Sean McGarvey, President of NABTU, discusses union's role in construction industry, skilled labor future, differences between union and non-union bids, IRA legislation impact, prevailing wages, energy workforce challenges, and evolving discussions on large nuclear power projects.

Today we were delighted to welcome back George Bilicic for an engaging discussion on the current power and energy landscape. George serves as Vice Chairman and Global Head of Power, Energy and Infrastructure at Lazard. In his long and distinguished career, George has over 20 years of experience at Lazard in the investment banking business with previous senior roles at Cravath, Merrill Lynch, KKR, and Sempra Energy. We last hosted George on COBT on May 2, 2023 (episode linked here) and were excited to get him back to discuss how the world has changed in the past year, especially in power. Jeff Tillery, Mike Bradley and I were thrilled to visit with George in our office in Houston. The discussion with George today began with hitting the high points of Lazard’s recently released 2024 Levelized Cost of Energy+ (LCOE+) report (linked here). George kicked us off by providing background on the report’s history and shares this year’s key conclusions including the stabilization of renewable costs, the importance of using all forms of energy, the cost and scaling benefits associated with energy storage, and the current status of the hydrogen market. We explore the report’s comparison of generation costs, the effect of the IRA on renewable energy costs, cost of capital impacts, storage economics, and challenges and opportunities in valuing nuclear energy assets. George goes on to share his perspective on key changes from last year’s LCOE+ report to this year’s, factors driving power demand, challenges in investing in gas infrastructure, the need for new infrastructure and permitting reform, consolidation in the power industry, the need for diverse generation resources and a more organized/systemic planning approach to incorporate them into reliable grids, and the necessity for more transmission infrastructure. We also discuss how tech companies’ decisions on where to locate data centers and their energy sources can significantly impact local economies and tax revenues, global energy trends and attitudes, public investor sentiment, the influence of market dynamics on capital allocation and investment strategies, and much more. We greatly appreciate George stopping by and sharing his time and perspectives. With George’s help, we also recently had the opportunity to host Peter Orszag, CEO of Lazard, this past March (episode linked here). Our episode with George marks the final COBT episode recorded in our offices at the Ion. We are excited to move down the street to our new home in the Upper Kirby District. Stay tuned for our first COBT episode from the new studio! Have a wonderful 4th of July!

Today we had the very exciting and interesting opportunity to visit with Russell Hagen, Senior Vice President and Chief Development Officer of Weyerhaeuser. Russell is responsible for Weyerhaeuser’s real estate, energy and natural resources businesses. Prior to his appointment as Chief Development Officer, Russell served as Chief Financial Officer from 2016 – 2021. Weyerhaeuser is the largest private owner of timberlands in North America, with 10.5 million acres in the US and 14 million acres licensed in Canada. In addition to timber products, Weyerhaeuser’s businesses include recreation, real estate, land and minerals, wood products, and climate solutions, including renewable energy development, forest carbon and CCS, and carbon credits. We were thrilled to visit with Russell. In our discussion, Russell shares background on the history and scale of Weyerhaeuser and their business segments, Weyerhaeuser’s sustainable forestry practices, the company’s natural climate solutions business unit and ambitious growth targets for the business (aiming to grow the unit’s EBITDA to $100 million by 2025), and the current state and pricing of voluntary carbon credits. We discuss Weyerhaeuser’s strategy for maintaining high quality and credible carbon projects, the company’s partnership with Carbon Direct, Weyerhaeuser’s approach to acquisitions and the return profile for timber investments, forest management and sustainability, Russell’s approach to strategic development as a former CFO, the natural climate solutions market, and solar and carbon capture projects. We explore factors in determining good locations for forest carbon projects, balancing carbon projects with timber operations, growing recognition and demand for nature-based solutions, particularly among tech companies, technological innovations including the potential for innovations in bioengineering and alternative fuels derived from wood fiber, and the potential for significant innovation and capital investment in both nature-based and technological solutions for carbon management in the future. It was our pleasure to host Russell and we greatly enjoyed the discussion. Mike Bradley kicked us off by highlighting that over the last 7-8 trading days, the 10-year bond yield has been stuck in a narrow