price of fuels have gone down. That stays around 8-10%.
But exported products, refined products, plastics, ethanol, methanol, all that sort of stuff – some of those margins are between 30-40%. What’s cool, especially when we talk ethanol, is that we export that to the wealthy nations. China buys a ton of ethanol from us, and we manufacture a ton, and we’re manufacturing more.
The reason is we have the most robust, largest refining complex in the world, and we have access to the cheapest feed stock in the world right here in our backyard. We don’t have to ship it here. Those margins are driving a lot of downstream growth. It’s great stuff. That’s jobs, and that’s prosperity for Americans.
James: What are they talking about when they mention global carnage?
Mark: He’s talking about if the prices of crude stay around $30, how many companies would go out of business. He’s right, but it’s not going to stay around $30 for a long time.
James: Right. I didn’t throw it in there, but Harold Hahn was making a lot of headlines today on Bloomberg and other places. Pretty much everyone seems to be talking about 60-70. We’ll stick by that.
Mark: Where’d you hear that first? A year ago.
James: Some guy named Mark LaCour seems to come to mind. Roughly 40 some weeks ago by now.
As oil crashed, renewables attracted record 329 billion. What is going on here?
Mark: I don’t like this article. It’s written in a slant that’s biased, which is not usually like Bloomberg. Who wrote this? Who’s Jessica? We need to reach out to Jessica to see if she has a stock ownership in the renewables out there.
There’s a place here where they talk about the dirty oil and gas market polluting the planet, polluting the atmosphere. That’s not true. Why would you put that in here? We’ve actually helped clean up the atmosphere.
Renewables have had a surge for a couple reasons. When the democrats and the republicans worked together to lift the export ban and they wrote that law, the democrats wanted some concessions. The concessions the republicans gave into is the government subsidizing the renewals.
The republicans say “Okay. We will subsidize renewals. We’ll basically write a check for renewables for longer than we were before if you let us export crude.”
Well, this article, the number they’re talking about, part of that is the government money that we gave them – gave renewables – so that we could export crude. This is a biased article that I’m not used to seeing from Bloomberg.
James: Yeah. That’s what surprised me about it, too. That’s why I said “What’s going on here?” Because I don’t see that from Bloomberg, and here it is. Are they invading Bloomberg, even?
Mark: Don’t get me wrong. There’s nothing against renewables. The number one win state in the country is Texas, right? In the right geographic place, different types of renewables make perfect sense.
Wind and solar is free. It doesn’t pollute. Well, the energy is free, but how do you capture it? That’s very expensive. How do you store it? That’s extremely expensive. I could get a bucket and tore crude oil. You can’t do that with solar or wind.
The financials and the way it impacts the environment is very complex. Most people think it’s black and white, one way or the other. It’s just not true.
James: I want to get your quick take on this, because we have talked several times where modalpoint believes we have hit the bottom, but now we’re trading near 30.
Mark: I still believe we’ve hit the bottom. The low crude price now is a bunch of drivers and that, but what’s going to tip us over the edge is as we start exporting crude, and as India’s consumption goes up, as long as China’s doesn’t crash, the small glut that’s in the market which, depending on who you believe, is between 1-3%, is going to disappear third quarter of next year, and we’ll be back to $60 a barrel.
Now, we won’t ever hit $100 a barrel again unless something tragic happens in the Middle East. But I’ll tell you what: This Iraq-Iran thing that’s developing – if that blows off, we may go from $30 a barrel to $90 a barrel overnight.
The funny thing is I don’t want to see that happen, but a lot of my peers in the oil and gas industry, when I talk to them, they’re secretly hoping they go to war so the price of crude comes back.
James: Come on. Come on. We don’t want to lose children over –
Mark: No. No.
James: But that does remind me – I didn’t tell you this – I had a dream last night that crude was trading at $146.02 a barrel. I have no clue where that came from, but I had a dream about that last night.
Mark: There’s a lot of operators out there that wish your dream would come true.
James: All right. We’re going to close with how one CIO left behind a diversity legacy at oil giant BP.
