In The Oil Patch: Episode 201 – Amy Chronis & Duane Dickson, Deloitte

ITOP Deloitte Facebook Featured 04.2019
ITOP Deloitte Facebook Featured 04.2019

In The Oil Patch – Episode 201: This week on “In The Oil Patch”: host Kym Bolado welcomes Amy Chronis, Houston Managing Partner at Deloitte and Duane Dickson, Vice Chairman, US Oil, Gas & Chemicals Sector Leader, Deloitte LLP!

We’re also joined by David Blackmon, Editor of SHALE Magazine!

-Originally aired on 5/4/2019 – 5/5/2019-

Alvin Bailey: (00:00)
Welcome to In The Oil Patch presented by Shale Magazine and sponsored by STEER broadcasting today from Aggreko studios. Aggreko powering the Permian. In The Oil Patch is where together, we explore topics that affect us all in oil, gas, business and in your community. Every week your host Kym Bolado will visit with the movers and shakers in this fast paced industry. You’ll hear from industry experts, elected officials, and many more right here on In The Oil Patch.

Kym Bolado: (00:29)
Welcome to In The Oil Patch radio show. I’m your host Kym Bolado today. We have a great show lined up for you. We will be joined in studio by Amy Chronis who is the Houston managing partner for Deloitte as well as Duane Dickson, who is the Vice chairman of U.S. oil, gas and chemicals leader for Deloitte as well. But first I’d like to tell you about the latest issue of Shale Magazine. It’s a wonderful issue. It breaks down the topic of natural gas, talks about importing, exporting. So if you have questions on what’s happening, there’s a lot of media attention around this clean burning fuel. So you definitely want to go to that’s spelled s h a l e m a Again, that’s s h a l e m a And remember it’s free. And did I mention for less than $80 a year, you can get a full year subscription to Shale Magazine. And again, all you have to do is visit shale, s h a l e m a and get your subscription mailed directly to your office or home. And now it’s time to bring on our editor of Shale Magazine, David Blackman. David, welcome to the show.

David Blackmon: (01:46)
Hey, it’s a beautiful day in Texas.

Kym Bolado: (01:48)
Sure is. Well, you know, when you say the weather, it could also mean weather like it’s kind of raining down assets and money and all kinds of crazy things here in Texas. And last week, you know, we talked about this whole, Occidental and Chevron both vying for Anadarko and you know, there was some very interesting things that had happened last week. And so I want to get back on the topic because it’s just truly taking over a lot of the media. There’s just a lot to talk about. A lot of things are happening. So now that we’ve seen that there is, Oxy is now tried to acquire Anadarko once again. You know, my question is this, do you think that it’s going to reopen negotiations with Oxy? I mean, there’s been a little bit of some talk, but how really, how valid is it do you think?

David Blackmon: (02:48)
Yeah, so Anadarko’s board did reopen those negotiations with oxy. It’s the first of the week. And that was after, as we talked last week, Oxy had come in with a higher offer than they had originally made and significantly, frankly higher than Chevron’s offer that Anadarko had originally accepted. So, I guess it’s not really surprising that Anadarko’s board made that move. They really probably kinda had to, I’m sure they were getting a lot of pressure from investors. There are a lot of other factors that go into a merger like this other than in addition to, you know, just the pure dollar amount. There’s, factors of whether or not the two organizations are compatible with each other. Things like whether the acquiring company really has the capacity to consume or to rationalize all those new assets and an organization. And, and so a lot of that will be discussions of those ongoing talks, but it’s a big deal. I know Chevron’s disappointed, frankly that Anadarko made that move. But, now the pressure’s kind of on Chevron to come back with a higher offer.

Kym Bolado: (04:01)
Yeah. And you know, when all this was going on and the offer was made, I didn’t find any media reports that had been disclosed that Oxy had visited Warren Buffet as well, and that Warren Buffett had come on the side of Occidental or Oxy, to the tune of $10 billion dollars of making an investment. Now, I guess my question would be with Warren Buffett now in the picture giving or not giving, but bringing in $10 billion of an investment who’s in the driver’s seat now? How much is Warren Buffett involved in this as well?

