C.O.B. Tuesday

For today’s discussion we were delighted to welcome back our good friend Robert Bryce. Robert is the author of six books (his most recent being "A Question of Power: Electricity and the Wealth of Nations"), host of the Power Hungry podcast, and a former journalist with more than 30 years of experience reporting on the energy sector. He is a frequent contributor to the energy discussion and his Substack is linked here. Robert has just released his latest docuseries focused on power titled "Juice: Power, Politics, and the Grid" (available to watch here). The series officially debuts today, January 31st, and we were thrilled to visit with Robert to discuss the vitally important examination this docuseries brings to light around the state of power grids both domestically and internationally. "Juice: Power, Politics, and the Grid" is a five-part docuseries with 20-minute episodes titled "Texas Blackout," "Undermined by Enron," "Green Dreams," "Nuclear Renaissance," and "Industrial Cathedrals." In our conversation with Robert, we touch on Canada’s recent nuclear power developments, the challenges and legacy of Enron and Enron-type thinking in today’s electricity market, the importance of government involvement in supporting nuclear energy, the consequence of electricity being treated as a commodity rather than a service, and the crucial role of reliability in the grid. Robert shares his perspective on the impact of permitting delays, regulatory issues and land use conflicts, the difficulties of building infrastructure, including high voltage transmission lines, the need for long-term bipartisan support for nuclear energy, and how the "anti-industry industry" affects energy policy. We also discuss policy as a reliability risk, industrial consumers (i.e. Dow, Microsoft) becoming more interested in nuclear (see recent Microsoft news here), NGO influence, the need for balanced priorities among decarbonization, affordability and reliability, and more. We want to congratulate Robert for the launch of "Juice: Power, Politics, and the Grid" and for his contributions to help change the conversation. It was a fantastic discussion!To kick us off, Mike Bradley highlighted the upcoming FOMC meeting, continued bullish equity market sentiment, rebound in crude oil prices, and broadening out of Q4 energy subsector reporting in the coming weeks. Wednesday’s FOMC Rate Decision meeting looms large, with most expecting the FED will continue to pause interest rates. Equity volatility is still very low and equity market sentiment remains very bullish. On the commodity front, global crude oil prices continue to rise and the biggest surprise for crude oil markets this week was Saudi Aramco’s decision not to proceed with plans to increase their maximum sustainable capacity up to 13mmbpd, which weighed heavily on the consensus positive sentiment towards internationally levered oil service equities. Brett Rampal flagged Canada’s recent announcement to refurbish the Pickering nuclear plant, extending its operational life by several decades, and showcasing the ability of groups, advocates and the nuclear industry to execute large-scale refurbishment projects efficiently. As mentioned, Robert previously joined COBT on Jan. 5, 2021 (episode linked here) and first on Aug. 11, 2020 (episode linked here). Our COBT episode with Meredith Angwin, author of "Shorting the Grid," is linked here from June 8, 2022. As is almost always the case, this past week was a busy one with many things happening i

Dr. Dan Yergin, S&P Global Vice Chairman, shares insights from Davos and previews CERAWeek. Topics include oil market dynamics, OPEC+ cohesion, global energy forecasts, geopolitics, and the impact of global political figures on economics. The podcast also covers challenges in the oil market, energy transitions, and mineral market complexities.