Mark: You know what’s cool about this story? Oil and gas industry, up until recently, was a male-dominated industry. Just was. It’s the culture. IT leadership, especially CIO level, is a male-dominated role regardless of industry vertical.
Here’s a woman that crossed both boundaries. One of the CIOs for VP. She did a great job. She increased the number of women in the IT organizations dramatically. It’s a major transformation in BP to make things more efficient.
The legacy she’s leaving behind is somebody did a darn good job for darn good reasons and left an organization behind that’s running like clockwork. Hats off to her.
James: Yeah. Do you think we can get her on the show? I would love to hear how she went about that.
Mark: I don’t know Lynn, but I know a lot of people at BP. If you want me to try to do that, I’d be happy to reach out and see if we can get an interview with her.
James: Yeah. Let’s try and do that. Depending on whatever she can divulge, but there’s got to be some really great best practices in that story.
Mark: I bet she has a lot of stories about battles she had to fight, which ones she had to pick and choose internally, because she implemented change in a part of the oil and gas industry that doesn’t like change, in an industry that as a whole doesn’t like change.
James: Yeah. There’s got to be some pretty good war stories there we can get in a 0.5 episode.
Speaking of 0.5 episodes, we’re going to get to two 0.5 episodes in just a moment. For now, we have the Onion of the Week. Traffic already lining up to be late to LA Rams opening game. Not that funny, but does give me an opportunity to mention there is Lara M. Sasken. This is a hilarious story. I put this image together, and it’s in the show notes. I put it up on my Facebook page.
This woman, she hit the social media Powerball, because she owns the Twitter account for LA Rams, or in her case, Lara MS.
Mark: Yeah. Somebody’s going to make some money.
James: Doesn’t your wife have some initials that she could have –?
Mark: Yeah. My wife’s initials are MSN. If she would have grabbed that URL back in the 80s, she’d be worth a fortune right now.
James: Man. All right. We’ve got to get a time machine as well. All right. That’s all of our stories for now, for this week. We are moving on to talk about our winner, because we have another winner of the Red Wing offshore bag. That is Mr. Simon Cox. He is the managing director at Garrison Energy Advisers, an energy-related corporate advisory firm that focuses on acquisitions and divestitures in Calgary.
Mark: Congratulations, Simon.
James: Yeah. It’s just awesome that a managing director from Calgary is listening to the show. I took this down off their site, because it says “Our firm is leading the way in energy-focused acquisition and divestiture advice”, and now it says “With ever-changing market conditions, you need someone on your side who knows how to accomplish the unthinkable”.
He accomplished – well, it’s not unthinkable – but he won. We will get that out to you. Tell him what we won, Mark, because you have one of these things.
Mark: He won a Red Wing offshore bag. I keep calling it a helicopter bag, because that’s what I see and that’s what I think of. It fits perfectly in a helicopter rack space. This is a really cool, rugged bag. It’s labeled Red Wing, but it’s done very discreetly.
This is a great bag. If you work offshore, you will love this bag. If you don’t work offshore but you need a way to carry stuff in the back of your truck, this is perfect. If you work in an office, you’ll love this bag, because it’s a really cool way to bring stuff to that office. It doesn’t look like a conventional briefcase, but it fits into the office environment.
I have one. If you want one, James, what do they have to do?
James: They have to go to redwingshoes.com/podcast. I’m actually opening my calendar right now, because we have only three more weeks left in January. We’re giving one away a week. Thank you to everyone who has entered, because by entering this, you’re really helping to support us, because this is one of the ways we’re able to give this content away for free is through these sponsorships. Thank you, everyone, for your support.
Just so everyone knows, I have to throw this in here. No purchase necessary to enter or win. You can see the official rules again at redwingshoes.com/podcast.
I was doing some research on Red Wing last night. I watched one of their videos, one of their technical industry videos about how they put together their boots. Fun fact, Mark. Red Wing randomly audits their waterproof boots by flexing them 50,000 times in water-filled tanks.
Mark: That’s really good. That’s somebody that has an eye on quality. They pull random samples and flex them that many times to see if they’ll leak.