David Blackmon: (04:40)
Well, it’s, you know, it’s certainly is a big boost to have, Berkshire Hathaway and Warren Buffett in your corner. $10 billion takes a lot of pressure off of Oxy financially. There were questions about, you know, how much new debt Oxy would have to take on in order to finance the Anadarko deal. And, so bringing Buffet on in this way, what he’s done is he’s made a commitment to purchase $10 billion worth of work to make a $10 billion equity investment in Oxy. And in return for that, he would, get a bunch of shares of the company with high dividend right attached to them. So it’s kind of similar to taking on debt, but it’s not through a bank and it’s not the traditional way and it’s all contingent on Oxy actually winning this negotiation or this competition with Chevron. That’s a big deal. You know what I mean? Anytime you have Warren Buffett in your corner,

He can come to our corner.

Yeah, you want to get a piece of that deal.

Kym Bolado: (05:48)
Well, and how many business professionals like himself really do jump involved in shale plays. I mean, this is somewhat new, that area too.

David Blackmon: (05:58)
Yeah. You know, he’s an interesting guy. He’s for a long time, had a big position and Conoco Phillips, I don’t know whether or not he still does, but he does take pretty significant positions in, oil and gas companies from time to time and but he’s, he’s very selective and picky about it.

Kym Bolado: (06:16)
Right. When he sees the winner he sees the winner. Let’s switch gears a little bit and talk a little bit about Permian Basin. Pioneer’s announcement that it was selling off all of the last remaining Eagle Ford acreage they had in assets and is going up purely focused on Permian basin. What do you think that means? Are they looking for a buyout? I mean, hey, right now the market is hot for Annadarko, do you think they’re trying to jump in on the action as well or what are your thoughts on this? What’s, what’s making them want to sell acreages in Eagle Ford Shale.

David Blackmon: (06:53)
Well, you know, it’s the end of a year long process. They announced a year ago February that they were, were going to sell everything other than the Permian Basin assets and become a pure Permian play. They’ve consistently said this is for the sake of efficiency, the financials are better, more profitable to drill in the Permian Basin than anywhere else. And so it would improve their income statement and balance sheet to do this. But at the same time, there is no doubt, and I wrote a piece at on this week. There is no doubt that becoming a pure Permian play like this, will make that company a more of a target for a big acquiring company like Chevron or Oxy, whoever loses this battle for Anadarko. Well there and now there’s going to be this pure Permian place sitting there with a gigantic chunk of acreage right in the middle of the Midland basin. What are the real sweet spots in the Permian region. It’s going to be really interesting to watch. The Permian region is full of companies that seem like pretty attractive targets these days for these bigger companies like Exxon Mobil and Chevron to come take a look at.

Kym Bolado: (08:02)
And isn’t it also, somewhat expected that once one starts getting acquired, obviously the big guys are taking a look at the Permian basin. It has been built out by a lot of smaller companies and now it’s really ripe for the picking, if you will, for big guys to move in there, cause there’s just so much going on over there.

David Blackmon: (08:24)
Right, it’s the hardest play in the world and everybody wants to be in it and the companies that are there, want bigger positions in it. When you have companies, like these majors all engaged in that region, not just Chevron and Exxon, but Shell and BP as well. These are companies with a lot of money sitting around waiting to be invested and there’s no better place to invest it than in more Permian assets. I really think in drilling info, and other analysts do to, that there we’re probably going a period of time here where there’s going to be quite a bit of consolidation going on.

Kym Bolado: (08:59)
Interesting. And I’m also wondering though, you know, there’s so much discussion that we need to stop drilling and yet it seems like with the Permian Basin, there is no shortage to drill out there. And I just wonder what these environmentalist especially like in DC or wondering like this doesn’t seem to slow down at all in the United States. It’s not happening. It’s actually investor coming to invest in the United States. What are your thoughts?