Today we had the pleasure of hosting Rob Gramlich, Founder and President of Grid Strategies. Rob previously oversaw transmission and power market policy for the American Wind Energy Association as SVP and Interim CEO, served as Economic Advisor to FERC Chairman Pat Wood III, and was Senior Economist at PJM Interconnection. Grid Strategies is a power consulting firm headquartered in Washington, D.C. that helps their clients advance grid integration solutions. Given the recent winter weather much of the US and Canada is experiencing, this was a particularly timely discussion and we were thrilled to hear Rob’s insight on power demand growth, infrastructure buildout, cost, and reliability. Our discussion with Rob focused on a report Grid Strategies recently published titled “The Era of Flat Power Demand is Over” (linked here). Rob first shares background on the Grid Strategies team and the inspiration behind writing the report. We cover aspects from the report including the need for the power industry as well as legislators and regulators to acknowledge sharply increased demand forecasts and the need for action, factors contributing to increased power demand, including data centers and AI-driven technologies, the influential players in Washington contributing to shaping policies, regions with notable growth, reliability and resource adequacy, and the need for large-scale robust transmission planning. Rob shares his thoughts on regional differences in power markets and some of the unique market designs, concerns about supply and demand challenges and its effect on rising costs, changing dynamics in the power industry and the power “basketball team” lineup, global comparisons, behind-the-fence power generation, and more. Thank you, Rob, for sharing your insights with us all! We learned a lot. Power has undoubtedly become such an important issue and a topic to which we have dedicated several episodes. The most recent episodes include John Bear from MISO (linked here) and Jim Robb with NERC (linked here). Last year, we also visited with ERCOT (linked here). You may remember that in the ERCOT show, we called on our friends at Orennia to provide analytics around Texas power. For today’s discussion, the team at Orennia provided additional data on summer and winter Effective Load Carrying Capability (ELCC) for solar and wind and cumulative coal retirements up to 2040 (linked here). To kick us off, Mike Bradley highlighted recent key issues across the regulatory, commodity market and energy/electricity space. On the regulatory front, the U.S. Supreme Court will be hearing arguments this week relating to the historical Chevron Deference decision; a decision to reverse could have huge implications for highly regulated industries, like the energy industry, as power to regulate could shift away from Alphabet-Letter Agencies (like the EPA and others). On the commodity front, WTI oil price continues to be stuck in a bit of a trading range (low-$70s/bbl) given that Red Sea ship rerouting/growing Middle East conflict is getting countered by global crude oil S/D that looks modestly oversupplied in Q1’24 without additional OPEC+ production cuts. He noted that U.S natural gas prices have completely round-tripped this week (down $0.30-$0.35/MMBtu to <$3.00/MMBtu) and further noted that in recent days, U.S. natural gas production has plunged (~103bcfpd last week to a low of ~93bcfpd on Monday and now stands at ~97bcfpd) mostly d

Today was a big one – the first regular COBT of the year, and also the second anniversary of Veriten. Accordingly, we thought about something that would be truly special to mark the occasion and reached back for two COBT All-Stars… on the same show! Today’s episode features two great friends: Dr. Lars Schernikau, energy economist, entrepreneur, commodity trader, strategic advisor, and the author of “The Unpopular Truth about Electricity and the Future of Energy” AND Rob West, Founder and Lead Analyst at Thunder Said Energy (TSE). Rob started TSE in 2019 and provides unique and thought-provoking analysis on energy transition research and technologies. Lars patched in from Dubai and Rob from Tallinn. What a delight it was to have this much firepower in the same discussion. Our COBT buffs may recall Lars previously appeared on COBT in March of 2023 (linked here). For Rob, today’s episode marks his fourth appearance on the show; he most recently joined in July 2023 (linked here), prior to that in November 2022 (linked here), and first in January 2022 (linked here). We simply thought these two gentlemen together would be perfect for global energy 2023 reflection and 2024 speculation and vision. We were not disappointed! To start the discussion, we ask Rob and