Energy Bytes

0:00 Welcome back everyone to another episode of Energy Bytes you might notice that Bobby is missing. This is the transition day for them where Devon is transitioning their merger with Grayson Mills. So

0:13 he is extremely busy doing all that right now. But I am here today with Dr. Bob Brooks, the founder of RBAC. I appreciate you coming on and chatting with us today I'm happy to do so. So we

0:27 normally start off with some current news and I thought this one was interesting given our prior conversation. I saw this, I think it was a reel or a TikTok, this guy. He has a, I think it's a

0:38 Toyota hydrogen vehicle and the whole video was about how he had to drive 50, 60 miles across town and he gets there and he starts refilling and then the hydrogen nozzle freezes and then even when

0:52 after all is said and done, he's still, you know, 9000. It costs him about to get however many leaders have. of hydrogen that he needed to fill his tank up. And

1:02 so all that being said, considering we're going to be talking about gas, natural gas markets, and potentially what hydrogen looks like in there, how do you kind of see, what are your thoughts,

1:15 you've been in the natural gas space for almost 40 plus years now? How do you see the kind of ideas and these proposals that people are putting in place to include hydrogen with natural gas, even

1:28 though there's all these fun colors of hydrogen in with that market? Do you see that? Are there a lot of benefits to that? Are there a bunch of challenges? Or how do you kind of see that fitting

1:39 alligator? Well, the simplicity of it is that

1:47 those who are promoting hydrogen as having an important role in the future of energy are doing so because when you burn hydrogen. You don't get carbon dioxide water. You just get water, okay? It's

2:02 not necessarily true, by the way, that you just get water, because if you burn it with air, you also have this thing of, there's nitrous oxides that can be also, which is also known as, by the

2:14 way, Noxos, and also known as smog, which can be produced as well. So it's not necessarily 100 clean. And there's all kinds of issues about, well, where did you get the hydrogen in the first

2:26 place? So there's a lot of issues. But when you get down to the core of it, if you burn natural gas, which is mostly methane, you get energy, which is, of course, what you're looking for. But

2:43 you do get carbon dioxide, and there's

2:49 variously graded intelligence about what carbon dioxide might or might not do as far as global warming or changing the atmosphere in such a way that it is negative or causes climate change and so

3:09 forth. So there's, you know, that's basically the reason why, you know, hydrogen is even being considered. It's been, you know, it's been on the agenda for many, many, many, many years and

3:20 decades, actually. But there's also different ways of using it So

3:28 I think, you know,

3:31 I don't know what the, you know, the example, you know, the incident that you were talking about, whether this was a hydrogen-fueled car, where they were actually like a fertilized hydrogen as a

3:45 gas. There's other ideas, you know, for using hydrogen fuel cell and so forth You would certainly not use liquified hydrogen. because that takes way, way too much energy and effort and cost to

4:02 liquefy hydrogen. I assume it's the same with same basic variables that you have with LNG, right? Where you got a super coolant and compress it. And so by the time the energy required for all of

4:12 that, your cost is now multiples of what it was when it wasn't compressed and liquefied, right? Yeah, yes and no, okay. So hydrogen is much worse You have to get much closer to absolute zero to

4:28 liquefy hydrogen more energy. So you, you know, realistically, you use it in rockets, where, you know, where the cost is not so much an issue. But when you start talking about using it in

4:43 normal

4:46 uses that you would normally use natural gas or gasoline or other kinds of things

4:53 you know, the cost becomes a really major, major issue, but the kinds, I think people are a little bit more seriously looking at hydrogen as a supplement for the fuel to make electricity, for

5:08 example, either directly 100 hydrogen or as a portion of the

5:19 input fuel to make electricity So in other words, maybe you could do something like 90 natural gas and 10 hydrogen or 5050 or something like that. And actually, interestingly enough, in our

5:34 work, which is producing computer software and databases that energy related companies can use to forecast markets in the future, interestingly, we have just added that capability. So with our

5:50 software, you can in our system, you can add hydrogen as one of the variables, production, transportation, storage, and use of hydrogen along with natural gas. And the reason we've done this is

6:07 so that energy companies can do the analysis. And so they can actually come up with something that's a rational, logical analysis instead of just propaganda one way or the other Right. So anyway,

6:22 that's basically, I'm still working on sort of final bits of that right now, but probably November, we have our company has a user conference every year in November. And so I think we're gonna

6:38 release it in November. It's in Orlando this year. Very cool. Last year was in Corpus Christi. Oh nice. So we move it around. So anyway, I don't know, are there any other questions No, you're

6:49 done. I'm so nervous.

6:51 I've got lots of questions, right? So I've got all kinds of questions around natural gas for transportation as any alternative fuels quote unquote for transportation. But since we're natural gas is

7:04 your background, I've got lots of questions around that. But before we get into that, let's kind of take a step back and tell people exactly what you guys do, what your software does. I mean,

7:14 like I said, you've done it for, you've been building for 40 years So you guys have have real true staying power, which means there's absolutely something there, so I'm very curious to unpack kind

7:24 of what you guys do, how you got into it, what problems you're solving, and who you're kind of end users are generally speaking. Yeah, I kind of jumped the gun just a minute ago. We like to like

7:36 transition into it, so it's good. Yeah, so yeah, it actually all started as when I was a graduate student I was in the PhD program at MIT in Um, um, a field called operations research, which

7:54 has nothing to do with the medical operations, by the way, it's more like, it really came from like military operations and logistics and this sort of thing. Anyway, it's basically using

8:06 mathematics in an applied way to do various things. And one of those things that is done is to look at various markets and apply economics to it, economic theory,

8:22 to try to mathematically understand how something might unfold in the future or to evaluate something in the present. So

8:33 I was interested in that particular field. I was actually a master's student in physics at University of Texas in Austin. And it was very interesting. I really enjoyed it, you know, one day I was

8:48 just realized, you know, do I really want to be like a theoretical physicist? It's like the existential question of all physicists, right? Like, it's like, what am I gonna do with this if I

8:58 don't go? Yeah, I mean, you're basically stuck in academia, for the most part, or making bombs and things, which I wasn't really interested in, right? So I heard about operations research,

9:10 and so, you know, I'd never even heard about it before. And so I started looking into that and said, you know, that looks really interesting. MIT had a program in it, and I applied, and got in.

9:24 And,

9:26 you know, basically, I had a family at that point, so I was already married with a couple of kids. And so I had to, you know, I wasn't going to be just a student, but I had to - Right. I had

9:38 actually paid my way, so I had to have a job. So I actually drove up from Austin, where, you know, we were living at that time

9:48 Cambridge, Massachusetts, and

9:53 went to, I found out that there was something that they had called the Energy Laboratory. And I was interested in energy also, I don't know if I want to get into that, but energy, I could see

10:07 that that was quite interesting even when I was at UT.

