Big Digital Energy

0:00 There, buddy, welcome to BDE, the mountain climb. Mark and I have spent the last 55 minutes trying to address the technological needs of the podcasting remote, and it's been an absolute shit show,

0:18 but because we're so dedicated to our audience, we said fuck it and did it anyway, so here we are. Still no Kirk. Yeah, and he's not responsive, so it's Wednesday night, what could it be? I

0:31 have no idea. Maybe we should send a patrol out to the men's club or wrecks or rubber

0:38 and a fine-glotropper he's trolling. I think golf influencer world is 247. I think so too, it's kind of sad. Is this like the moment we've realized we've been jilted?

0:53 Right before the holidays, always the best time. Yeah, right there for Thanksgiving All right, well let's go ahead and record this. jump in, hold on,

1:04 drum roll plays. We have a new Secretary of Energy nominee. Letting on a spark. I heard something about that. What was it, five days ago? Yeah, Chris Wright, who was apparently pretty heavily

1:22 promoted by Harold Hamm, who has also been, I think, the industry's highest profile and most impactful voice for pragmatism. If you've gone and read, he's the CEO of Liberty Energy, which is a

1:40 frontline OFS provider stimulation. I think I heard a stat the other day. Maybe it was from him describing on a podcast or an interview that Liberty is responsible for 20 of the wells in North

1:58 America that. for Stimulated, which is a pretty big number. And going forward, 100 of the wells in the Beadlew base in Australia. First saw Chris in his role several years ago. He came and did

2:12 one of our CEO luncheons and it was a bar side chat format with Maynard. And just remembered, or as Roger Clemens once famously said, maybe I misremembered, that he was an early pioneer with

2:27 mutual energy in the Barnett shale. So he's been all about and front and center in the revolution that started back in the late '90s with Mitchell and the Barnett. I'm just, you know, my first

2:41 reaction was given,

2:45 I would argue fairly idealistic, if not misinformed policy leadership, not only in this past or in the current administration, but in several administrations before, And as we've been talking

2:59 about the shifting policy landscape of the leadership, the need for more scientific, technical foundation in the leadership part of policymaking, and I think we couldn't have gotten a better

3:17 candidate or to appointee

3:19 the Secretary of Energy, Spot and Chris. I mean, you know, I was talking with Sheffield Brian this morning on, we did the

3:26 Ask Me Anything on Collide.

3:30 And one of the things Sheffield was saying, and I agree with him 100 as, hopefully he uses the Secretary of Energy role, and he should, 'cause he's really good at it, to follow up on what he was

3:44 saying, just to educate people. I mean, literally he'll have a high profile spot, Trump will point to him

3:53 all the time, and he'll be educating folks on this so we can get some more informed policy. decision because, you know, at the end of the day, there's nothing you can do about kind of a hardcore

4:04 environmental, but there is a wide swath in the middle that when you educate them on, hey, if you want renewables, you do have to build a power line here. Yeah. And I think one of the biggest

4:18 waves in the electorate was the young men who were the predominant constituent or listener to the long-form podcasts, and that in and of itself is an education if you've got the interest and

4:34 attention span to listen much more deeply about the nuanced aspects of not only who someone is, but how they think and what they think. And if anybody's been paying attention to what Chris has been

4:47 saying over the last over years and need a refresher, the 180 page bettering human lives, I think it was described as

4:60 the most fulsome

5:03 walk through all the issues that impact upon energy. Of course, immediately upon his announcement, the popular press is picking up the narrative. I think I read in three different mainstream

5:17 publications. He was described as either an oil boss or a fracking boss. So boss was, boss was one of the talking point words or headlines announcing his appointment or his nomination. So

5:34 if you look at his background, he's been an investor and is on the board of Oclo. Well, what has Oclo done with oil and gas here in the last little while? They are part of that memorandum of

5:47 understanding that we've talked about Diamondback for SMR development for off-grid oilfield power. Now that's way off on the horizon, but if you look more deeply in his background, quite a bit of

5:60 depth there in involvement and curiosity and interest in things like small modular reactors or nuclear in general. And then in his more distant past has had some involvement with solar. And the

6:13 points that I think that the clearest point is that and it gets lost in the noise or or spun inaccurately is that, you know, he immediately wears the label of climate denier when he said that, you