Lars for their view on the most significant macro factors for the upcoming year. Rob discusses the impact of higher interest rates and puts particular focus on the volatility of today’s energy systems. Lars added his concern with our growing energy inefficiency and what that means for costs. Volatility, energy inefficiency, rising costs and government/corporate/investor decision-making wove in and out throughout our conversation today. We touch on weather’s contribution to energy production volatility, recent warm weather and how it may be masking underlying problems, overall trends in European energy sentiment, China’s self-interested energy policies and their control of raw materials, Rob’s recent work on Harmonics, the current state of energy forecasting and the lack of transparency around models, last week’s appearance by Senator John Kennedy (episode linked here) and much more. We were sorry the discussion had to end and wrapped up by asking everyone for the number one thing they are focused on for 2024 (in Bari Weiss rapid-fire style). We can’t thank Lars and Rob enough for joining. We are honored to call them friends and appreciate all the work they are both doing to make energy, the environment, the inherent trade-offs, and decarbonization broadly more understandable. Mike Bradley kicked us off by discussing key themes for 2024. Economically, he highlighted that markets are expecting the FED will engineer a soft landing and cut interest rates beginning in Q1. He noted this scenario was consensus and that this week’s CPI and PPI prints could be the first true test of this “goldilocks” thesis. From a commodity standpoint, he noted that analyst’s 2024 commodity forecasts are much higher than the 2024 commodity futures curve, indicating 2024 estimates may be adjusted lower and could result in some energy equity headwinds in Q1’24. US natural gas production surprised in 2023, and investors are asking when will natural gas-levered E&Ps begin ramping up activity in anticipation of a 2025 LNG ramp. From a crude production standpoint, he flagged that one of the biggest surprises in 2023 was that U.S. crude oil production growth nearly doubled expectations and that in turn raises qu

We hope you all had a fantastic holiday season and that you are excited about the New Year! We had a special guest join us yesterday to kick off 2024. We have been lucky enough to get to know a number of Senators, Governors and Congressional Representatives over the past few years. One that we have been getting to know better recently is Senator John Kennedy of Louisiana. Sharp, informed, well read, very funny, and representing a very important energy and industrial state, Senator Kennedy never disappoints when any public policy matter is up for thoughtful debate. We felt particularly lucky he took some time to brainstorm the coming year with us in this Special Edition COBT. As you will hear, Mike Bradley, Jeff Tillery and I explored a broad range of topics with the Senator including domestic and international challenges facing the United States in 2024, the divide in Washington regarding climate issues, Senator Kennedy’s stance on climate change, the role of the government and private sector, the erosion of public confidence in institutions, and potential strategies for restoring that confidence. We also touch on the importance of leadership and transparent communication, power demand growth and infrastructure challenges, and the need to improve the understanding of energy-related issues in Washington. Senator Kennedy shares his perspective on the significance of the United States projecting strength and power and his optimistic outlook on American resilience in overcoming challenges. We are very grateful to Senator Kennedy for sharing his time and valuable insights with us all. Speaking of kicking off the New Year, we attended the Goldman Sachs Energy, CleanTech and Utilities Conference in Miami this week (agenda linked here). Arjun Murti spoke on a panel addressing “Where Are We in the Commodities Cycle?” I am biased but I thought he did a great job discussing why energy is so important globally, why energy broadly is an attractive sector, and why oil and gas peak demand is nearly impossible to predict. Overall, we saw many friends old and new, and increasingly perceive that Veriten’s mission of “truth in energy” is gaining more visibility and support. Special thanks to Neil Mehta and the entire Goldman Sachs research team for having us and congratulations to them on a great kickoff to the year. We will return next week with the regular COBT schedule. We have a very fun “2-year Veriten Anniversary” show planned! Again, Happy 2024 and thank you for your friendship and support!