James: But the thing is, you have to see the video of the machine that they have built that does this. It’s hilarious in that “Wow, that’s how much they care”. It’s just awesome.
Congrats to Simon. I said we’re going to the 0.5 episodes. He’s from Calgary, Alberta, Canada. This is a perfect time for me to let everyone know we have two different 0.5 episodes coming with number one bestselling author of The LinkedIn Code, Melonie – I apologize, because I know you’re probably listening to this – Dodaro.
We’re going to record those on January 27th. We’re doing two shows: one for the Oil and Gas Career Show, and on that show, Melonie is going to talk about how do you use LinkedIn to get a job? Then on this show, This Week in Oil and Gas, she’s going to talk about how to use LinkedIn at the enterprise level to be successful on LinkedIn as an enterprise.
I’m freaking crazy excited about this, Mark.
Mark: What great free content we’re putting together for you, our listeners. This is stuff that’ll add value to your day, which makes us happy.
James: Yes. Perfect. Definitely looking forward to that. We have a couple events. We’ve got to go do a big finish here. BP Energy Outlook 2016, it’s a webinar. I remember it happening last year. It’s loaded with great information. Tell them about it, Mark.
Mark: This is BP’s researchers and scientists putting together reports for you. What’s going to happen in the energy world out the next 30 years. It’s a webinar, so go. If you can’t go, watch the recording. This is extremely valuable information if you’re in the oil and gas industry.
James: Yeah. We’ll have the link in the show notes. I don’t believe I’ve mentioned the show notes, so if this is your first time listening, you can always find the show notes at triberocket.com/ “TW insert episode number”. This one is triberocket.com/tw46.
If you just want to quickly get to other, older shows, then just triberocket.com/tw40, 35, and so on and so forth. I do it all the time, because it just makes my job easier.
Then we have the 8th Argus Americas Crude Summit happening January 20th through the 22nd. Talk to us about that.
Mark: It’s exactly what it is. It’s an American Crude Summit. Here’s an event built all around crude production here in the US. Argus is a great company. They do a lot of research. This is a good event. If you’re an upstream person or if you’re a service company that touches upstream, you should go to this.
James: Talk to us about touring a rig. I’m fired up.
Mark: I pulled off the impossible. I’m a member of API. I’m on the board of directors of the API Houston Chapter. About a year and a half ago, I stood up a young professionals’ group.
I have secured a real offshore rig tour for my young professionals. If you’re in Houston or you can get to Houston on the day –
James: You can get to Houston. Honestly. Get to Houston.
Mark: We haven’t set the date yet. The date will be on the Young Professionals website, but it’s going to sometime in February. We’re going to take the whole group for free and go bring them to an offshore semi-sub rig that’s in dry dock in Baytown, and they’re going to tour the entire rig.
Most people that work in oil and gas industry, even if they work on stuff for rigs, have never been on a rig. Nowadays, it’s almost impossible to get on between liability and security. I’ve done the impossible, and I’ve gotten permission for us to go.
If you’re in the industry and you want to see what a rig actually does and understand how it works, if you’re not in the industry and you want to tour a rig, or if you just like big mechanical things that engineers built, you need to come to this. It’s free.
The only way you can come, though, is you have to join the API Young Professionals. It costs all of $25 a year to join. You automatically get membership in the API Houston chapter, as well.
We’ll put links up in the show notes, but this is a once in a lifetime chance. I promise you not even I will be able to pull this off again. This is literally once in a lifetime.
James: Man, I can’t wait for this. You and I were talking about this at the end of 2015. I was setting out some goals, and this is one of my top goals was to get offshore, and boom, here it is, happening. I love it.
Mark: James and I are going. If you want to see us be wide-eyed and bushy-tailed – I haven’t been offshore in probably ten years. You can come out and meet us as well.
James: All right. We haven’t gotten any questions for the Q and A yet. That’s going to be coming up in a few weeks. Triberocket.com/qa. What kind of questions can they ask us, Mark?