6:29 know, he does believe there's evidence of what's happened since 1850 has been a significant influence on the temperature trend that we've seen. But he also qualifies that and says, this is not the

6:45 most urgent priority for the world. And you know, what he, what he frames and discusses in bettering human lives is is really about more urgent issues in his mind and I think most of the developing

6:59 world would agree are issues like human health, pollution, clean water, et cetera. So catastrophic climate change or tipping point, climate change is pretty far down the list behind some

7:14 important priorities that are

7:18 about the human condition and human flourishing. Yeah, and you're never gonna get past that with certain people on the environmental side 'cause I mean, it's not about, at the end of the day,

7:33 it's not about climate change. It's about I need to be in charge of your money and control you. So, you know, we're not gonna get past that, but hopefully we can have a reasonable discussion

7:44 where we have trade-offs like, oh, by the way, your lifespan doubles once you start burning hydrocarbons instead of wood and dung in your house. That's

7:56 a good thing. Now, how do we measure that? possible climate change over the future and make those balances and make those trade offs. He'll be perfect in the role of kind of educator in chief and

8:09 hopefully folks will listen to him, read his book. And then hopefully that leads to people listening to Alex Epstein more, reading his book. I did a great, I released a podcast this morning on

8:23 Chuck Job with Scott Tinker Hopefully they'll listen to Scott Tinker so that we can truly start building at least what Scott calls the radical middle of a, you kind of got to play it down the middle

8:37 and make trade-offs on both sides to get the best outcome. 'Cause at the end of the day, and we've said this million times on BDE, it's if we let the next billion people come in here and they have

8:49 to suffer through energy poverty, wars get started that like And stuff over that's not gonna be good. And I'll tell you this too, just within America where we have a pretty high standard of living,

9:02 when we start jacking up gasoline prices, we start jacking up electricity prices, that's gonna cause some tension in the system. And even worse than that, if we start sacrificing our lead and AI,

9:18 because we put all these data centers in places that have more realistic energy policies, that's not gonna be good either Well, and that's what the President-elect has kind of pointed to as, you

9:29 know, making America dominant again in energy, didn't just say it well in gas and in energy. And I think that one of the key drivers of that is the strategic advantage or risk that we take if we

9:44 get, you know, if we go pragmatically to addressing taking that leadership position in AI, which is, as we've seen, heavily dependent upon new power generation coming online quickly in large

10:02 quantities. And so

10:05 let's stop doing things that seed more strength than market share. We saw it in LNG pause on the immediate heels of that. There were a couple of long-term agreement signed with buyers and sellers

10:22 who were not in the US, mostly in the Eastern Hemisphere and the Southern Hemisphere. And so the notion that we've got a singular solution, he has said explicitly, Chris has said explicitly,

10:39 there is no energy transition as framed or envisioned in an idealistic framework, which is really also, as he points out, addresses only 20 of the energy mix, which is electricity. of critical

10:54 dependencies on things like generating process heat, fuel density, or energy density for aviation, fuels, et cetera, that it just aren't going to go away because there are things on the horizon.

11:06 There aren't things on the horizon that can replace those just purely from a physics standpoint. And Chris with an MIT mechanical engineering career understands that as well as anyone who's ever been

11:18 in a policy making leadership role. Well, and you know, the other things Jeffy talked about this morning is we hear time and time again about Putin. Well, our allies need energy in Europe. And

11:32 they're not going to provide it themselves, right? They're going to wander off into La La Land with, you know, hopefully they come back, realize what nukes can do. It seems like the French have

11:45 at least done that. The Germans haven't done it yet. But they need energy And quite frankly, the energy that's going to be realistic like Putin offer the next five to 10 years is L and J.

11:59 And if we're not providing it, then that's the reason Putin can go march across

12:06 Europe. And so let's flip this. When it gets really cold, I don't care where the molecules come from. Yeah, totally. Before we flip this into the Department of the Interior, because it's very

12:19 related, I think people totally underappreciate it I watched an interview with Milton Friedman today, and you know what he wanted to do with the Secretary, add the Department of Energy? He

12:31 basically said, we can get rid of it, except to a degree that we need it for our military, therefore it'll be in the Department of Defense.