10:11 And in fact, I had read about this guy, Peter Glaser at Arthur D. Little, which was also in Cambridge, Massachusetts, who had this idea of a satellite solar power station, SPSS. And you build

10:27 this gigantic satellite with solar cells that capture, you know, sunlight and beam it down to Earth. And, you know, I really didn't know anything about costs or anything at that time, but it

10:41 just seemed like a really cool idea. That was a hell of an idea. Yeah, it was a hell of an idea Yeah, so actually when I. When I drove up, I actually saw two people. I first of all, I went at

10:53 MIT itself and this energy laboratory. And I said, I'm just, I'm gonna be a new student. I need a research assistant job or something. And he said, this guy, Professor White said to me, go to

11:12 the Sloan School and talk with this professor, I forget his name right now. They just won a contract with from the National Science Foundation to study the natural gas industry. Interesting, what

11:30 year roughly is this? This was in 1972. Okay, I want a long time ago. Well, it's important giving the, especially natural gas, the history of the regulations and all that stuff. Well, that

11:42 was exactly - or broken on all the funds you're totally right, 'cause this was exactly the point. the point of the study was to look to see whether deregulating the natural gas industry would be of

11:55 benefit to the American people economically. Right, this was the tight gas floor. This was a, actually it was a little bit different from that. Okay, this was the way that natural gas was

12:10 regulated was based on the initial natural gas act from the 1930s Okay, okay, so pipeline companies actually had to buy gas from producers, and then they would move it and resell it to local

12:29 distribution companies. You know, could be thousands of miles away. But there were rules on what price that they could charge those utilities. And so, I mean, it was very, very tightly

12:44 regulated In fact, it got to a point where. This was the Federal Power Commission before FUR. Right.

12:51 They actually were in a position where they had to regulate the price of gas produce and every single well in the United States. I mean, this was like over a million wells. Yeah, that's insane.

13:04 So I mean, it was like, we're totally gotten totally insane. So that's what the project was. And so we had six graduate students and three professors on this project And my role, I had a couple

13:18 of different roles, but my major role during this three years that we did this project was to understand the transmission system. In other words, all the pipelines and how they were connected to

13:33 upstream, to producers and downstream to consumers. And so I actually built a model of all American, all US pipelines and how they were all interconnected. and tied it in with what the other

13:47 people on the team were doing on the supply and demand side. And then looked at, okay, under current conditions with the current regulation, how did things work and what kind of prices do we have?

14:00 And then, if you had deregulation, how would it be? And so, did the comparison and that was basically my PhD thesis, my professors liked it and said to that, my PhD Did that snowball into

14:14 ultimately the reality? It did, but it did, but kind of slowly. Okay, so what happened was federal government agencies through various ways found out about the work that I was doing, and so I

14:27 actually got, after I graduated, I just basically kind of stayed on my own, I didn't take a job. And three or four projects came my way within a very short amount of time. for the Federal Energy

14:47 Administration, which evolved into Department of Energy for a Federal Power Commission, which evolved into FERC and some others and Electric Power Research Institute also did one. And so I actually

15:04 got several projects that were very strongly related to, you know, what my PhD thesis was all about. So I actually had work, which was good for my family, as we needed income. And so, you know,

15:17 that

15:21 happened. I sort of skipped the part where I actually did get a job. I forgot, which was for one year I was a professor at University of Southern California, which is how I got from Boston to LA.

15:36 But after, you know, before the year was up, Basically where I was going broke because the salaries were so low, I got this opportunity to do those projects that I was talking about. I took those

15:51 opportunities and never went back to USC. So I was only there for one year. So anyway, this all worked out very well. And you know, it's like, you know, your career kind of evolves, you meet

16:03 people and so forth. So I met somebody that said, you know, well, why don't you, why don't you just open an office of my company out in LA, you know, he had an office in DC area. And then you

16:18 can work with me. You can be a VP in the company and run that office and we'll work together. I like the guy a lot. So we did that for several years and that worked out well. And we did various

16:30 studies for, you know, a number of different, you know, it wasn't all the things that I had been doing, but you know, energy, mostly energy and transportation related So, you know, that's

16:42 kind of how we got started. And it actually worked very well. So fast forward to today. I only imagine that's the scale of what y'all do has grown considerably because now everything is global

16:55 markets, right? This is before that kind of, I mean, I don't know what it was like, but I assume it was a pseudo global market, but there wasn't, there weren't futures or option. Yeah,

17:05 there's no trading that can happen on the global scale like there was back then, so Yeah, the industry has completely changed. Yeah, you know, basically,

17:17 yeah, I mean, I went through a bunch of evolution, but there was one thing that I think, you know, maybe some of your listeners might be interested in, which is for a very long time,

17:30 I was involved with companies who would have a particular need and they would hire me to design a system

17:42 to meet that. particular need. Typically, this was part of a government contract or procurement. So it was for a government, but it could also be for private companies as well. And that worked

17:57 very well, and I got paid quite well to do that, as long as that project was going on. When the project ended,

18:07 then I had to do it again. And so I found that my income was kind of like a rollercoaster, you know, it would go up and then down and down. This is not the best way of raising a family, I can

18:19 imagine. So I did a lot of thinking about this at one point. And actually, if you don't mind, kind of an interesting story, I think it's interesting, at least, which is,

18:35 this new thing called the internet, right? And so I

18:41 put it. web page, personal web page out there. And it talked a little bit about natural gas markets and modeling and stuff as things that I've been doing. And I started getting calls from various

18:52 companies that were interested in this. This was about the time period when the natural gas regulation had begun to change, but it wasn't completely clear about how things were going to roll out.

19:06 So there were a lot of new natural gas marketing companies and so forth and energy marketing companies, but they didn't really have the tools that they needed to do the kind of work that they were

19:18 doing. So I got calls, people were interested in possibility of maybe having natural gas markets or helping, having me design them for them or whatever. So I got this call from a company that was

19:36 a data company there is a what's called, uh, Resource Data International, Boulder, Colorado. And they currently had data sets that they were licensing out in that had like all this information

19:49 about power plants to companies that were interested. And they also, coal was another big thing for them. So they had all the coal mines and costs and production capacities and all this sort of

20:02 stuff. So they didn't have anything in natural gas and they wanted to have a similar kind of data product that they could sell for natural gas. So this guy, I'm not going to say his name, because

20:18 he didn't tell me that it was OK if I made it funny. Anyway, he lives in the Houston area. And he called me up. He was working for them. And so he told me this story. And he said, well, how

20:31 much would it cost to build some kind of a tool? because, you know, we're doing this for data, but actually, I would like a tool that could be used to do the forecasting. So I said, well, okay,

20:45 so I've done this several times and usually it's about a hundred grand, you know, minimum of a hundred grand to put these things together. Said, okay, well, that sounds reasonable. You know,

20:56 I'll think about it and talk to you later.

21:01 So after we hung up, I got to think about it and I was thinking about my little analysis before, you know, it's like, is this going to be another one of these projects, you know, where, you

21:11 know, I get, make some money and then when it's over, that's it. So anyway, I said, hmm, so I called him back and I said, okay, Bob, his name was Bob.

21:24 I'll tell you what, I've thought about it and I have,

21:27 I have a new price for you. And he said, okay. And I said, okay, so my new price is zero. What do you think?

21:38 Okay, what do you mean? I said, okay, this is what I propose. I will pay my own way to get to Boulder from Los Angeles and I'll pay for my hotel, I'll pay for my car, I'll pay for everything.