trading range of ~4.25%. There could be some fireworks in the bond market on Friday when the all-important PCE Deflator report drops. WTI price rallied another $3/bbl this past week and pushed WTI price to ~$81/bbl. Global oil demand, rather than supply, seems to be the biggest catalyst to break WTI price out of its recent trading band of $70-$90/bbl. He noted natural gas price has pulled back to ~$2.75/M despite a hot weather outlook and that lower-48 dry gas production has rebounded from a recent trough below 99bcfpd back up to over 101bcfpd, which could prove problematic in reducing the huge current gas storage surplus. Broader markets continue posting new highs as they follow the direction of AI/Tech equities. Broader equities seem to be running on fumes/losing trading momentum as broader market indices (S&P 500 & Nasdaq) still remain technically overbought. Energy was by far the best-performing S&P sector this past week (+4%). He noted YTD performance of Timber Companies, S&P Timber REITs, S&P Materials Sector and REITs Index and rounded out the conversation by highlighting performance (YTD, 1yr, 2yr & 3yr) in EU Carbon Permits. Todd Scruggs flagged the recent bankruptcy of Zachry and subsequent layoffs, highlighting the scale and complexity of industrial projects and the inflationary forces involved (Zachry press release linked here). Thanks again to Russell for joining us and a special thank you to the whole Weyerhaeuser team for their help with making this episode possible. Our b

Today we had the honor of hosting Reginald DesRoches, President of Rice University, in Veriten’s offices at the Ion. Reggie assumed the role of President in July 2022, after previously serving as Rice’s Provost and the Dean of the Engineering School. Additionally, Reggie serves as a professor of civil and environmental engineering, and as a professor of mechanical engineering. Before his tenure at Rice, Reggie was Chair of the School of Civil and Environmental Engineering at Georgia Tech in Atlanta. Rice University is an essential part of Houston’s community and is home to 8,600 plus students and more than 900 faculty members. As we discuss, Rice Management Company is responsible for developing the Ion District in partnership with the City of Houston, where Veriten first started in January 2022. We were thrilled to visit with Reggie and hear his perspectives on the world, energy, the Ion, and the current educational landscape. In our conversation, we explore how AI will change the educational landscape and future career prospects for the next class of students starting at Rice, changes in demand for top areas of study, the vital role energy plays in economic development and healthcare, student attitudes towards energy, and the importance of exposing students to real-world energy access challenges in developing countries or rural areas. Reggie shares Rice’s efforts to increase study abroad participation to 50% to broaden student perspectives, the current generation’s eagerness to address global issues and make a difference, Rice’s University-Industry partnerships including Woodside and the Texas Medical Center, the role of industry in providing practical constraints and scalability considerations to university research, and the surge in industry interest Rice received following the Woodside partnership announcement (linked here). We discuss Rice’s goals for the Ion District and the potential for Houston to grow into a leading technology and innovation center, Houston’s unique advantages, Rice’s strategic plan for the next ten years, the balance between STEM and non-STEM disciplines at Rice, navigating research funding, planning for new facilities, the competitive landscape for hiring new faculty, and the importance of having global representation on campus. We ask Reggie for his perspective on the evolving role of university presidents, and as you’ll hear, the job is anything but easy. The Economist article Reggie references is linked here. We covered a great deal of territory and can’t thank Reggie enough for joining us today. Mike Bradley kicked off the show by highlighting that the 10-year bond yield is hovering at ~4.25%. He noted this week’s economic calendar isn’t overly robust. WTI price has rallied ~$4/bbl over the last 4-5 days, trading back above $81/bbl and surpassing its 50/100/200-day moving averages. Whether you’re looking at 3mo, 6mo, 12mo or 24mo timeframe, WTI price has been relatively rangebound over those respective timeframes averaging ~$80/bbl and with crude oil volatility trading at multi-year lows. Broader equities continue to be driven by the recent drop in bond yields and a continuation of the strong AI/Tech rally. Broader equity market breadth continues to be extremely narrow, with the top six AI/Tech stocks (APPL, MSFT, NVDA, GOOG, AMZN & META) seeing their combined market-cap increase by $5T over the last year, pushing their combined market-cap to ~33% of the S&P 500. Jeff Tillery expanded on Mike’s thoughts on volatility, adding that the focus on commodity volatility will likely expand. We hope you enjoy the conversation as much as we did! Thank you again to Reggie for stopping by. Go Owls!