12:43 God bless him. All right, update us on the Department of the Interior pick and the head of the Energy National Council,

12:53 and gives them color, 'cause I don't think people realize how important the department of the interior is to the energy business. Well, and sometime misunderstood that DOE has essentially

13:04 jurisdiction over

13:07 a drill baby drill, for example, that's actually interior. It's permission to, or permits to drill on federal lands. BLM lands So, you know, the Department of Energy spends,

13:24 I think almost 50, I think the number 48 of it's 52 or so billion dollar budget on the seemingly obscure, at least to the layperson in thinking about what the Department of Energy does on things

13:42 like dealing with nuclear security It has purview over

13:51 the nation's nuclear weapon stock the nation's nuclear weapons stock. for example.

13:57 And so BLM is really the governor, no pun intended, with a former governor,

14:04 Burgum from North Dakota coming in to take over the leadership, not only of the Interior Department, but also this new Energy Council, which is multi-agency collaboration,

14:16 addressing some of the interagency misalignments because there's a need for

14:23 more

14:26 seamless alignment where there are permitting overlays or overlaps in terms of getting things done with different energy projects. My hope is, and I haven't seen it explicitly, that this Energy

14:40 Council on which both Doug Bergum and Chris Wright sit, Bergum has the chairmanship of the NEC. I'm hoping, and I'm on a little bit of an evangelical rant about the NRC and really breaking down the

14:56 inertia. They are not a trivial problem to try and solve because it is hugely complicated, highly emotional, highly political. But with this momentum, this bipartisan momentum, I think to the

15:11 extent that

15:13 we can have some trade-offs that get the agencies working in concert to actually implement this build out in nuclear, which I think everyone, at least in business, and if you're a residential rate

15:27 payer, would certainly like to have more surety and reliability in your base load, then we need this interagency coordination aspect

15:40 to get on the same page, speak the same language. Yeah, 'cause I've always been the libertarian and much more a state's rights. guy and I forget which of the founding fathers said it, I think it

15:55 was probably Madison or it could have been Hamilton that basically the, and I forget which federalist paper it was in. But basically they said something to the effect of the federal government's

16:08 powers are limited and stated and the state's powers are vast and unstated, meaning we're going to leave everything to the states and so I've always been more that way politically. But when we start

16:24 talking about grids

16:27 and crossing states and EPA and lawsuits and all that, we may need the hammer of the federal government and to get some sort of basic framework in place because it's not going to happen in its

16:44 current configuration.

16:50 like Chris is, Bergum actually, I believe, has his professional background. At least I think I know where he made most of his money, which is in software. But he ran the state that is the third

17:04 largest oil producer in the country behind Texas and New Mexico. He was also a proponent of this fairly controversial CO2 sequestration line that was a multi-state transmission line going from the

17:20 Corn Belt states to a sequestration site in North Dakota. And part of the effort to get that done was gonna require some pretty painful, eminent domain

17:32 in the pipeline right away. And so that he has not had a favorable view of some, what I would call more progressive actions and plans relative to things like carbon capture. I think if you look at

17:50 his background, there's gonna be quite a bit of balance. Don't judge that kind of oil boss book by its cover, right? So I think it's a

18:01 good mix of much broader and deeper perspectives across the energy spectrum that will be working together on this energy council above the silos of their respective agencies. And that's a good thing.

18:16 And I think you bring up probably the highest priority problem that they've got to solve is, is greater resilience and stability. And because it is such a multi-state animal in almost every

18:29 situation except for maybe Aracott and Texas, that it's a pretty important thing to get right or get a lot better at doing. As we've seen time and again, the incidents where we've got fragility pop

18:44 up in the grid and we have a Band-Aid solution or a. you know, conservation notices or rolling brownouts and blackouts. And when you've got this kind of wave of power demand coming at you, that's

19:00 all something on the order of, I think it was in a key bank research report last week.

19:08 Something on the order of

19:10 250 terawatt hours need to be added between now and 2030. And that was kind of a conservative case. You know, think about power demand growing on the order of 5 when it, you know, the preceding

19:23 two decades, it's been flat, essentially flat. It's a new world. And if you've got a grid that's in

19:33 pretty decrepit or shaky state, then that

19:39 poses some potential to have some friction. Well, you know, we've talked about this on BDE, but it bears repeating is there is a lot of technology out there that can be used to bolster the grid.