21:53 And all I want from you is you get your team together there and I will spend a day with you or half a day with you and explain and even demonstrate a prototype of what I'm thinking about building for

22:10 you.

22:12 And all I want from you is that you would agree after you've seen that, that if you like it, you will negotiate in good faith a license agreement where I keep the software and own the software but

22:29 you license it from me on a recurring basis. You say, Well, that's fair, let's do that So we did. and they liked it. About what timeframe is this? This was in 1997. So you're like original

22:47 SaaS model right here. That's awesome. It's really, I mean, genuinely, that's quite incredible that you were already thinking about. I mean, it's true. Anyone that's ever done any kind of

22:57 consulting runs into that same problem of it's like, hey, it's really good when I have the business, but then when the project's over, I've got to go find another one That's right, because when

23:08 you're doing it, when you're actually building it, you're so busy that you're not thinking about with the next project, you don't have the capacity, yeah. So, yeah, it is that way. So I

23:20 figured, okay, well,

23:24 I think it would be fair, I'm thinking my head, okay, we'll give them one user license for 50 grand a year, that would be fair. Anyway, it ended up they were better negotiators than I was, and

23:36 they got - three licenses for 20 grand, but, you know, it was a start. Right,

23:44 it was a start somewhere, right? So we started and it worked well, and what we agreed was that I would do all the software and they would do the data. You see, so we even, in fact, would split

23:55 it, right? They would get the revenues that were associated, 'cause that's what they were building. They were building a data source. And so they, so anyway, it really worked well And, you

24:06 know, that was the beginning. And, you know, there was all kinds of changes that happened. This company got bought by FT Energy, that sold it to Plats. And they recently got rolled up into SP

24:18 and blah, blah, blah. So all of that stuff. But over the years, you know, we just started that way and eventually ended up, we took over the data side as well. And we started licensing it to

24:33 big companies as big as Shell and Exxon and so forth. in as small as, you know, some very small companies, consulting companies in some large consulting companies, and you know, that's the way

24:46 it's been. So that's the way it was up until a few years ago when, as you were saying, we started to see that actually there was an evolving global market for natural gas, primarily happening

25:05 because fracking, you told me that you had been involved in that industry yourself earlier. And because of fracking, it turns out that US. and Canada have so much natural gas resource that once

25:24 they figured out how to do it economically, It was like, What the hell are we gonna do with all this gas? That's where we're at right now, I feel like, right? We're still there, yeah, I mean,

25:32 it's - I've been waiting for gas prices to go up ever since I got into the industry. Oh, yeah, I know, it's amazing. I got them when they were on the way, but right after, you know, whatever,

25:41 seven, eight, I was on the tail end of the downside of that. And then they've never come close to that in a sense. Yeah, it's amazing to really think about. Yeah, it's really amazing if you

25:50 take into account inflation and everything, you have2 or250 gas, I mean, it's almost nothing But anyway, what this has done, of course, so long with,

26:01 you know, if you think about it, actually,

26:05 Chaneer was going broke. I mean, they were about dead, you know, because they built this import terminal. Right. And what did it import? There wasn't any, no need to import, okay. So Chaneer,

26:17 whoever

26:19 it was, Sherif or whoever it was, was smart enough to say, you know what? The only chance that we have. to survive. I think this is what's going on in his head. I didn't read this, is to

26:31 switch this around and make an export, make a liquefaction and export terminal. Anyway, they did this and it came into service in 2016 and the rest is history. We're now the biggest liquefied

26:45 natural gas producer in the world, even overtaking Cutter. So it's really amazing So anyway, the point is that we had to get into that game too. So we took what we already had in terms of the

26:60 software system and we made another version of it to use for global instead of North America, where previously everything was North America. So let's unpack it a little bit. First off, what did

27:12 that data look like when you were having those initial conversations in the '90s versus how it is today? I do a lot of data wrangling and ETL and all the fun. No one, no one that's not. If you're

27:25 not in the data side of things, you don't realize how much effort goes into cleaning and getting really good trustworthy, reliable data sets. And so, you know, they say it's like 8020 with any

27:36 kind of data science you're spending about 80 of your time and just getting the data set correct before you actually do any analysis on it. And so I can only imagine what that was like back when the

27:48 tools that you had digitally were much more limited, I assume And you didn't have APIs, the internet was brand new, you don't have all these, you know, there's not IoT, there's not real-time

27:59 production and all this stuff. So I'm fascinated at how that kind of has evolved 'cause now I assume there's just all kinds of different sources that you can pull data directly from and it's

28:10 structured and you know, and it's there, right? Yeah, yeah, it's like super good now. But in 1997, the resource data and international guys, there were three guys working on our data set And

28:23 literally they were. they had maps all over the room of the various pipelines and how they were connected to the producing areas and so forth. And they were having to keep up with each operator and

28:35 how many wells and how, what the production had some amazing. Yeah, absolutely. And whatever other data sources that they had, but a lot of this is just visual map work that you had to do. But

28:47 as you were saying that, asking me about that, they go back to, well, what did Bob Brooks do in 1973 and '74 and '70. And actually what I did was I flew from Boston to Washington, DC

29:05 and went to, I guess, it was the Federal Power Commission offices and got microfilm.

29:15 God, I don't even know if you know what that stuff is. Okay, I was at the tail end of the life of microfilm Yeah.

29:23 and you had to turn the prank, you know, to go from page to page to page, and I had to pull all the information I was gonna use from those microfills. I mean, that's where we start. That's wild.

29:35 Yeah. You were probably using, I mean, it was all command line and like mainframes and stuff too, right? It was a mainframe. It was a mainframe. And on cards. Yeah, on cards, on fun cards.

29:44 And, well, I'll tell you, if you had a card deck, you didn't wanna drop it. No, I don't know. I'm gonna tell you that. You did not wanna drop that card deck My mom was an accountant, and she

29:55 would tell me stories about how she would always, she would always befriend the lab TA because she could not, she hated punch cards because if one got out of order, the whole thing was off, which

30:09 is also, I relate to that with coding, 'cause it's like, hey, the code is there, but it's in the wrong order, so it doesn't work, and it's where you get frustrated, but I can't fathom Yeah,

30:19 it draws her pretty crazy. And it was Fortran, everything was Fortran at that time. And, you know, one little funny incident was

30:30 in some of the work that I did at one point, I was, I coded in when I was printing out the results, I coded in a line feed, you know, to go to the next line. You know, there's a code for a line

30:45 feed, except I mistook it and did a page feed instead. And I got this call from the computer guys at one point, they were saying, We've got three boxes of output

30:60 from me. 'Cause you know how it came out of these printers, you know? Attached printer. Oh my God. And I said, No, stop the run.

31:10 Yeah, those are the crazy things. And then the final crazy thing was at the very end, after I'd done all this work, I'd been granted my PhD and all this, Actually, we had actual terminals and we

31:24 had, I mean, actually we were moving up in terms of technology. I had all of my work and everything. And I was cleaning up. I was cleaning up my space. And whatever the system was that I was

31:37 using, I was cleaning this up and I said, delete star dot star.