Today we were thrilled to welcome back Dr. Francisco Monaldi, Director of the Latin America Energy Program, along with his colleague Dr. Tony Payan, Director of the Center for the U.S. and Mexico, with Rice University’s Baker Institute. Francisco last joined us on COBT in December 2022 (episode linked here) and is an expert on Latin American energy, policy, and economics. In addition to his role at the Baker Institute, Tony is a Professor of Social Sciences at the Universidad Autónoma de Ciudad Juárez and his research focuses primarily on border studies and US-Mexico relations. It was our pleasure to visit with Francisco and Tony for a Mexico and Latin America energy and geopolitics focused discussion. In our conversation, we examine President Claudia Sheinbaum’s recent election, her background as a climate scientist and former Mayor of Mexico City, concerns about her independence and potential influence from former President Andres Manual Lopez Obrador (AMLO), violence in the recent election, implications for democracy and governance, regional perspectives on Mexico’s political trajectory, and the potential future direction of Mexico’s energy policies under President Sheinbaum. Francisco and Tony share their perspectives on Mexico’s decline in energy production, Mexico as a huge consumer of US (especially Texas) natural gas, the broader implications of nearshoring for US-Mexico relations, renewable energy and climate policy, and the importance of future energy policies for economic stability. We discuss Mexico’s economic challenges, broader Latin American trends, the potential impact of President AMLO’s policies if they persist for another decade, upcoming changes to the US-Mexico-Canada Agreement, the role of US diplomacy and political leverage in shaping Mexico’s policies, the need for a comprehensive framework addressing trade, immigration, and crime, and much more. It was an enlightening discussion and we are thankful to Francisco and Tony for sharing their insights with us all. Mike Bradley kicked us off by highlighting that this week is crucial for bonds, with the June CPI and FOMC Rate Decision on Wednesday potentially confirming or dispelling speculation about a 2024 Fed rate cut. On the crude oil front, WTI has rallied back to ~78/bbl after last week’s overselling post-OPEC meeting due to production cut confusion/uneasiness. OPEC’s June Monthly Oil Report (linked here) showed unchanged global oil demand estimates for 2024 and 2025, while the IEA’s global oil demand estimates (~1.0mmbpd below OPEC’s) will be released Wednesday. The 12-month natural gas strip has rallied to ~$3.50/MMBtu (highest since Nov ’23) driven by extreme heat forecasted through the month of June which might begin to influence current sizable E&P production curtailments. In Europe, several equity markets sold off, and EU bond yields spiked, notably in France, due to heightened political risk from the EU Parliamentary vote. Conservatives fared better than expected and Green Parties lost significant seats in Belgium, France, Germany and Italy, which could put future climate goals/policies at risk. He ended by noting US equity money flows, usually directed towards Emerging/International markets for diversification, are either stagnant or reduced due to the S&P 500 and Nasdaq’s outperformance driven by AI and Tech equities. Jeff Tillery noted there has been significant news about the Mexican stock market’s performance with Mexico and Brazil underperforming over the past one and three years, influenced by factors such as border issues, higher interest rates, post-election impacts, and cartel problems, but that Mexico’s reshoring trend suggests potential gains. We hope you find the discussion as insightful and interesting as

We are sending out this Special Edition COBT at 6:30 AM CT. We are doing so because 80 years ago today, at 6:30 AM at Omaha Beach in Normandy, American troops (at an average age of 22) landed as part of the largest amphibious assaults in all of history. Over 4,000 Allied troops died this day 80 years ago as part of the effort to free Europe from the Nazis. To help us fully grasp the gravity of D-Day, we invited acclaimed author and historian Alex Kershaw to join us on COBT. Alex is the author of over a dozen World War II books, and in particular, the author of “The First Wave: The D-Day Warriors Who Led the Way to Victory in World War II.” Jeff, Mike and I all read the book and felt so lucky to have Alex join us for this unique COBT. One thing that’s quite special about our discussion with Alex is that he actually made a presentation, with slides, that we encourage you to watch. On each page, he shares the personal stories of key heroes from the British, Canadian, French and American forces whose heroics often turned the tide of battle at key moments. If you are able to watch this episode instead of listening, you will likely find it worth it. Of the four million Americans who served in WWII, approximately 100,000 remain. The sad truth is they won’t be with us much longer. Toward the end of our discussion, we ask Alex what he has learned from all his research and writings. He shares his thoughts in a most poignant and direct way. You should hear his remarks for yourself, but the essence of the message is to not give up the fight for freedom and democracy EVER. There will be many ceremonies today, as there should be. Today was one of America’s greatest moments, planned and executed hand in hand with our greatest allies. Dwight Eisenhower’s D-Day speech to soldiers from June 6, 1944 is also quite remarkable to listen to. You can find it linked here. All our best to you on this hallowed and historical day. God bless the soldiers who died on this day. God bless you, and God bless America.