19:54 If you had somebody with a scientific mindset that was leading the charge and as opposed to kind of these bureaucratic utility types that just wanna maintain their the pushing folks some had you if,

20:09 job

20:11 envelope on this, I think there's a lot to

20:15 do and maybe more cost effective than we imagine So it'd be interesting if Musk would turn his attention to it for a little bit 'cause I mean, arguably the greatest scientists we've had since

20:31 Einstein, right? Well, he did find a workaround with XAI and Memphis to get 100 megawatts online that he couldn't get from the utility. And that's, we've talked about that before, installing the

20:47 temporary, the mobile gas generation.

20:52 EPA non-attainment zone in Shelby County, Tennessee, which is starting to see some local noise about

21:03 air quality and some issues related to those pollutants that fall under the non-attainment zone and the EPA rules. Whatever, it's never not stonking Memphis when I've been there So I do think and to

21:20 bring up a familiar name, we both spent a lot of time reading. Denver was very timely this morning with a piece out called Irreconcilable Differences, which really points out that

21:35 there's kind of an inevitability that's growing here or that it's pointing increasingly to off-grid and it's pointing increasingly to not guess standing in the breach here between now and whatever.

21:51 the whatever is nuclear that a decade away in terms of the, just the execution on that. So back to the energy council, what does that mean? If it removes some of the regulatory inertia and the

22:05 permitting inertia around that to facilitate in parallel those off-grid solutions at scale, I think that's a good thing as well because those things take pressure off the grid. The downside to that

22:17 as Dumberg pointed out is, for example, gas turbines, the big, most sophisticated ones, one of their sources said that backlog for new equipment is three to four years.

22:31 And so the other aspect is competing for those supply chain resources for off-grid solutions then puts pressure on the utilities and on-grid providers for those same services and materials So you got

22:49 a pretty tight supply chain.

22:52 in some critical components. So if you've got a pretty hard-charging group of players in the off-grid solutions, they're buying everything they can get their hands on. I've coined an acronym today,

23:07 just thinking about it. NPY, which is need power yesterday. And that's,

23:14 I think, is the building pressure here for

23:19 what we're facing in terms of satisfying this demand. If you can't build it, you can't power it. Yeah, as well as you potentially have the fear of Trump tariffs coming, and I've heard that's put

23:31 a lot of buying pressure just all across the supply chain of everything, so yeah, potentially an issue there. All right,

23:43 so yeah, this will be interesting to watch I think it should be a lot. It'll be more chaotic, but hopefully a lot. better than what we've seen the last four years. Turning our attention out of

23:57 the world was COP, just a big old COP 29. Was it just a big flame out? I didn't hear anything about it. We, just the first I think we brought it up on BDE. It just, is it a big nothing burger?

24:13 Well, we talked about it a little bit last week and this was mainly in the context of who's not there. And US leadership is not there. It's probably not something that Joe Biden wanted to do. He's

24:28 done it or has been down at the G20 in Brazil, but there's a lot of political frontline leadership that's missing from this COP 29. And this week,

24:42 the second week, the last week of COP is more focused on the finance aspect of COVID-19. The eroded down, what's it called?

24:59 the collective quantifiable goal, which is the old 100 billion a year commitment from the signatory developing countries, which is falling short. And the strident voices are at COP, who are the

25:20 loudest or saying that really needs to be wrapped up to over a trillion a year And as you can imagine, there's been less enthusiasm expressed by those who are either there and certainly those who

25:35 elected for whatever reason not to attend. I will get it from a US. perspective. We're 36 trillion in debt. I think I saw just a foreign aid fact on Steve Ballmer's USAPaxorg a

25:53 few weeks ago, just looking at government spending.

25:58 Our largest foreign aid has been since World War II to

26:06 Israel, and I think to the tune of cumulative over that entire 80 year period has been something under over 350 billion dollars. And if we put a trillion dollar kind of annual obligation out there

26:20 for the world or the developed world or this collective quantified goal, that I think proportionally rests pretty heavily on the US. And, you know, we're trying to fund a lot of things in a lot of

26:35 places.

26:37 And so I think just the juxtaposition of timing, the intersection of Trump's when, some pretty blunt comments about intentions vis-a-vis Paris and even cop. The next four years are going to be

26:54 interesting There is a apparently a. an affirmation of last year's much ballyhood goals from COP 28 of, you know, tripling renewables, transitioning out of fossil fuels that has to be reaffirmed

27:10 before COP 30, which is in Brazil.