Today we were thrilled to visit with Brian Lee, Vice President and Head of US Clean Technology Research at Goldman Sachs, for 2023’s final COBT episode. Brian has been with the firm since 2011 and offers a unique vantage point with his experience covering cleantech. Recently, Brian and his team released their 2024 Americas Clean Technology Outlook (linked here). With 2023 coming to a close, it was fantastic to hear Brian’s end of year reflections as well as observations on the space heading into 2024.   Goldman Sachs will kick off the New Year in Miami, Florida with their flagship Energy, CleanTech and Utilities Conference starting on January 3rd (agenda linked here). Veriten is excited to be attending. In our conversation with Brian, we discuss Goldman’s approach to cleantech as part of the broader energy team, the cyclical nature of the sector, the gyrations of the last few years, the deeper appreciation investors are now gaining for the complexities of clean energy business models, the unique mix of stocks Brian and his team cover, the global investor footprint, current investor sentiment, and of course how rising interest ratees have greatly impacted his coverage group. Brian also shares his perspective on the total addressable market for solar including residential and utility-scale solar, residential solar market potential, policy impacts on solar, trends in solar energy, the latest IRA detailed guidance from the US Treasury, the outlook for more of such detail, and much more. With revised ratings out earlier this week, we also got Brian to share his specific stock views going into next year. Time flew as we were having fun! We ended with a “lightning round” and asked Brian to share his quick thoughts on China, the water space, and surging power demand growth to close out our conversation. It was a meaty and fantastic discussion. Thank you Brian!   Mike Bradley kicked us off by highlighting year-to-date performance for bonds, commodities and equities. He noted the 10-year U.S. government bond yield began the year trading at 3.9%, peaked at ~5.0%, and has round-tripped back down to 3.9%, mostly because the rate of inflation has been cut in half and expectations that the FED could aggressively begin cutting interest rates beginning in March 2024. WTI price began the year trading at ~$80/bbl, peaked at ~$94/bbl and is now trading at ~$74/bbl. U.S. oil production in 2023 has grown by ~1mmbpd which has been offset by OPEC cuts of ~1mmbpd. U.S. natural gas began the year trading at ~$4.50/MMBtu and is now trading at ~2.50/MMBtu, mostly due to warm early winter weather, above average natural gas storage levels, and U.S. natural gas production that has grown ~5bcfpd in 2023. He highlighted that broader equity markets posted a stellar year with the S&P 500 up ~25% and the Nasdaq up ~55%, while the energy sector posted just a modest gain for the year. The best performing subsectors in 2023 on a "total return" basis were Nuclear (+60%), Coal (+35%) & Refiners (+20%), with the worst being Renewables (-25%) & Batteries/Solar (-30%). He flagged reasons why the Illinois Commerce Commission "rejected" a multi-year integrated grid plan from two key State electric utilities and highlighted the $15B merger agreement between Nippon Steel and U.S. Steel, further noting that it seems to be facing early opposition from both members of Congress and Unions and could face challenges from CFIUS (foreign investment in the U.S.). Arjun Murti shared a few of his reflections from 2023 including the disparities in energy access worldwide and the massive amount of energy demand 7-8 billion people will need, the continuing significance of energy as a

We had a fantastic session today with Amy Roma, Partner and Global Energy Practice Leader at Hogan Lovells. Amy has served at Hogan Lovells since 2007 and as you will hear, her work focuses on the commercial nuclear energy industry. Her efforts have earned her recognition as one of the Top 10 most innovative lawyers in North America by the Financial Times and the National Law Journal named her one of the most impactful minds at the "intersection of energy and the environment." Amy is freshly back from COP 28 and we covered a broad range of topics in today’s discussion centered on Amy’s nuclear expertise and key themes from her firsthand experience at the conference.   In our discussion, we begin by exploring her expectations for this year’s COP. Amy shares insights on her interactions with OPEC, her motivation to attend COP 28 following a disappointing COP 26, and the shift she has seen towards more serious considerations of decarbonization, energy affordability, reliability, and security. We discuss the business case for nuclear energy, unique financing models to mitigate risks, the challenges of establishing a secure fuel supply chain, Amy’s role and where she spends most of her time, and the team and expertise at Hogan Lovells. We touch on the pace of progress around nuclear in the United States compared to internationally, the strategic importance for the US to be a leader in the global nuclear market, and some of the new interest in nuclear Amy has seen from industrial participants. We end with Amy’s thoughts on what the nuclear landscape might look like in ten years. Thank you, Amy, for joining and sharing your insights with us all!   