Today we had the pleasure of hosting Lynn Calder, CEO of INEOS Automotive, for an engaging discussion on vehicles, decarbonization, and the future of transportation. As you may have heard, INEOS Automotive has just launched a new vehicle called the Grenadier. Lynn is a fellow energy enthusiast and brings a fascinating background, having previously served at Lime Rock Partners and Talisman before joining INEOS and leading their Shale (CEO), Phenol (Commercial Director), and Composites (CEO) businesses. Lynn was appointed as CEO of INEOS Automotive in December 2022 and has taken on the challenge of building a new automotive company from the ground up. We were delighted to visit with Lynn and greatly appreciated hearing her unique perspectives about the automotive industry and so many of the energy and regulatory issues it touches. One overarching topic that we’ve noticed, and that emerged in our discussion with Lynn, is how interesting large private companies are and their unique approach to decision-making. INEOS is a great example as a global chemical company with 36 diverse businesses including Hydrogen, Aromatics, Energy, Trading & Shipping, Hygienics, and Solvents among others. As you’ll hear in the discussion, Lynn feels she can make decisions quickly and that her team has the freedom to think outside of the box. As we are all car people at heart, we were already fascinated by the challenges of starting a car company but the more we talked to her, the more we thought that what Lynn and INEOS Automotive are doing is a microcosm for what’s going on in the world. She had to work with 45 different governments to get approved for sale, is exposed to all the dialogue around EVs, EV adoption, hybrids, and automotive tariffs, as well as where governments want to take the world vs. where consumers want to go. Lynn also makes interesting comments about being an industrial company in Europe right now, the decisions that are being made in Europe, and how they could affect industry at large. In our discussion we also explore INEOS Automotive’s vehicle lineup and what makes the Grenadier unique, their sales model and market strategy across the US, Europe, Africa and Asia, supplier relationships, plans for future growth, government policies and attitudes, potential shifts in powertrain strategies in the future, and the advantage of INEOS as an energy and chemical producer. Lynn shares her perspective on Europe’s competitiveness in global markets, China’s advancements in EV technology and its impact on trade regulations and EV adoption, the role of entrepreneurship in driving economic growth and much more. It was a fantastic discussion and we are excited to follow up with Lynn as INEOS Automotive continues to grow. Mike Bradley kicked us off by highlighting that over the last week or so, markets seem to be taking on a different tone, one of economic stagnation/slowdown. He noted the 10-year bond yield has recently sunk to ~4.3%, mostly due to a handful of weaker-than-expected economic reports, including today’s JOLTS Job Opening report, which are refueling speculation the FED will cut interest rates this year. Over the last five trading days, WTI price has plunged to ~$73/bbl and broken through “key” technical trading support levels. This week’s plunge in crude price was mostly related to disappointing/confusing news of a potential gradual unwinding of OPEC oil production cuts at a time when global demand growth looks to be slowing. Energy equities are holding up much better in this current downdraft than crude oil. He ended by noting the substantial year-to-date performance gap between EV & ICE auto companies as ICE companies seem to be moving increasingly towards hybrids. Todd Scruggs added to Mike’s comments with data on US and European automotive sales, highlighting the predominance of SUVs and trucks in the US versus a much lower SUV to EV ratio in Europe, indicating a po

On this Memorial Day, we are excited to share a Special Edition with Representative John Curtis (R-UT). Rep. Curtis has been serving in Congress for four terms, beginning in 2017, and is currently running for the U.S. Senate. He serves on the Energy and Commerce Committee including as Vice-Chair of the Energy, Climate and Grid Security Subcommittee. Additionally, he serves as Vice Chair of the Federal Lands Subcommittee and member of the Energy & Mineral Resources Subcommittee on the Natural Resources Committee. He also founded and leads the Conservative Climate Caucus. Prior to his tenure in Congress, Rep. Curtis served as the Mayor of Provo. Leslie Beyer, Veriten Senior Advisor, was kind enough to connect us with Rep. Curtis and Mike, Todd and I were honored to host him in our offices in Houston. Rep. Curtis first shares the inspiration for creating the Conservative Climate Caucus and its role to support solutions that reduce emissions without drastic economic costs. We discuss the importance of distinguishing between climate and climate extremism, Rep. Curtis’s approach to addressing climate issues within the context of