27:14 It sounds like that is running out

27:19 of steam and it's really the reality of

27:24 the seeming unwillingness to really step up and commit to kind of 10x the funding that the collective couldn't, you know, couldn't seem to meet under the old framework. And on the receiving end,

27:41 on the receiving end, there's pushback in that there's a desire to make this more of a grant model, which, you know, essentially turns into something that's non-recourse,

27:57 and as we've said. As we've seen the accounting around some of

28:02 the climate spending around the world, I think there was a recent incident where41 billion went missing.

28:10 We need to get that straight first, but I just think that - How many foreign leaders live at the Waldorf Astoria in New York City? I mean, so - Is it more than I can count on one hand? It's a lot,

28:24 you know So, yeah, just a lot of you and money seems to make its way to the Waldorf Astoria on a fairly regular basis, so - Yeah.

28:41 I mean, it's a pretty big moment. You know, we'll see if we can get things done with a new agenda that is very pro-energy.

28:48 You know, politically, there's going to be, I think every trick in the book is going to be tried by the opposition, that's just the way the game is played.

29:01 But it's going to be an interesting transition of the term, at least, and I think if we can keep the momentum legislatively in the courts and in the agencies, I think we've got a pretty good shot

29:14 at making a pretty big difference in the next four years with the players that have been named so far, they're going to be leading

29:24 energy policy And kind of the last thing I'll say on this is I listened to JD. Vance talk on Rogan. Vance actually has a pretty good handle on the energy business in terms of just, yeah, he's

29:42 talking it through, gone wins and I think burger. No idea why we're still messing with wind, solar, there's some promise there, certainly some applications for it and so I think Kim having a seat

29:56 at the table's not gonna hurt anything either. Yeah, and Rogan, you know, in his part has been, has not been

30:05 certainly not just been blindly aligned with

30:10 pro-traditional energy, pro-possil fuels. In fact, I would characterize just my interpretation of listening to him over the last couple of years at least, is that he's still a bit Californianized

30:23 when it comes to thinking about climate and the things that he's heard, but he'll talk to people and learn along the way. And it seems to me that his point of view has shifted a little bit based

30:38 upon just thoughtful exploration, and actually of what this is all about. And that's a good thing. I think giving people voice outside of the soundbite or the structured interview, to the extent

30:54 that that takes root

30:57 Um, it's, it's a great unfiltered way to see what somebody's about, see if they're full of it or don't know what they're talking about, which I think is really important in a, certainly a

31:07 technical subject matter area, like energy. Yeah. No, I, I agree wholeheartedly. All right. It's 927. We've done everything we can for, uh, for,

31:26 for a BD, I'm ready to go to sleep. I'm an old man. Well, this was, uh, this was worth the effort And it was fun, it was fun watching you, uh, turn the knobs, trying to get the, uh, trying

31:33 to get the audio right. This is a platform with which, at least I don't have much familiarity, but, um, thank you for accommodating a remote show. Yeah. Oh, all good. The, uh, you know,

31:47 it's going to be, uh, it's going to be Max's, uh, ear pods that have some setting on them that was the whole problem tonight So I apologize. Before we go, one,

32:01 is there an archive

32:06 of Sheffield's AMA? Yes, Sheffield, give us a teaser highlight. What was the - A

32:12 lot of good life lessons, talk us through what

32:19 you do to start an EMP company, this and that, and so I thought Brian was good on that front We kind of went deep on talking about the haters and just everybody that says daddy handed him a company

32:31 which, you know, nothing further from the truth and he addressed that

32:38 and talked through it. And then, you know, there were some silly questions too. Do you like golf or tennis better if you're doing business development, DP? So it's

32:51 a good hour and definitely, you know, good to hear from one of the leaders in our industry. The answer to the haters too, can be found in that car video that he did talking about drilling his

33:01 first well. Yeah, well, in the video he did, talking about Ted Collin's schooling him, you know? That was the, you know, one of the things I'm beginning to appreciate, the great MA guys are

33:15 actually the folks that start off doing lots of small land deals. You know, you buy a lease here, you don't have title, so you lost your money and stuff. You learn your lessons quick and you get

33:28 a lot of reps from that, so, yep. All right, go to bed and give Max

33:35 a zero-pods back. All righty, good to see if you enjoyed this week's show. Send it to a friend, drop with some comments, but be kind, it's late at night, and we'll see you next week.