David Blackmon: (09:22)
Right. Investors from all over the world coming to invest in the United States and here in Texas because of the world needs the energy. We need the energy in America and there’s no viable substitute for it frankly. And so, I mean, we can talk about not drilling and all we want to, but unless people want to freeze in the dark and pay electricity bills three times as high as we have now, we kind of have to keep doing it at least for the time being. And, we have a presidential contest going on and Beto O’Rourke is out there talking about drilling moratoriums but it’s all just rhetoric. But it’s not practical and you really can’t do what they’re talking about doing.

Kym Bolado: (10:01)
Excellent. Well David, that is all the time that we have for the show. Thanks for joining us this weekend. We look forward to having you back next week.

David Blackmon:

Great. I’ll look forward to it.

Kym Bolado:

And with that we do have to take a quick break, but when we return, we will be joined by Amy Chronis as well as Duane Dickson with Deloitte. We’ll be right back. You’re listening to In The Oil Patch Radio Show.

Alvin Bailey: (10:25)
In the oil patch radio show is proud to bring you this week’s energy minute produced by Here’s Texas Railroad Commissioner Ryan Sitton with your current industry update.

Ryan Sitton: (10:37)
This is Texas Railroad Commissioner, Ryan Sitton with your energy minute oil prices fell by as much as 4% on Thursday breaking through a key support level as rising US crude stockpiles helped offset concerns about a supply crunch. The drop was partly due to the overhang from Wednesdays weekly report on US crude stockpiles which showed inventory surging by 9.9 million barrels. US stockpiles have risen in five of the last six weeks helping to ease the market’s concerned that global supplies are getting tight. WTI closed the day at $61 and 63 cents down, $1 and 97 cents a barrel while natural gas clothes the day at $2 and 59 cents also down 3 cents. This is Ryan Sitton and that’s your energy minute.

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Kym Bolado: (13:12)
And welcome to In The Oil Patch radio show. I’m your host Kym Bolado and today we have a great show lined up for you. We will be joined in studio by Duane Dickson who is Vice Chairman and US oil, gas and chemical sector leader for Deloitte as well as Amy Chronis, the Houston managing partner for Deloitte. You guys, welcome to In The Oil Patch radio show.

Duane Dickson: (13:35)
Thank you.

Amy Chronis: (13:36)
Good morning.

Kym Bolado: (13:36)
Good morning. We are so excited to have you guys. We have had you guys on the show before in the past so we’re really happy to have you guys back. Amy we are happy to have you join us.

Amy Chronis: (13:48)
Great to be here.

Kym Bolado: (13:48)
We’re going to talk on the topic today, which is energy transitions. So this is a pretty important topic as it’s something kind of fairly new. And of course, being with Deloitte, this is the leader in the energy sector. So we’re excited to get started. So you guys, let me first of all talk just briefly about Deloitte. Amy, we’ll start with you. Just tell us, tell me a little bit about what your role looks like every day, or what are you handling.

Amy Chronis: (14:17)
I have the great privilege of representing Deloitte here in the Houston marketplace, and that means, representing us on local boards, community activities, representing our people. And just as importantly, I work on quite a few of our large energy integrated oil and gas and chemical companies, which are global. And so I have the great privilege of coordinating our resources globally for those clients, bringing the best of the firm to them and bring our industry insights and capabilities.

Kym Bolado: (14:46)
You know, it’s always amazing to me to see, you know, Deloitte just such an amazing brand or even just, you know when you’re talking to Deloitte and you’re in good hands. Duane, let’s talk a little bit about what is your role with Deloitte because obviously you have a lot of different areas you’re responsible for is well, so me a little bit about what your day looks like.