31:48 Was that the whole directory? Hit the, you know, hit the enter key. And I said, wait a minute, is that gonna delete

31:58 everything? And oh my God, it did. It deleted everything, all of the work that I had done and whatever. I was just, you know, I wanted to back it up. Fortunately, the computer center had

32:10 backups from the previous day. So I was able to restore that. But boy, let me tell you, turn it on hard going like, oh that, I mean.

32:20 I don't think you're truly a developer. If you've never done that before, cause it happens to everybody. Or yeah. I mean, now they try and even out, they have the autosave and all that stuff,

32:30 but it's still, your files can still get corrupted or moved around and stuff, but. All that stuff. Let's talk about the 4K. So let's talk about kind of how y'all incorporate all of the data,

32:44 because I think that's, I think that's one of the trickiest parts about the energy system as a whole, that the average person just doesn't truly understand is how many people, like it's the energy

32:55 life cycle from well-head to whatever power, electron, let's just say, because it's easiest with natural gas. That's a lot of people, it's a lot of time, like that, you know, that hydrocarbon

33:08 could come from Pennsylvania, end up down here in Corpus somewhere, or wherever, and, you know, whether it's on our agenda, Or, yeah, ended up in the other side of the world. Right, and so.

33:19 you were talking about, you also model economic theory into it. And so, you know, on the engineering side, there's always this debate around, you know, do I use simulation, numerical

33:30 simulation? Do I use physics based models, all this stuff? And I think there's kind of some interesting tie over to that, because economics are kind of like the, to me, economics, generally

33:42 speaking, is a mathematical way of modeling human psychology in some aspect, because it's kind of human behavior in certain areas. But how do you all, how does that just generally work? Like,

33:55 what are what kind of inputs and stuff are you guys looking at with all of the natural gas production, data and demand to tie all that together with that obviously then rolls into the forecasting

34:07 part of what y'all do. I'm very curious about that forecasting is fascinating to me just holistically. And so I think it is an interesting conversation, especially with commodities. Yeah, it is

34:17 very interesting. And to your point, there was a conference here in Houston, just a little over a week ago called GasTech. And there were 45, 000 people from around the world who came to this

34:31 conference. And if you walked around the exhibit floor, which was huge over at the convention center, or listened to the talks, I mean, what I was amazed at is, you know, I think what we do is

34:47 important. And it's kind of an overview top level kind of thing, you know, looking at supply and demand for, you know, some big market, whether it's United States, North America, or the world.

34:58 But, you know, these people are getting down to the nitty gritty, you know, these are the engineers and the people who are building pieces of equipment and all is just totally amazing. And

35:10 to think also about how many different things have to work. right in order to make an energy system that work. I mean, and it's reliable for people, people just turn on it,

35:25 flip the switch, or their heat just comes on when it gets cold. It's the danger of good design, ultimately, right, is it's like it makes the user think that it's not even in their thought process.

35:38 If it's that good of a design, it shouldn't interrupt what you're doing, right? You flip it on and it works. That's right, and just to get a little bit political and maybe politically incorrect

35:48 here. We like that, so it's

35:52 okay. I think that a lot of people, mostly young people who don't really know about this, but others that maybe should,

36:01 they don't realize what they're talking about when they say, Oh, well, we You know, we want to kill the fossil fuel industry or, you know, with. went to completely revolutionize and make the

36:14 whole system be renewables or to be zero carbon or whatever. I mean, they're basically saying to throw away a system that works for something that hasn't even been designed yet and to do it by 2030

36:30 or 2050 or something like this. I mean, they don't really have an appreciation for how complex this system is and how it has to fit together and they can't really quite see that it would be better

36:47 to go very incrementally. I think it's totally, by the way, I think it's a totally rational and

36:58 beneficial thing for them to demand that energy companies operate as cleanly as possible. completely agree. I think that they get rid of the missions to whatever extent that they can. I think

37:10 that's the biggest misconception about the traditional energies is that every day on my way to work, I stop by a pond and dump five gallons of oil into it because I hate the environment. Almost

37:22 everyone I know in the energy industry, especially the traditional space, is trying to be as clean and as good of stewards of the environment as they possibly can They can.

37:33 There's always bad actors.

37:36 And there are costs associated with making better equipment that's going to be made less methane and so forth. And those costs have to be incurred by somebody.

37:50 I think that there is some inertia in the system. But these things are doable. They can be done and companies in fact actually are doing something about it. So that part is good. get back to your

38:05 original question. You know, this is basically something that I learned, you know, when I was a graduate student at MIT and I was studying economics, it's like, it's a really, there is an

38:17 actually, you know, quite beautiful theory of economics that is at the top level. It involves things called supply curves and demand curves that use very simple concepts They're very simple

38:31 concepts. And they're very rational concepts. It's like when prices are higher, people are probably going to consume less of that particular item. On the other hand, if prices are higher

38:43 producers, are probably going to try to produce more. So you get a supply curve where the quantity produced goes up with price and you get a demand curve where the quantity that is going to be

38:56 consumed goes down with price. So you have these

39:02 forces here, And what you can, you learn a guy actually was an MIT economist named Paul Samuelson wrote back in the 1950s, 1950, in fact, the first article that said, OK, well, if we have to

39:17 move product from some production area to some

39:21 consuming area, this is how the mathematics has to work for a supply curve, demand curve, and transportation system And anyway, you look at

39:32 it, and it turns out to be, for anybody who has an appreciation for mathematics, it turns out to be a quite beautiful theory. And the equations make a lot of sense, just like I explained supply

39:47 and demand. There's other things that

39:51 make sense. It's like physics almost. I can kind of see how you went from the physics side into this side of it, because it's like you have these theories that are. kind of explain

40:04 the reality. Yeah, they are, that's right, they are descriptive of what you would actually expect. And in a free market system, you would expect, for example, that if it's competitive, right,

40:17 that

40:19 the price that somebody charged for a product would end up being about what the cost was for them, let's say if they're moving a product like transportation, the cost of what it costs them to buy

40:35 the product, plus what the cost is to transport it, okay? Because if they charge more than that, plus a little profit or whatever, if they charge more than that, competition is going to drive

40:48 the prices down. So, I mean, there's equations that describe all of these kinds of things. And when you pull it all together, it, it just works very, very nicely. So, those are the underlying

40:59 mathematical economics to power systems. And this is all something users don't really have to know about it, except for the, you know, they don't have to know about the algorithms that actually

41:12 solve these things, which are pretty complicated. But, you know, they do need to know about the principles and to agree with the principles. Now, the other thing that was kind of interesting was

41:22 that when you looked at a highly regulated economy, it doesn't work that way. Right. And you'd, you have ugly equations instead of, instead of beautiful equations. Can you give me an example of

41:31 that just out of curiosity? Well, you know, back in, in the old days, they're again, you know, when I was first studying this stuff, pipelines could only sell their gas at what was called the

41:44 weighted average cost of gas, Wacog. Nobody hears of Wacog anymore. That was, everyone hears about people complaining about how low their spot prices for gas.

