C.O.B. Tuesday

Today we were thrilled to welcome back our good friend Corby Robertson, Chairman of the Carbon Neutral Coalition (CNC). Corby’s extensive career includes over 40 years of global investment and operations in energy and natural resources and as a proud Texan, he is focused on what the state looks like in the decades to come. The CNC’s mission is for the state of Texas to be carbon neutral by 2050 and the organization is focused on the necessary education and regulatory changes to achieve their goal. As always, it was our pleasure to host Corby.   To help frame the discussion, Corby provides a detailed walkthrough of the organization, why the organization is focused on CCUS and their other objectives, and the importance of how the liability and regulatory aspects of CCUS are managed. We also hit on the organization’s management team and their community of advisory board members, the audience the organization is able to reach with social media, and studies that various universities are conducting on economic impact, as well as the incentive bills that could help us implement CNC’s proposals. Corby was last on COBT on March 26th, 2021, and so we also touch on the momentum CNC has created in the past two years, the bills they are currently supporting including the franchise tax credit, property tax credit and liability bills, the upcoming legislative session, and we wrap with Corby’s vision for a more vibrant Texas in ten years. It is fantastic to see the progress the CNC has made and we’re excited to watch and support their efforts in the years to come.   Mike Bradley kicked off the show flagging a few key items including the upcoming FOMC meeting (March 22nd), implications of rising rates and what markets are expecting (consensus = 25bp hike). He highlighted that high inflation, the FED aggressively hiking rates and recent banking instability all have roots in governments globally outspending. He rounded out the segment by noting that global crude oil price weakness has less to do with current supply/demand fundamentals and more to do with a global risk off trade, and that equity investors, though modestly more concerned with 2H’23 global demand, are even more concerned with global upstream underspend, which will support higher “normalized” commodity prices. Jeff Tillery touched on recession concerns and historical context of energy demand.   Thanks again to Corby for a fantastic discussion and thanks to you all for your support and friendship. 

Today we were delighted to host Jarand Rystad, CEO of Rystad Energy. Jarand founded Rystad Energy in 2004 following a long tenure with McKinsey & Company to build an independent research and consulting company rooted in granular data. Rystad Energy tracks all energy sources, from production to consumption, to provide detailed analysis. We had a wonderful visit!   Our discussion explored a range of topics starting with Jarand’s background and inspiration for creating Rystad Energy, the company’s growth in scale and depth of analysis, the data and analytics the company tracks, Jarand’s day-to-day involvement, and the importance of adding energy transition supply chain capacity in the US and Europe. We also touch on the concept of energy transition vs. diversification, Jarand’s view on how new technologies and the free market will outcompete oil and gas, the role of nuclear, future supply and demand for electrification, Rystad Energy’s data on new energy materials, and more. We ended with Jarand’s view for the energy world ten years from now and walked away with a great appreciation for the work Jarand and Rystad Energy are doing.   To kick off the show, Mike Bradley presented a market update from the past week, including a closer look at the historic three-day decline (100bps) in 2yr US Government bond yields and why that’s changing the Federal Reserve’s previous hiking campaign of higher, faster, and longer to one that most market participants believe will be shifting to lower, slower, and shorter. He noted that the recent Silicon Valley Bank seizure had enormous implications for venture capital funding and that it would likely lead to less, higher cost and more stringent funding for Tech and New Energy startups. He wrapped up by reviewing recent events, including ConocoPhillips’ Alaskan Willow project approval, Aramco’s large boost in future capex spending, and a handful of key themes coming out of last week’s CERA Conference. Arjun Murti chimed in and emphasized the importance of understanding risk and finance controls within a company and what are inherently less sexy aspects of running an organization. He also flagged that all companies should be considering how international climate policy and regulations might impact them, even if those policies seem distant in location or time.   This week marks three years of COBT and we are thankful for all of your support along the way. Thank you to Jarand for being a fantastic guest to mark the occasion! 

Today we had the pleasure of hosting Georges Tijbosch, CEO of MiQ in our office for a special edition COBT. Georges and his team are in town for CERAWeek and have made exciting announcements during the conference. MiQ is an independent non-profit organization that set up a framework to certify natural gas graded on methane leak levels. They are largely funded by philanthropic efforts and are committed to addressing methane issues in this decade, a mission we appreciate. Jeff Tillery, Mike Bradley and I greatly enjoyed visiting with Georges.   To help guide today’s discussion, Georges first provided background on the organization including the formation of the group, their technical process for evaluating emissions, how attitudes around methane emissions have changed in the past few years, and the organization’s interaction with the energy industry. In the past year, they have increased to certifying ~20% of US gas production. We also discuss the organization’s future plans, the advantage of being an independent group, the typical methane escape associated with natural gas production, Georges’ vision for ten years from now, the organization’s interactions with the investment community, and natural gas as a long-term solution for Europe. Earlier this week, MiQ announced that BP has certified 100% of its U.S. onshore upstream operations with MiQ. It was an exciting time to meet with Georges!    The conversation with Georges was far ranging and incredibly stimulating. For those of you like us who strongly believe in natural gas as an answer, Georges will have you thinking about not just how good an answer it can be but also about what can be the problems. You will also hear that so many of those problems are “low hanging fruit” and can be fixed and fixed soon. We are so glad Georges came by the office to visit during this busy CERA season.     We look forward to staying connected with the team at MiQ and watching their progress in the years to come. Thanks to you all! 