Mike Bradley kicked us off by discussing bond yields and the Wednesday FED meeting. He noted WTI price weakness is mostly due to the same issues that have plagued it for the last several weeks and further noted the plunge in U.S. natural gas from early-November levels given above-average U.S. storage levels and U.S. production that has recently averaged ~2-3bcfd higher than previous months. He highlighted that broader equity markets are trading back to near March 2022 levels due to the recent pullback in interest rates and a belief that the FED will pull off a "soft-landing" for the U.S. economy. He noted that the COP28 conference had all but concluded but that diplomats were still working after-hours to craft fossil fuel "wording" for their final official communique. He noted that "phase down" wording is important for some COP28 delegates but for all intents and purposes, it’s less important for most countries that will do what’s ultimately best for their own citizens. He wrapped by highlighting that Ford is reducing their 2024 F-150 Lighting (EV) production, and that it was a positive development for their shareholders as it means less future capex, less EV losses, more FCF and higher ROCE employed. Jeff Tillery and Brett Rampal also joined today’s session and added their perspective and questions to the mix with Amy.   Thanks to you all for your support and friendship!

Today we were very fortunate to host Fernando Oris de Roa for an insightful discussion on Argentina and the recent dramatic election result there. Fernando served as the Ambassador of Argentina to the United States in 2018 and 2019 is currently an Independent Director of Allkem. He is an accomplished entrepreneur and business leader in Argentina and earned his MPA from the Harvard Kennedy School. With the country’s recent election of political newcomer Javier Milei as President, we were thrilled to visit with Fernando and explore the implications of the new presidency for Argentina and Latin America at large. Fernando first shares his perspective on the political landscape in Argentina, the significance of Milei’s win, the libertarian philosophies Milei will bring to office, and reactions within the Argentine business community. We explore Milei’s announced and other potential key players in a new government, the United States’s cautiously supportive stance thus far, the nation’s vast energy and economic opportunities, the issue of dollarization, geopolitical considerations with neighboring countries, and China’s growing influence in Latin America. We also discuss the current investment climate in Argentina, the potential for expansion in the mining sector, Fernando’s recommended short-term goals for the nation, including stabilizing inflation, the potential for sweeping budget cuts to reduce the size of government, and much more. In our conversation with Fernando, we began to wonder if a good analogy to Milei’s win is Lech Walesa in Poland or Vaclev Havel in Czechoslovakia, instead of the often repeated “Trump of Argentina” comparison. It’s perhaps too early to tell but a rejection of socialism and government control has clearly happened. We ended by asking Fernando for his ten-year view for Argentina. It was an insightful discussion and we greatly appreciated hearing his insights. Mike Bradley kicked us off by indicating that 10-year bond yields plunged ~20bps and are now trading at a 3-month low of 4.2%. He noted that bond traders are betting the FED is done hiking rates and could soon be cutting due to a growing consensus of a U.S. “soft landing.” He highlighted a couple of rumblings stemming from the COP 28 conference and noted pleas from some more vocal individuals on a more aggressive phase out of coal & other fossil fuels, on the other hand, there was also constructive dialogue for a more aggressive nuclear buildout and more stringent methane monitoring. He highlighted that broader equity markets continue to trade sideways, are technically overbought (post a 10% rally off October lows) and that near-term trading caution is warranted. He highlighted that WTI price traded down to ~$72/bbl. (-$2-$3/bbl.) this week and really needs to hold technical support levels of $72.50/bbl. He further noted that crude price weakness is due both to CTA contract liquidation and physical weakness, which has pushed crude curves into contango from long-held backwardation. He also discussed that the recent OPEC+ meeting concluded with Russia/Saudi extending 1.3mmbpd of cuts, a handful of OPEC+ members agreeing to a 0.9mmbpd “voluntary” cuts through Q1’24, but that traders also remain unconvinced for most of these voluntary OPEC+ cuts, which has pushed crude traders into “show me” mode. He rounded out by highlighting Javier Milei’s win of the Argentinian Presidency rallied the Argentinian stock market by 40% on early optimism that he might contain runaway inflation and further open up the oil & gas and mining industries. Jeff Tillery also joined for the exciting discussion with Fernando. Fernando was a fantastic guest and we hope you enjoy the conversation as much as we did. Our best to you all. Tomorrow evening marks the start of Hanukkah… so a “Happy Hanukkah” to everyone just a bit early.