41:56 But a weighted average cost of gas basically said okay. if you're a pipeline, you're buying all your gas from Texas and Louisiana and Oklahoma and wherever you're buying it from. And it has

42:07 different prices and different, determine what the weighted average of all of those costs are. And then the price that you can charge is based on that, plus maybe a guaranteed 6 return on your

42:22 investment, some kind of some, some, you know, this is called regulated rate of return regulation. Okay, that's what it's called. That was the power commission. And that was federal power

42:32 commission did all of that. So they basically said, whenever you, whenever price was set across the country, or was it just per pipeline? For each pipeline separately. So, but it turns out,

42:48 when you look at those equations, the weighted average cost equations, turn out to be much more complicated. Sounds very complicated and from a mathematical point of view. trying to solve to get,

43:01 quote, the optimal solution is it turns out it's much, much harder and much, much less clear and so forth. And so I was able to, you know, as part of my thesis to figure out how to do that stuff.

43:17 But you can see, you know, how the idea of a free market or, you know, it's not completely unregulated clearly, but, but, you know, one which operates with more sort of rational rules, ends

43:32 up with a better solution. You know, that's all there is to it. It's also simpler in some aspects, I assume. It's simpler. Yeah. But, you know, if you think about it around the world, it's

43:43 not that common. Right. That in most places are not that right And, you know, you take a place like India, you know,

43:54 it's doing much better as a country and as an economy that it used to. But it was still up until very recently, you know, people just couldn't afford, you know, high-priced energy products. And

44:09 so the government always had to subsidize. Okay. And so and there were times when they had committed to buying LNG and then the LNG was too expensive. Right. They had to basically refuse the cargo

44:23 and just pay the penalty, you know, because it was just too much. Right So, you know, those kinds of things are, you know, very typical in the poor countries. But in some countries, which

44:36 were previously poor, they are trying to develop systems that are somewhat similar to what we have in the United States. So you will see in China, for example, you know, we think of China as

44:48 being communist,

44:52 but it's a very strange kind of kind of. Right

44:55 You know, they call it socialism. with Chinese characteristics, which means basically, hey, we're the top dogs, we control everything. So it's an autocracy like that. But in actual fact, it's

45:10 like a super capitalism in some regards inside that country. So they are quite interested. I've been there several times. And in Beijing talked with some of the energy companies and people and I

45:23 found them to be very interested in how we do things in the United States. So they are a country that is trying to sort of break out of their isolationism and to understand what's happening around

45:37 the world and to take what they can learn, how it might be applicable to them and do better that way. So I'm not gonna say anything about the politics and the defense and offense and all of the

45:54 other stuff, I'm just talking about the on the economic side. experience with a country that,

46:02 you know, in the end, the demand for natural gas in China is going to control the world oil price or the world gas price, for sure, because it's so great. No, it's an interesting, so when I was

46:15 getting my master's, I took a policy class and my professor, he was on

46:23 both Bush's and Clinton's energy advisors, I don't even apologize for butchering that professor, but. Council of Economic

46:37 Advisors. The fascinating thing that I really took from that class was how almost disadvantaged the US is because we are a democracy and because you have, you basically have power changes every two

46:49 years, right? So like energy, pretty much any kind of commercial energy project is. you know, weight takes way longer to develop, right? And then you start looking at how they plan these

47:02 projects and then you look at all the risks and then got policy as one of the biggest risks of any kind of traditional energy project these days. And so it's like, well, how the hell, how could

47:12 you get approval for a pipeline, even if the all the state and local stuff was checked off? It's like you still have all these risks, just policy-wise that are outstanding or could change in the

47:24 future that you just have literally no control over Whereas in a country like China, where they do have sustained government, essentially for long durations of time, they can have a 10, 20, 30,

47:38 50-year energy plan and actually execute on it because two to four years later, someone new isn't coming in office and changing the policy because they're a different party or something like that.

47:49 And I never thought about it that way, but it makes a lot of sense when you look at it, because you always have this infighting in the states, basically from both sides. But then you go out of the

47:58 States and you're like, oh, well, if the government runs the country in this kind of autocratic way, they have ultimate control and they can actually plan and execute these energy visions on a

48:11 much longer timeframe, which is going to be interesting to see how all that ends up shaking out. But it's a. Yeah, it is very interesting. I guess what I would say to that, though, is you've

48:24 got to think about it this way You essentially have one point of view, which means they come up with one plan, and then they push through that one plan. But what if it's a bad plan? Absolutely.

48:35 If it's a bad plan. You see, the difference we have is we got in the United States, we've got thousands and thousands and thousands of

48:44 people, entrepreneurs and so forth, who are going to try out different plans. Yes It's a little bit of a kind of evolutionary doggy dog or, you know, the. Whoever is the best

48:59 will win in that circumstance. Now, that being said, what we have found, of course, is that if you have a government which is so bureaucratic and antagonistic to the fossil fuel industry then

49:15 they will,

49:17 stop projects for trivial reasons, okay?

49:23 I mean, here's another example,

49:27 in Texas, not only do we have all this oil and gas and so forth, but we have an entrepreneur who is building the first rocket that will be able potentially to take people to Mars. And by the way,

49:44 do you know how it's gonna be fueled by LNG?

49:48 It's actually gonna be fueled by LNG No one understood why he picked up. Brownsville for for all of that stuff. Yeah, he bought a bunch of gas wells and there's a lot of stuff. Well, we have,

49:58 yeah, Rio Grande LNG is going to be right, you know, right next to it. Yeah, there's a lot of energy here for sure because it takes a lot of energy to get out of orbit. Yeah, there's all of

50:06 those things. But anyway, the point is that the FAA under the current administration, even though

50:14 Space X is ready and has been for a month to launch their next rocket to test it and so that they can make it better and better and better, that's their philosophy is you launch frequently and find

50:27 out yours, you fix them and so forth. And they've taken over the entire industry using that philosophy, but the FAA is

50:36 just arbitrarily stopping them from doing this for another three months. And by the way, if Elon must pisses them off, we can just make it another two months or other tumors and you know, just

50:49 forever. So it's really really stupid. But the good news is that because there's so much oil and gas production in the state of Texas, and there are so many export facilities for oil and gas along

51:06 the Texas Gulf Coast, you can build your pipelines in Texas. You don't have to go outside of Texas and have to get approval from the federal government to do this. So that's why you have so much

51:20 development in Texas and Louisiana. You also have a lot because it doesn't have to cross the state line, and so you don't get stopped kind of arbitrarily like Williams is being stopped up in the

51:34 Northeast. And it's just, you know, after spending billions of dollars, you know, to

51:42 do everything that involved and actually even build the damn pipelines, and then they say, well, you can't operate

51:48 it Yeah, I mean, it's yeah, that's insane. It's really pretty insane. That leads us to a really interesting question.