It’s CERAWeek in Houston and we are excited to share another interesting global perspective on energy. Today we had the opportunity to visit with Dr. Lars Schernikau, economist, entrepreneur, commodity trader, and Co-Author of “The Unpopular Truth about Electricity and the Future of Energy.” He is also the author of "Economics of the International Coal Trade." Lars joined from Geneva and has twenty years of experience in commodities, particularly both basic energy and energy transition commodities / raw materials / minerals / etc. As you will hear, he’s incredibly passionate about energy, energy economies, and energy and environmental policy. We covered a fascinating and broad range of topics.   Our discussion spanned Lars’ vantage point from his experience as a commodities trader and exposure to the entire energy supply chain, coal markets and their importance to electricity, coal market development over the next five to ten years, and the inevitability of its appeal in Asia as affordable and reliable energy. Lars also shares fascinating data on global wind and solar irradiance, capacity issues that technology cannot fix, recent acknowledgement of looming Germany power capacity issues, challenges with long-range forecasting, the pressure on banking systems, and a few concepts Lars covers in The Unpopular Truth including full cost of electricity. We wrap with Lars’ perspective on nuclear and what Lars thinks the energy world will look like in ten years. Lars was a fantastic guest and we greatly enjoyed our conversation.   To kick off the show, Mike Bradley covered a market update from the past week, including a closer look at what’s happened in the last five days, and compared key themes from this year’s CERA conference to 2022. Jeff Tillery continued the CERA discussion with his highlights.   Thanks to you all. We hope you enjoy!

Today’s COBT episode is focused on Norway and in particular, the country’s technology, climate tech, and broader energy landscape. What most of us don’t realize about Norway is the country is the 7th largest natural gas producer in the world, is the single biggest supplier of natural gas to Europe, gets 90 percent of its own power from hydro, and is a major source of energy innovation. We have three excellent guests to help guide the discussion including Karl Liapunov, Head of Energy at Startuplab, along with Arild Selvig, CEO of ZEG Power and Jørgen Festervol, CEO of Heimdall Power. Startuplab is Norway’s largest incubator and the country’s most active early-stage investor and both ZEG Power and Heimdall Power are graduates of Startuplab! It was our pleasure to host the group and we were excited to dig in.   Karl first provides context on Norway and background on Startuplab’s program, which receives 600 applications a year and provides a network of founders, mentors, investors, industry experts and corporate partners to help companies succeed. Karl also shares key highlights from Startuplab’s recent report, “Energy Transition & Climate Tech in Norway." We then turn to Arild and ZEG Power, which is focused on providing clean hydrogen with a uniquely simplified carbon capture process. Jørgen shares background on Heimdall Power and the company’s fascinating grid technology. With a good understanding of each company’s features and role in the Norwegian and potentially global energy landscape, we discuss the themes and types of companies Startuplab sees in the Norwegian energy market, where Hydrogen will be most valuable, the potential FERC requirement for dynamic line monitoring, Heimdall’s new Houston office, and more. We end the discussion with Karl, Arild, and Jørgen’s advice to early-stage companies and each had fantastic advice. We can’t thank them enough for joining!   Mike Bradley kicked off the show by flagging that the rise in US bond yields continues to be a headwind for US equity markets and will probably continue to be a headwind until the March 22nd FOMC meeting. He highlighted WTI crude oil price has been stuck in a relatively tight trading band (~$72-$82/bbl.) over the last 3-4 months and that energy companies are getting comfortable with that trading band and potentially a higher trading band for 2H’23. He also flagged the sharp rebound in an oversold natural gas market due to a late winter blast but also that S/D fundamentals are still out of balance. He wrapped by referencing the cross-border merger deal between Baytex Energy (Canadian-based) and Ranger Oil (Eagleford-based), and the possibility of an acceleration in 2023 E&P M&A. Todd Scruggs, Veriten’s senior partner focused on investments, rounded out the Veriten team for today’s session.   A big thank you to our friends in Norway for sharing their time and expertise and thanks to you all for your support and friendship! 