Duane Dickson: (15:09)
My days are pretty busy and I would say that as we look at my role, it’s oil, gas and chemical sector lead. And what that really means is across all of Deloitte’s four business functions. That would be our audit group, our tax group, our financial advisory group, and our consulting group. I lead the marketplace activities that go on there. In addition to that, I also drive the research agenda. So we spend a lot of time thinking about the future of oil and gas and how chemicals in oil and gas are fitting together and the future of the end markets that are slow, important to, you know, these, these industries.

Kym Bolado: (15:48)
Well, you know, you’re right, it is an important thing. I don’t think as a whole lot of people who really put together the up mid and downstream and how they all intertwined together. Because I think as consumers, most individuals just kind of look at, okay I’m dealing with the what are gas prices today in my vehicle. Then there’s of course utilities. Then there’s also the petrochemical part of it, which they’re like, how do these connect together? So I’m glad that we’re going to talk about the energy transition today. Duane, let me start with you. How do you respond when you’re asked by your clients? What issues are going to be impacting the energy transition? Let’s start with, what is the energy transition to you?

Duane Dickson: (16:33)
Yeah, so to me, the energy transition is really the way that the mix of energy that gets used to changes over time, the way that demand patterns change over time and the way that we actually optimize the value of, of all of the hydrocarbons that are produced. So as, as we start to think about that and think about it a little bit more, what it means, we are seeing a world that is becoming more sustainable. We’re seeing a world that’s becoming more digital and we’re also seeing a world where we’re seeing different alternatives for how people live in larger cities and how people move around, the way that they get mobile and, you know, we’re also seeing, you know, sustainability as a really serious issue now, which drives alternatives such as a renewable energy sources and electrification of vehicles. And this has a sort of a longterm impact on how fuels that we make today are used and how the demand patterns will be shaped.

Kym Bolado: (17:41)
Well, that’s a pretty interesting to think about. We attend a lot of conferences Duane and Amy and a lot of it is focusing around not just oil and gas, but like you said, the future and where are we going? I think there’s a lot of speculation and also a lot of confusion on, you know, where are we really going? And then we’re going to get into a little bit in the show but, you know, how long will fossil fuels be around versus a lot of these alternative energies. As you guys are aware, we have Sarah Week in town right now. A lot of emphasis has been on that. And then also I was just amazingly shocked but a wonderfully shocked to see how really cutting edge and digital, the oil and gas sector is of how they’re feeding into one another.

Kym Bolado: (18:28)
Like one specific company, I won’t mention their name was just full circle with really, you saw robotics, you saw they have a formula e car now that’s completely like a electric car. And it’s a formula one type vehicle. I was just shocked to see how much technology is really coming in and playing a super mega role in making the energy more or energy sector more efficient as well. And staying cutting edge. Amy let’s switch gears a little bit and talk a little bit about what do you see as far as where are we heading with the demand?

Amy Chronis: (19:05)
I think confidence in demand recovery’s returning with expectations for stable but relatively slower economic growth, commodity prices and investment. The market indicators seem to support this view with the US and global economy showing three things, a decent growth, energy demand increasing it’s above average levels, and risks to supply persisting from a few key exporting countries.

Kym Bolado: (19:29)
Well you know, when you talk about demand, and I want to get into that a little bit more because when you say demand is picking up, I guess in my mind, I wonder where. Other countries and in what areas are the demands. So we’re going to take a quick break. We’re going to return. I’d like to come back to that topic and see where is the biggest demand coming from and y’alls opinion as well. We do have to take a quick break. You’re listening to In The Oil patch radio show and we’ll be right back.