51:56 We have a shit ton of gas. We have too much natural gas. Some people would say because, you know, you've got a lot of operators in the Permian where they still, you know, there's no takeaway

52:08 capacity or it's. If there is takeaway capacity, it's just ridiculous prices that they can't make any money on, but what

52:18 Know what being in the gas markets, watching how the gas prices over the decades have ebbed and flowed. Cause I mean, that's the, I think that's the craziest part about shale is that it kicked off

52:29 basically when we were, everyone was thinking peak oil was kind of hit happening. It seems like, and I know that happened multiple times through history, but, you know, you can see the gas

52:41 prices just, if you look at the charts, right? Like they just explode in the early 2000s and then it's like, well, shit, Where is it going to come from? And now, you know, the decade. 15

52:51 years later, we're back well below what prices were then, and so it's like, do you think we continue this kind of ebb and flow cycle of overproduce or underproduce, which leads to higher prices,

53:05 which leads us to overproducing, which leads to lower prices for longer? Because then you also have the compounding technological efficiencies of, hey, for each new shale or gas weld, they're

53:16 able to increase the production by however much percent over the years, or do you see, I'm just, I won't even, I won't feed any more ideas because I don't want to influence anything, but I'm

53:30 curious what, because I just, there's so, I mean, there's so much energy that we just for natural gas that exists in the US. today that isn't being used, and it's like we're literally wasting it.

53:44 I mean, they were flaring it for years, right, like, and so it's like, well, it doesn't make sense not to use it, especially if it's already. being produced, most of like, I think 60 at one

53:54 point was associated gas, like of the natural gas production, 60 of it was not targeted. It was, you know, just associated gas with a will. And so how do we, I mean, is it, is it policy? Is

54:07 that gonna be the big thing that changes how people use more natural gas? Or is it entrepreneurs and individuals coming up with, you know, building more pipelines and having these creative

54:19 solutions for it? What are your thoughts? Well, I have to unpack what you just said. Yeah, I was like five or six different issues there, all of which are important and very well stated. You

54:31 know, we have different issues in different parts of the country, you know, Permian Basin here in Texas.

54:39 You know, you have situations where the gas price at the pricing point called Waja has gone negative on many, many occasions, like I don't have. a hundred days this year, you know, they went,

54:52 it went negative. You say, how can you have a negative price? That's the same for those who want to understand what that means. That means they are paying them to take the gas away from them.

55:02 That's literally what that means. I'm going to pay you to take the product that you used to pay me for. So then there is literally no psychological incentive for them or human incentive for them to

55:12 do any, they're not going to pay someone that they're expecting to get paid. Actually, it's not really quite true And the reason for that is just what you said before about associated gas. Okay,

55:23 a lot of this gas, the majority of it is what you call associated, which means it is produced when you produce oil. But the point is that if you are making enough profit on your oil sales, you

55:38 don't care if the gas price is negative because you want to produce another barrel of oil because you're still making enough profit And if you can move the oil out of the. Permian Basin to market,

55:52 then you're going to get paid. And so this is this crazy thing called co-product economics when you have multiple products that are produced at the same time. So it does make sense actually

56:05 economically. It just looks weird, okay, it really looks weird. Now it does offer an opportunity when these things happen for other entrepreneurs who say, you know what? We got all this gas

56:18 production We need to build more pipeline capacity to take the produced gas and send it, you know, to market wherever the markets might be. So, but the thing is that the producers and the pipeline

56:35 people are not coordinated all the time. And so what you get is that the producers get out of, out ahead of the pipelines. It's not, see, here's the opposite scene I mean, just to show you

56:49 something. totally opposite.

56:53 There's a pipeline that was built a number of years ago between Russia and China, called Power of Siberia. Okay, this pipeline was built with a capacity of about 38 billion cubic meters per year,

57:11 which is about 4 billion cubic feet per day, approximately Okay,

57:17 it hasn't in 10 years, it hasn't reached capacity yet.

57:22 Okay, because why? Because they built the pipeline first, and then they develop the field around it is going to supply the gas through the pipeline. We do it the other way. We do it the other way.

57:36 Okay, and largely, I mean, it's not always unsynchronized. Okay, there are situations, for example, where

57:48 It's not going to make sense, for example, in the Haynesville, which

57:52 is dry gas in Louisiana. It's not going to make sense to start drilling like crazy up there when there's no pipeline in the past, because you don't have oil for all sorts of products, so you have

58:06 to do things a little bit differently. But yeah, it is an interesting problem, and it is one of these things because we don't have central planning, the

58:17 state of Texas doesn't have central planning, the US doesn't have central planning, so you don't necessarily always get the sequences right. Right. Now, it's frustrating, from a consumer

58:27 perspective, where it's like, I've been in the oil and gas industry for 15 years now, and the natural gas price is about the same as it has been the entire time, yet my utility bill keeps going up,

58:42 and it's like, well, shit, if people would just figure this, you know, figure some of this stuff out. I think the opportunity, the energy problem as a whole is that in most cases, the most

58:55 dense sources of energy that we want to harvest are the furthest away from where it's actually needed, right? Like you can have great solar locations or wind locations or natural gas, whatever,

59:08 but typically they're in the most remote places, the best of, or the best resources Generally speaking, remote places away from the demand. And so you have to have all this infrastructure that

59:20 connects them. But I think like with natural gas at least, especially with all the AI and demand for new compute, I'm hoping that it's going to go the other way and they're going to start building

59:32 data centers and high energy consumption things at closer to the sources of these things, right? Like, why isn't Microsoft in West Texas buying up all this associated gas building it? some kind of

59:48 infrastructure and just having a giant data center there that I know why Microsoft isn't because it isn't going to get them their ESG checkbox because it's natural gas. But there's huge opportunity

59:59 there when you think about long term, especially when you think about how natural gas prices have been flat for so long, like that de-risk sit theoretically, at least from the project perspective.

1:00:10 But I'm very hopeful that people will start building closer to the source, which helps with the economics, which burns even more stuff off of that. Who knows? Yeah, I mean, I think that that's

1:00:21 all true. And yeah, Microsoft decided instead to restart Remile Island and get nuclear power for those. So that just was in the news this last week. But you know, I don't really know fully what

1:00:35 the plans are on this, but I would say it seems like to me it would make sense to build more gas-fired plants in the Permian. to produce electricity, which both the oil and gas producers could use,

1:00:50 the

1:00:52 gas processing plants and

1:00:57 other plants that exist out there in the Permian itself. There are, by the way, some growing cities out there, Midland and some of these other cities are growing, so you are getting some

1:01:07 population growth out there. But then you still have to build the wires, right? You still have to build the wires to the Gulf, to Houston, to Dallas, and so forth, and that seems to be the

1:01:20 major stopping point, I think, is building more electricity transmission. And I'm not really, I don't really study that area that much, so I don't know why it's always the problem, but it seems

1:01:34 to be, you know, the problem. I think it, from what I understand, it's a cost problem in that the utilities can't get rate of return, or whatever, on building transmission. And so there's not

1:01:46 much of an incentive for them to build more. But we certainly needed Antexas. I mean, Yuri proved that. You were here, I was here. It wasn't pleasant. Nope. So.

1:02:00 Yeah, I was happy I had natural gas. That was the only thing that worked. I stood in my fireplace. That's the same thing with me. We could keep things warm in our house. We didn't have power,

1:02:10 but we could keep things warm By the way, we, this last time in preparation, not for Yuri, but last time we went to Home Depot and we got some of these little lamps that you put on your forehead.

1:02:23 You know, it looked like cold minor lamps. Those things worked great. They're great, they're great.