We are excited to share with you this COBT Special Edition featuring our good friend Jigar Shah, Director of the US Department of Energy Loan Programs Office (LPO). The LPO is the largest private debt fund in the energy space with more than $400 billion available for innovative clean energy projects. As you will hear, Jigar and his team of 250 professionals at the LPO have immensely valuable insights as to what’s really happening with early-stage companies and technologies across the energy spectrum. Jeff Tillery, Brett Rampal and I had the opportunity to visit with Jigar ahead of CERAWeek for a check-in and for a preview of DOE’s plans for the event. It is amazing how much has transpired since our last COBT discussion about six months ago.   In our conversation, we touched on the LPO’s progress since Jigar joined, the 126 applications that have been processed seeking almost $120 billion in funds, Jigar’s assessment that the US is in a deployment-forward position, how the LPO manages risk, harnessing the information that the LPO office receives, which new energy sectors are reaching a tipping point, and the Nuclear, Hydrogen, and Long Duration Energy Storage reports that the office is rolling out during CERAWeek. We also discuss how EPC contract availability is impacting emerging energy projects, the difference between “industrial policy” and “industrial strategy,” the IRA, remedying fragile supply chains, the CHIPS and Science Act’s influence on loans and development, Fortune 500 companies and their role in the energy transition, and more. We greatly enjoyed talking with Jigar and have loved getting to know him over the last year. We hope you enjoy this Special Edition conversation as much as we did!   As we wrap up, we also wanted to share with you some developments with our team. Our longtime friend and partner Colin Fenton has decided to pursue new opportunities in his career and we are certainly sorry to see him move on. His thoughtfulness and creativity will be missed and we wish him massive success in his future endeavors.    All the best to Colin and to all of you as well! 

Today we had the pleasure of hosting John Dowd, CEO of GoGreen Investments, in our offices. John has spent the past 30 years investing in and analyzing energy, most recently at Fidelity, and in 2021 raised over $275 million to create GoGreen Investments. A few months ago, GoGreen announced they were taking Lifezone Metals public, creating the first nickel resource listed on NYSE. We were thrilled to visit with John for a minerals and mining focused discussion. Our conversation spanned several elements of the energy transition. We touch on John’s story and how and why he chose to focus on minerals, the GoGreen team, their nickel sulfide project in Tanzania, the geopolitics involved in mining, the massive amount of investment needed across the full energy spectrum, and the effects of the IRA on sourcing minerals around the world. We also discuss John’s observations on the energy transition from starting almost two years ago to today, investor attitudes and structural features of spacs, the technology involved in mining, electric vehicles overall, the auto companies and supply chains, lessons learned from oil and gas investing, political risks from Tanzania to Massachusetts, what Wall Street has right and perhaps wrong on energy investing today, and many more topics made possible by John’s thoughtfulness and his deep energy experience. We ended the session with John’s optimistic view for the energy world ten years from now. Mike Bradley kicked off the show by flagging that the substantial move higher in Treasury yields (10 year - nearing 4%) was “taking the wind out” of the stock market. He also highlighted the continued plunge in US natural gas price with both prompt and the 12-month natural gas strip trading at/near two-year lows. He noted that with the current 12-month natural gas strip below $3.00/MMBtu that it would result in multiple natural gas rig drop announcements by E&Ps over the coming weeks/months. He ended the conversation by signaling that this week would be a very heavy week of Q4 energy reporting, and one dominated by E&Ps. Todd Scruggs also joined the crew for today’s discussion. As always, thanks to you all for your support and friendship!

It was our honor today to welcome back our good friend Dr. Dan Yergin, Vice Chairman of S&P Global and Chairman of CERAWeek. As you all undoubtedly know, Dan is the Pulitzer Prize winning author of “The Prize,” the more recent author of “The New Map,” and is a highly esteemed and revered voice in the energy space. His achievements and contributions to the industry are immense and we were so thankful to have an hour of his time to discuss the state of the energy world.    We have spoken with Dan on COBT on two previous occasions. The episodes, although they took place in recent years, seem like they were eons ago. On May 5th, 2020 we visited with Dan during the initial depths of the COVID crisis. And just last year, we visited with Dan just days before the Russian invasion of Ukraine. It’s stunning to think back on how different both of those worlds are from today.   As you will hear in today’s episode, the range of topics covered was extensive. The items and issues included the US SPR levels, the North / South divide on the energy transition, the challenges of expanding minerals supply, the IRA, the strong push governments are giving the energy transition, the talk and the mood at Davos, Dan’s perspective on European governments and their palpable return to reality on energy security, the different perspectives that will be showcased at CERA on the energy transition, and the US and China relationship. We also discussed Dan’s recent study on the future of copper, Dan’s view on natural gas and its long-term role, the automotive companies and their plans to go electric, how to plan in an energy boardroom with all this uncertainty, and observations on this year’s CERAWeek conference. No surprise... it was a fantastic, thought-provoking discussion!   Mike Bradley kicked off the show flagging a few key items including the Valentine's Day above expectations January CPI print, potential for decreased natural gas activity, and OPEC's 2023 supply / demand forecast in the face of a wobbly economy. He then framed us up for the discussion with Dan by looking at how WTI, Brent, natural gas prices, gasoline and a few other items have moved since Dan's last COBT appearance on February 22nd, 2022.  Jeff Tillery also joined and peppered in his thoughts to the discussion.   As always, it was our pleasure to visit with Dan and we greatly look forward to CERAWeek. We hope you enjoy the discussion as much as we did! Our best to you all.