energy independence and economic stability, and the importance of avoiding divisive rhetoric and focusing on practical, bipartisan solutions. Rep. Curtis shares his perspective on learning from European energy policies to avoid energy dependence on adversaries, the potential of geothermal energy advancements driven by fracking technology, and the role of the US as a leader in energy technology and the global impact of its energy policies. We discuss distinguishing between reducing emissions versus eliminating fossil fuels, rising power costs and their impact on businesses and families, the need for better education on the realities of different energy sources, addressing climate and environmental concerns within the context of other critical national priorities, areas of bipartisan agreement, and his perspective on restoring the Republican brand and principles. We also highlight Utah’s blend of entrepreneurial spirit, fiscal responsibility, and environmental stewardship, the complex relationship between the US and China, and more. We ended by asking Rep. Curtis for his vision and hopes for the political landscape in ten years. We greatly appreciate Rep. Curtis’s optimistic outlook for the future political leadership of the US as well as the hard work he is doing in Washington on behalf of the energy community and all Americans who want sensible, balanced approaches.   We hope you have a safe and happy Memorial Day as we all remember and honor the brave men and women who have made the ultimate sacrifice for the freedoms we enjoy. COBT returns next week with a regularly scheduled episode on June 5th and a surprise Special Edition on June 6th. We are very excited about both! Thanks to you all for your friendship and support! 

Today we had the pleasure of visiting with Max Layton, Global Head of Commodities Research at Citi. Prior to joining Citi in 2017, Max held notable leadership positions including Managing Director and Head of European Commodities Research at Goldman Sachs as well as Deputy Head of Commodities Research at Macquarie. We have been eager to examine copper’s recent record highs and were excited to have Max join us for a discussion on global commodity trends. In our conversation with Max, we discuss the current commodities landscape and significant trends that Max and his team are observing in the market. We explore the primary factors driving the copper surge, the impact of US Federal Reserve policies on global commodities markets, investment strategies for short-term cycles and long-term structural trends, and the most significant opportunities for growth and investment in the commodities market over the next few years. Max shares his perspective on China’s role in the energy transition and how China’s technological advancements impact the copper market, potential risks to the copper market from geopolitical events or changes in global trade policies, broader energy transition dynamics, and how the current state of the uranium market compares to other commodities. We cover how global economic trends and technological advancements might shape the copper market over the next decade, supply side challenges for copper, how speculative funds impact the copper market, the natural gas market in the US and globally, current trends driving gold prices, long-term oil market demand outlook, power prices and industrial activity, and more. It was fantastic to get Max’s perspective from his vantage point in London and as head of the global group. He and his team clearly see market developments and gather information from multiple unique angles. Thank you for joining, Max! Mike Bradley kicked off the show by noting that this week could be a much slower news week for markets than prior weeks. On the economic front, he highlighted the 10-year yield was trading at ~4.45% yield and that there could be a bit of churn in bond yields this week due to lack of any real economic stats (outside of the FOMC meeting minutes). WTI remains stuck in a narrow trading band ($77-$81/bbl) even with the death of Iran’s President and Foreign Minister in a helicopter crash over the weekend. Front month copper contracts recently spiked above $5.00/lb. mostly due to a substantial increase in “NET” non-commercial future positions. Mike also noted that long-term copper fundamentals remain constructive due to Russian metals sanctions, global production cuts and mine closures (ex. Panama), all at a time when copper demand is set to accelerate. On the broader equity market front, the DJIA hit an all-time high (>40,000) as well as most other broader market indices. NVIDIA reports Q1 results on Wednesday (after the close) and could be a market moving event for broader markets and the Tech sector. He ended by noting that NVIDIA is the best performing S&P 500 Stock YTD (+90%), accounting for ~25% of S&P 500 gains in 2024, so the investor expectation bar is pretty elevated for NVIDIA. Brett Rampal also joined and added his perspective and inquiries to the discussion. Thanks to you all for your support and friendship!