1:02:29 They are, I would recommend them. No, they're super handy. I've got one that I use when I go hunt, and it just like, it's like a headlight. I mean, like a high beam on a car. It lights up the

1:02:40 world. Yeah, so I don't know how we solve that problem. I think, you know, what you were talking about is certainly true, you know, I mean, in the beginning, everybody wanted oil if you go

1:02:49 back to the 1800s. And natural gas was nuisance. I mean, it was a nuisance gas. And in fact, it was more than nuisance gas. It was actually quite a threat. It was quite dangerous because. Yeah,

1:03:02 they were just what the wells blow out back then, right? Well, the other thing was it's heavier than air. So it sticks close to the ground. And it actually is odorless, strangely enough. And so

1:03:13 you actually got situations where you got seepage from mines, from wells and so forth. And these clouds would go over an inhabited area and people would just die at nighttime while they were

1:03:26 sleeping because they didn't know what was happening. And they got asphyxiated because, you know, and so that's by the way, one reason why utilities add for something that smells nasty. um, so

1:03:41 that you can tell in your house, you know, if the natural gas in your, from your stove or whatever is leaking. That's why they do that. Okay. So it's, it's pretty interesting. Um, but it was

1:03:53 nuisance gas and, uh, and that's, and, and basically there wasn't anything to do with it. And so that's why they, you know, they would just light it off and burn it. And that's called flaring.

1:04:05 Yep. And it gets rid of the methane emissions for the most part, but it creates carbon dioxide. Not very good for the rest of it. So if you think that carbon dioxide is bad thing, which by the

1:04:16 way, the trees and grass and so forth, don't think carbon dioxide is such a bad idea. But if you do, then, you know, that's something you would want to get rid of. And and largely in the US,

1:04:29 it's, we're getting rid of that, you know, flaring and all this emissions and stuff. You know, we're doing a good job. And, you know, the The major, actually the major, like. I don't know,

1:04:41 what percentage, a huge percentage of flaring that occurs, inventing is in Russia. Yeah. You know, because they're not as advanced. It's always. And they do have that central planning more or

1:04:52 less, but they're just not doing it. Yeah, no, that's my biggest thing with a lot of the stuff is it's like, if you think what we're doing is bad today, you could only imagine how bad some of

1:05:04 those things internationally, where it's not regulated are across the world, but

1:05:14 let's talk about the forecasting element a little bit, and then we'll get into the closing stuff,

1:05:23 so I'm familiar with forecasting just from the data side, but I have not, and from my past roles in sales, where you're forecasting sales numbers and stuff for budgeting purposes and all that, but

1:05:37 let's talk about that with what you guys do because that sounds like a hell of a complex. I mean, I'm just thinking about it holistically, right? You already you inherently have seasonality,

1:05:46 right? Like, take out all the other complexities. You have seasonality. Like that's something you always have to account for. So that means you also have to account for weather. Then you've got

1:05:55 all the global, all the global sources, all the geopolitical, all the how, like, how does that, you don't have to go into super detail, but just generally speaking, how do you all,

1:06:06 how do you all do that? Like, how do you, that's a tremendous amount of data, and they're also all variable, so it's. Yeah, you're right. You're totally right. And so we, you know, we're a

1:06:18 small company and we can't do it all. So, you know, we pay good money to various larger companies that provide data sources for us. And so, you know, big money actually for a small company, you

1:06:33 know, because again, you can't do it at all, if you're. But our focus is on being the integration of all of the different data that could be available. So

1:06:50 describe your current customers and what problems they're trying to solve with your platform. Well, the big companies, of course, have problems across the board. So this is only, this is kind of

1:07:03 at the top level where they are basically trying to determine where prices are headed. Our prices in the near-term, medium-term and long-term are they headed up, down, like you said, what kind of

1:07:18 seasonality is associated with prices and all of these kinds of things. So, in the short-term, it's usually the traders, because the traders are the ones who are most interested in price. In the

1:07:31 longer term,

1:07:33 the people who are most interested would be, let's say, planners who are looking at investments in infrastructure, new pipelines or new power plants or anything like that. So they want to get a

1:07:46 heads up on, they may want to look out 25 or 30 years or longer to justify the expenditure on some new piece of hardware. So essentially we're forecasting four things We're forecasting how much

1:08:07 production there's going to be, how much consumption that there's going to be, what the flows will be across different pipelines and LNG flows around the world, that sort of thing. And then price,

1:08:21 okay. And price at all of these different locations. So it's all the sell pricing. Yeah, basically prices, flows, supply and demand. Those are the things, the basics of what we do. That's

1:08:33 fascinating How a man. So

1:08:39 I've also got another, this is just in my, when I got my master's, I did a commodities trading class, which was really fun 'cause you should play with fake money, but

1:08:50 that was always fascinating to me because

1:08:54 my professor said something to the effect of,

1:08:58 now something like 80 to 90 of futures are never actually, they're just purely trades, they're not actually taken possession of, which is crazy to me because, you know, however many weeks before

1:09:11 we were talking about that in the class we were talking about, well, this is why we opened up international futures trading so that we had a global commodities market and we could justify true

1:09:21 international prices. And now it's just like, oh, well, it's just traders and bots that are speculatively trading to make profit most of the time, but it still also functions as this hedging

1:09:32 instrument for everybody else I assume also like the planning and stuff. in some of the trade areas as well, or use your platform for hedging and that sort of thing as well. They do, and I don't

1:09:42 really understand all of their own models and technologies, and how to go about doing that. I don't personally understand that, to be honest with you. I mean, you're right that many of these

1:09:53 trades, a particular parcel of natural gas might be traded 50 times. Right, it's crazy. Before, at the very end. Right. So when I'm actually trading, you actually have to, you know, finally

1:10:05 do something with it. You know, actually take possession of it or something. So,

1:10:10 you know, it's a pretty complicated game that the traders play, and I don't, you know,

1:10:19 the ones who are successful make Boku dollars. I mean, you know, they really make a lot of money on bonuses and that sort of thing. It is crazy. But it's also, you know, as we learned in early

1:10:28 2000s, it is something where you have to maintain ethical level.

1:10:36 and to demand that of your own traders or they can go wild before the money. And we saw that in Enron and some of the other companies kind of got into that

1:10:49 sort of unethical behavior also. So I think things are definitely better at this particular point. But you still, there are ethical

1:11:03 people and most people are ethical and they're unethical people who are going to try to take advantage of whatever they can. It's not just the United States, like you said, now it's all around the

1:11:13 world, so. For sure.

1:11:16 Yeah, so I don't know what more there is to say, specifically did I answer whatever question you had on that? It's like I said, it's just a fascinating thing. I mean, I think it's wild to watch

1:11:30 prices converge other and prize futures, know you,

1:11:34 all trading in generals. fascinating thing to me, but it is fascinating. And one thing I will say, which is interesting, and that is it's really hard. And to forecast what the market's going to

1:11:48 do in the future. I can't imagine even just like numerically forecasting it based off of, because we were looking at heating days and cooling days and all the stuff that you're supposed to look at.