This week we had the pleasure of co-hosting a panel and live town hall style discussion with our good friends from Vinson & Elkins featuring the recent work of the Houston Energy Transition Initiative (or “HETI”). It was exciting to bring the community together and have a live, studio audience to discuss the opportunities and challenges for Houston to serve as the capital of the energy transition. We had the honor of hosting Bobby Tudor, my former partner, CEO of Artemis Energy Partners, and previous Chair of the Greater Houston Partnership (GHP), Jane Stricker, Executive Director of HETI and Sarah Morgan, Co-Head of M&A and Capital Markets at Vinson & Elkins. While it was a Houston-focused discussion, the conversation more broadly focused on the role of classic energy producers and industrial users in the changes to come, and most certainly the things every energy and industrial community can focus on in preparing for the energy future.    The catalyst to our discussion was a report that the Greater Houston Partnership released late last year, “Perspective on The Energy Transition Capital of The World: Houston’s Opportunity to Win by Catalyzing Capital Formation” (the report is linked here). Bobby laid the groundwork for our discussion with background on the GHP and the formation of HETI, and from there we touched on Houston’s ecosystem around the energy transition, the concentration of energy capital in the city and the financial community’s critical involvement going forward, getting solid and interlocking contracts completed and how that will help get more money to work, and working with non-traditional financing structures to facilitate new technologies. We also discussed the role for Houston’s traditional oil and gas companies, noting that the biggest investment dollars on energy transition have been coming from the incumbent energy industry, HETI’s partnerships with local and state universities and the focus on developing talent and the workforce broadly, the thorny permitting process and how “primacy” will be critical for maintaining a competitive advantage and simply getting things done, and more. Bobby summed it up well by saying “we are the laboratory for the energy transition” given the unique combination of Houston’s infrastructure, it's industrial base, it's local energy and related companies, it’s engineering talent and overall workforce, its pro-business attitude, physical location, and nearby geology for CCUS.  At some level, this episode was all about what Houston looks like in 10 years. And forgive us for saying so, but what Houston does and how it adapts will be pivotal to how the nation as a whole and certainly the oil and gas industry adapts. We can’t thank the team enough for a great discussion!   Thank you again to our friends at Vinson & Elkins for co-hosting and to the great crowd who turned out and asked some excellent questions. We hope you enjoy this Special Edition COBT! 

We had a fantastic session today with Kendall Dilling, President of Pathways Alliance. Based in Calgary, Alberta, Pathways Alliance was formed by Canada’s six largest oil sands producers (who account for 95% of oil sands production) to achieve net-zero greenhouse gas emissions from their operations by 2050. To do so, they have created a “doable, credible net-zero plan” and are working with federal and provincial governments to meet their target. Kendall has over 20 years of technical and environmental experience in the energy industry and it was our pleasure to visit with him and learn about the great work at Pathways Alliance.   To help guide today’s discussion, Kendall shared a presentation covering the vision that drives the Pathway Alliance. In the walkthrough with Kendall, we discuss long range oil supply and demand forecasts, the six companies involved and their mission, Pathways Alliance’s three-stage solution to net-zero, the major CCUS system and transportation line from oil sands in northern Alberta to a storage hub near Cold  Lake, additional major projects including electrification, examples of additional technologies that could be developed and deployed to reduce emissions past 2030, and a comparison of ESG oil scores across the globe showing why cleaner Canadian and US oil should be the preferred barrels globally. It was a fantastic overview that spurred many questions and comments from the team. We wrapped with where Kendall sees Canadian energy ten years from now.   To start the show, Mike Bradley reviewed energy equity and commodity performance from the past week, flagging sideways trading in crude oil, modestly improving Brent time spreads and US natural gas continuing its slide lower. He then focused on major oil companies with many reporting earnings this last week and offered up several reasons why EU Oil Majors are outperforming US Oil Majors this year. He wrapped by emphasizing Canadian energy’s influence on the US and how it will become even more important as US shale production plateaus. Arjun Murti, part of Veriten’s Advisory Board, also joined today’s show and shared his arguments for why Canadian oil should be praised for being profitable, abundant, affordable, reliable, and as clean as anywhere in the world.  We look forward to staying connected with the team at Pathways Alliance and watching their progress in the months and years to come. Thanks to you all!