David Whitehouse, CEO of Offshore Energies UK, talks about UK and North Sea energy, including challenges and opportunities in the offshore energy sector. They discuss the impact of windfall taxes on investments, the transition to renewable sources like offshore wind and hydrogen, and the importance of reliable and affordable energy for successful economies.

We’re so pleased today to be able to bring you what is now the fourth in a series of COBT Thanksgiving episodes. When we think about the joys of Thanksgiving Day, it’s striking how many of those things are connected to energy. The energy to warm our homes, to cook our food, to help our families fly and drive to see us, to power everything from the TV to the refrigerator, etc. The list goes on and on. What’s always struck us is that not only is energy needed for this great holiday, but so many of the people who make our energy possible are actually working on Thanksgiving Day. We love highlighting the hardworking men and women in energy who make this all possible.   Our previous Thanksgiving-focused COBT episodes have included:Thanksgiving 2022 | Episode Linked Here Featuring energy workers in oilfield equipment and servicesThanksgiving 2021 | Episode Linked Here Featuring energy workers in power plants, fracking, and LNGThanksgiving 2020 | Episode Linked Here Featuring energy workers on rigs, at a refinery, fracking, and monitoring pipelinesThis year, as we were thinking about difficult jobs in the industry, we thought about offshore drilling rigs. We reached out to the team at Transocean and their team helped make today’s episode possible.   Joining us for COBT from Transocean’s Deepwater Atlas drillship are Tyler Riley, Captain, Jeff Bruno (“Bruno”), Drilling Superintendent, Dennis Walton, Senior Subsea Supervisor, and David Galatenau, Driller in Training. They literally joined us from five thousand feet of water in the Gulf of Mexico.   Captain Riley first provides fascinating background on the 130+ hardworking men and women on the ship, highlighting their work schedule, lifestyle, and team dynamics, and also provides background on the drillship. As you’ll hear, the Deepwater Atlas is one of only two 8th generation drillships in the world and has 20,000 psi well control capabilities and a 3.4 million pound hoisting capacity. Bruno and Dennis each share thoughts about their roles and their respective teams, discuss the support and camaraderie they share, and even tell us some good fishing stories. David is a recent graduate from Texas Tech and is a participant in Transocean’s accelerated program to become a fully trained driller. He also shares his perspective as a young, talented person interested and passionate about an energy career.   Before letting the guys get back to work, we of course ask the team about their plans for Thanksgiving Day (including the menu). Each of the guys also gives a shoutout to their loved ones and to their companions also working on Thanksgiving Day. We are so very thankful to the men and women of the Deepwater Atlas and hope everyone on the ship sees this COBT in their honor!   Mike Bradley kicked us off today by highlighting that broader equity market indices continue to rally and are up over 10% from late October lows as they continue taking their trading cue from lower bond yields. He noted that broader equity markets are technically overbought and possess some near-term trading risk. He flagged the surprising Argentinian Presidency election win last weekend by Javier Milei, which initially rallied the Argentinian MERVAL Index by 8% (total of 20% since Friday), and shares of YPF by over 40%. He discussed that crude oil markets are laser focused on the OPEC meeting this weekend and that crude oil prices have caught a bit of a bid this week due to growing optimism that OPEC will not only extend 1mmbpd of production cuts through Q1’24 but also increase the level of production cuts. He al