Mark: Anything. If it’s something that the answer is proprietary or it’s X-rated, we won’t answer it, of course, but any question you have about oil and gas industry, about what’s going on.
James: No groupies on the QA page, okay?
Mark: Yeah. Ask us. The quality of our questions keep going up, which I think is really, really cool. Some of them are getting harder and harder to answer, which actually helps educate James and I. We benefit from this as well. Anything you want to know, James, in the show notes, will have a place where you can go. Preferably, you’ll leave a voicemail for James. You do that on his website. If we like the voicemail, we’ll play it on air.
James: Yeah. That would be perfect. Triberocket.com/qa will take you straight there. Even if you don’t go to the show notes, it’s pretty easy to remember.
We sold one more sponsorship spot, Mark.
Mark: Yeah, folks. We only have one spot left. If you want to get your product or service or company or blog or whatever in front of our oil and gas market, you better hurry and reach out to us. We just inked one more sponsorship, which means we have one remaining sponsorship for 2016.
You can reach out to James and I. We’re very open and transparent. If we don’t think we can help you, we’ll tell you. If we think we can help you, we will tell you that as well.
James: Yes. We’re all about setting real expectations and being able to really drive results. If those results that you’re looking for don’t match up with the kind of things that we’re doing on this show, we’re not going to twist your arm and try to make a sale, because that’s just a waste of everyone’s time.
Mark: We don’t want you.
James: Yeah. Exactly. All right. We have to talk about reviews, because we got a new one. If you would like to leave a review for the show, go to triberocket.com/twreviews. That will take you straight into the Apple iTunes Store. If you need to, you can create an account. Takes no time. Leaving a review takes no time. But it helps us out immensely in terms of getting found.
This is from – it’s just like me to not actually pronounce the name. I’m not sure. Everybody has different handles online.
“Five stars. Recently discovered this podcast. The only one out there to summarize weekly industry news in one show. Very informative. Easy listening. Generally enjoyable.” That’s you, Mark. “Keep going.”
I’m seeing this a lot form a lot of different people where they’re saying “Keep going. Keep at it. Keep going.” I don’t think people realize, we’re not even getting started yet.
Mark: Yeah. We’re not in this for the short haul, folks. We will keep going. Trust us. But thanks for the thumbs up. We appreciate that.
James: Yeah. We appreciate that. Just to back up what Mark said, when we started this show, I said “Yeah. Imagine where we’ll be in two years, three years.”
On that note, we are changing the name of the show. Why, Mark?
Mark: We’re changing the name of the show to help our search engine ranking so we can get in front of more people and help them as well.
James: But it’s not really a change, anyway. We’re just rearranging things a little bit. It’ll go from This Week in Oil and Gas to Oil and Gas This Week. Not too big of a change in general, but a little SEO tip for anybody, search engine optimization – if you want to rank for something, it’s always best to put the term at the beginning.
We’re always asking for reviews, because we’re battling against these people to get up in the search rankings for oil. Well, if we just shift a few words around, we’ll quickly get there.
That doesn’t mean we don’t need reviews, though, so triberocket.com/reviews. Tell them to join the LinkedIn group, Mark.
Mark: Yeah, folks. Let me back up to reviews. Please, please, please, please, please, take the minute and a half to leave us a review. It helps us in the search engine rankings so that more people like you can find us so we can help your peers.
We have a companion to the podcast. It’s our LinkedIn group. A lot of great information out there. In fact, I just answered somebody’s question before we jumped on the show. James helped people do copywriting. All your peers are there. I’ve seen salespeople trade contacts. It’s a very useful companion. If you’re in the oil and gas industry, go join. You’ll be glad you did.
James: Triberocket.com/linkedin will take you straight there. I think we hit everything. Thank you very much to Red Wing for your support. We love the partnership that we have going with y’all. Everyone in the organization has been fantastic to work with so far. We’re so excited for all the people that are receiving these awesome offshore bags. Thank you everyone for listening. Thank you again, Mark, for putting up with me this week. Are you ready to get out of here?
Mark: Yeah, folks. Do great work, pay it forward, and we’ll see you next time.
James: Go find some grease, guys.