Today we had the pleasure of welcoming back Alexander Zaslavsky, Co-Founder and Managing Partner of Horizon Engage. Alex established Horizon Engage in 2003 and specializes in energy politics in Russia and the former Soviet Union. Horizon Engage merges tech and geopolitical expertise to provide country insights, data on how sanctions and counter sanctions impact your business, security analysis and advisory solutions. To help navigate a meaty Russian/Central Asian/Middle Eastern geopolitical discussion, we called on our good friend Gabe Collins to jump in as a cohost. As you may know, Gabe is a Baker Botts Fellow in Energy and Environmental Regulatory Affairs at Rice University’s Baker Institute for Public Policy. We were thrilled to visit with Alex and Gabe. In our discussion, we address various aspects of the ongoing war in Ukraine, including its impact on alliances and energy security in Europe, business takeovers in Russia following Western companies’ divestment from Russian subsidiaries, and the domestic impact of the conflict with what Gabe refers to as the “Wagnerization of Russia” where families are getting large cash payments for the service (and death) of their male soldiers. We explore the sustainability of Russia’s military endeavors and the potential for escalation, the intensity and effectiveness of Russia’s internal propaganda about the war, the lingering effect of Prigozhin’s legacy (and popularity with the Russian people), and the significance of Russian oil for the country’s economy and its role in funding the war effort. We discuss the Biden Administration’s approach in Ukraine which seems to fear a Russian loss as much as a Russian win, China’s industrial base and its support for Russia in the conflict, the effectiveness of Western sanctions against Russia and lack of real enforcement, potential NATO actions, and geopolitical considerations with COP29 set to be hosted in Azerbaijan. Alex provides insights into potential outcomes of the conflict in Ukraine, geopolitical dynamics and alliances in the region, strategic considerations of Western powers regarding their approach to Russia, the influence of financial institutions like the World Bank, the many mistakes both sides have made in all this, and much more. It was an engaging discussion that highlighted the complexity of geopolitical and economic factors at play. Thank you to Alex and Gabe for joining! Mike Bradley kicked us off by highlighting that most markets this week are focused on one item and that’s the April CPI print due to report on Wednesday morning. On the economic front, Tuesday’s April PPI printed much hotter than expected and the 10-year bond yield unexpectedly decreased to end the day at ~4.45%. On the commodity front, he noted the spike in near-month copper futures to an all-time high (>$5/lb.). He also noted the copper curve has recently shifted from long held contango to a steep backwardation structure which is likely due to a near-month contract squeeze and improving S/D fundamentals. On the broader equity market front, equities so far this week have traded sideways in anticipation of Wednesday’s CPI print which likely could lead to elevated equity market volatility for the remainder of the week. He ended by highlighting the progression of ten stats (bond, commodity and equity) since Alexander’s previous COBT appearance in December 2021. For our COBT history buffs, today’s episode marks Alex’s fourth guest appearance on COBT. He previously joined on December 7, 2021 (episode linked here), May 19, 2020 (episode linked here) and first on April 7, 2020 (episode linked here). Today’s episode also marks Gabe’s third guest appearance; he previously joined on August 23, 2023 (episode linked