1:11:58 And then it's like, well, shit, and there's a hurricane and then prices go down and you're like, what the hell is happening? There's all these psychological things where it's like, hey, it is a

1:12:07 market. It's not always logical because humans are involved or there's bots and other stuff that you can't actually describe.

1:12:16 That's true. And one thing we don't directly take into account in our system is doing some kind of modeling of the open positions, because you can have open interest in one way or another which is

1:12:34 going to affect you. what the price is in any given time period. If you're long or you're short, it's going to affect those things. So we do what we call fundamentals. We're based more on

1:12:44 fundamentals, not those kinds of things. But the good news is that using this system, you

1:12:50 can detect certain likelihoods, okay? You can do risk analysis where you look at many different scenarios and see what kind of range the prices could actually end up being which can be very useful.

1:13:04 But you can also see, you know, a kind of trends that might be happening or a phenomena that might be happening that are pushing the market into unusual territory. Let's say, you know, one of the

1:13:21 things that we have seen is the following, which is

1:13:28 that, you know, there's so much American gas being produced and there are so many

1:13:36 new LNG terminals, which are if they all get built actually, or if several new ones get built in addition to the ones that we currently have, that at the same time that there are major expansions

1:13:53 occurring in Qatar or their LNG production capacity, there are other projects in Southeast Africa, in Mozambique, and various other projects around the world, Canada, Mexico.

1:14:10 You can envision, in fact our models, we'll point to a situation where you could get toward the late 2020s, an LNG oversupply that would basically overwhelm the world market and prices collapse.

1:14:29 So prices in Europe and Asia could collapse. because even though

1:14:37 in demand is growing in Asia, they're trying to phase out natural gas in Europe, which is kind of a little bit crazy to be honest with you, but

1:14:48 that phenomenon combined with this increase in global supply, you could have this situation where prices just, I mean, get down to the level of US. prices in Europe That's why. You know, which

1:15:02 would be on, right now, we got250,

1:15:07 something like that at Henry Hub price. So let's just say, two to four or five dollars around the United States. And in Europe, it's like 12 or 13 right now. So you can imagine if that 12 or 13

1:15:19 goes down to two and a half or three or four dollars, that's the same as US. It's like that would be pretty amazing and very, very unusual but you could have that kind of situation happening. if

1:15:33 you overwhelm the market with too much, which is kind of what you were saying at the very, very beginning. Right. It's not just a US phenomenon that happens in the Permian Basin. Right. I mean,

1:15:43 this can happen globally as well. Yeah, no, that's the weird thing about the natural gas side. Like I said, they just keep getting better result. Like they just get more efficient with how much

1:15:55 gas they're able to get out of a single well and they have continued to be. And yet they're still producing gas because they can make those margins work. But it's wild to see, yeah, no pricing. I

1:16:08 mean, you look at how volatile oil production is tied to the price of gas, right? Like people start turning wells off and shutting things in or doing deferred production once you get below50, 60

1:16:19 barrel. It's like natural gas is in below3 an

1:16:25 MCF. Generally speaking, for a long time finding ways to make it more efficient. And so it's, yeah, it's, it's, it is very interesting. You've mentioned this a couple of times and I haven't

1:16:37 really had a chance quite to respond, but I think it's, you know, the old way of looking at resource economics was that generally the people who were the exploiters of resources

1:16:54 found the easiest and biggest

1:16:58 fields first. And so they developed them first, which meant that if you look at it over time, the cost of resource exploitation should increase per barrel or per million BTU or, you know, 1000

1:17:13 cubic feet or whatever, because you're going to pockets that are less prolific and more costly. But those theories didn't take into account learning. Right Okay, and the biggest learning that

1:17:29 we've had. uh, over the last 50 years has been, uh, horizontal drilling and controlling that along with, uh, hydraulic fraction. So you combine those and all of a sudden you're in a whole new

1:17:43 world. Right. So, you know, figuring out how to model learning is very, very, very, modeling technology and to, but that's basically what's happening is that there's so much learning that

1:17:55 takes place. And the process, they also called the, I think they call it the factory approach or manufacturing approach, which, which means that actually something that you could not do in the

1:18:09 old days, which is, you know, once you turn to well on, you kept it going. Yeah. Okay. Because otherwise you could actually ruin, you know, the formation, you know, that, but you can now

1:18:23 do so many of these wells or whatever. It's more like a control prices are too low, okay, we'll turn some of them off and it's not gonna actually hurt things. Yeah, no, the technique that they,

1:18:33 one of the innovative ways they kind of figured that out was when prices were low, they still had lots of drilling activity so that they call them ducks drilled uncompleted. So they would drill the

1:18:46 well at fractions of a penny on what they would, we're drilling them two years prior because everything went down, all the prices went down. So they get a really good well cost Then when prices go

1:18:57 back up and it's economic, we'll come back and frack the well and start producing it. And so it's a smart way of looking at it because that's the craziest part about oil and gas. Asset doesn't go

1:19:08 away. It doesn't disappear. Like it's not degrading in our time cycle, right? The well is gonna produce what it's gonna produce. And so it's like, if the economics aren't there, then you just

1:19:18 don't produce it. It's pretty crazy. It is pretty crazy. And I'm hearing there's another thing I don't really know much about cold. refracking, okay? So they can go into an area and then frack

1:19:30 it again. They're going back into the exact same well. But, you know, prices are too low, they just delay the refracking until prices are, you know, justify it. Yeah. So there's much more

1:19:41 control that producers have than they used to have, you know, on this. And you're seeing this in real life, you know, if you read the newsletters and so forth, you know, producers are reducing,

1:19:55 you know, to try to bring prices back up to a better level. And, you know, so it's just managing supply and demand to a better degree, or the supply side at least than has ever been possible

1:20:08 previously. Yeah. No, it's going to be very interesting to see what the kind of market cycles look like in the future because of both the on demand production side of it. And then also because

1:20:18 they can have this pseudo on demand production. They also now have more control over the supply piece of it, right?

1:20:26 I can't, we have blown through this

1:20:30 at the time. This has been really good, really fast. I always find energy markets and just the whole supply chain of fascinating thing because no one ever talks about how complex and new ones of

1:20:42 this stuff is. But yeah. I agree with you on that. And I know you're gonna close us out here, but I would say to any listener here

1:20:52 that I have found, I mean, there's a lot of things I'm interested in I've always been interested in, I'm totally a STEM guy, right? You know, from the very beginning, but I used to be a lot

1:21:02 interested in rockets and space program. I'm still interested in these kinds of things. But once I started getting into this energy area, it's like it is so fascinating. It is so important. You

1:21:17 can never learn. Yeah, and it continually changes you can, you know, you just, you never get bored. Yeah, honestly, you never get bored. That's a perfect way to wrap this up. How do people

1:21:30 find you if they're interested in reaching out or using your software? You know, we have a website, wwwrbaccom. You

1:21:38 probably don't even have to put the www anymore. But that's the best thing. And then there's contact information there for people. And you're certainly welcome to look through the site and read the

1:21:51 various articles and that sort of thing If you're just interested in this area. Perfect. Thank you so much, Dr. I appreciate it. Everybody, thanks for the time. Make sure you guys give us a

1:22:02 like and a follow when you get a chance. We will see you next time.