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Kym Bolado: (20:34)
Hi, this is Kym Bolado host of In The Oil Patch radio show. Starting every second Saturday of the month at 2:00 PM we will have a live call in show in which John Tintera, the president of Texas Alliance of energy producers will be joining me in studio to answer all your questions. So be sure to take advantage of getting your most important oil and gas questions answered live and join us on the show. The call in live line is (210) 526-3656. I’d love to get your questions answered, so be sure to call in at area code (210) 526-3656

Kym Bolado: (21:32)
We are back. You’re listening to In The Oil Patch radio show. We’re being joined today, our guest is Amy Chronis with Deloitte as well as Duane Dickson. You all, before the break we were talking about Amy, I asked you a question basically about what do we see with the demand and you kind of said that we’re on an uptick for energy being in demand all over. Can we break that down just a little bit, both of you guys and kind of tell me where do you feel this energy demand? I’m sure it’s global, but where? And in what ways are we going to see the biggest impacts?

Duane Dickson: (22:09)
So I think obviously to look at places where the markets are growing, we think of places such as China and India where population growth is very large and we looked for places where infrastructure is being built then and it is becoming a sort of more middle class rich. So that’s sort of one area that drives growth. Another area that drives growth is just sort of pent up demand. And that’s a little bit what we are seeing and especially with prices and inflation being pretty good at this point in our low, there, there is going to probably be an uptake and demand. Also as we look at the energy transition and we think about, you know, electrification and some of those trends, they’re going to be important mostly in city centers at the beginning and we’re still going to see a fairly heavy reliance on fossil fuel based products to use for transportation and farming and so forth in the more rural areas.

Kym Bolado: (23:08)
Interesting. Amy, tell me a little bit about fossil fuels. When do you think they’re going to peak in demand? What are your thoughts on this area?

Amy Chronis: (23:16)
Right, and in addition to the continued growth from our emerging economies that Duane mentioned, you know, the 21st century energy transition, it’s moving the world towards cleaner, low carbon energy, along with electrification of many applications including transportation. Most people expect this to lead plateau and then decline in the use of all fossil fuels, coal, oil and natural gas. Depending on government policies towards carbon reduction and consumer acceptance of cleaner fuels, I think it’s plausible that peak demand of fossil fuels will continue well beyond 2030.

Kym Bolado: (23:49)
Okay. Well I don’t know if you would really believe that in reference to, I’m not saying you’re not, I wouldn’t believe it, but just perception wise. Yet I think everybody thinks will be off of this in five years. Probably not.

Amy Chronis: (24:02)
Probably not. Much will depend on whether rising energy to me in an emerging economies can be met by low carbon non fossil fuels over the next 20 years or so.

Kym Bolado: (24:11)
Excellent. You know, I was again surprised to see that even other countries have, so CERAWeek had Aramco, Saudi Aramco there and they were discussing low, admission type of processes as well for their, I think conventional wells out there. So it was kind of good to see that I think the whole planet is on board with how are we going to do this in a more efficient and cleaner way. I think we’re seeing some really good technology coming out trying to develop that as well. Interesting. Duane, let’s talk a little bit about speculation. We are heading into a global downturn, right? Or so we think we’re heading that way. How important will this impact would be to the oil and gas industry?

Duane Dickson: (24:59)
So, let’s start by talking a little bit about what’s going on in the economy at the moment. So, prices at this point are up about 1.5%, which was relatively low. So we’re not seeing a lot of inflation at this point. The peak of inflation that we’ve seen in the sort of recent period was a 2.9% that happened sometime mid in 2018. What we’re also seeing is what’s driving some of that lower inflation is the big decline in energy prices? So energy overall is down about 5% year over year and gasoline or fuels, transportation fuels are done about 9.1%. Those are US figures. But we start to look at that and that starts to create a sense that, you know, we have lower inflation. So potentially we will see, you know, the government continue to keep interest rates low and keep the conditions pretty good. We’ve heard from most economists that the type of downturn we’re probably expecting it seems to be more muted or more mild. And I think if we look, if we look at the sort of impact on oil and gas, we’re basically gonna see, you know, the oil and gas industry sort of a decline a little bit if the economy is the decline because consumers really drive a fair amount of the overall volumes.

Kym Bolado: (26:34)
You bring up an interesting dilemma to think about as far as, you know, where are we going to go with the downward turn in oil and gas? And I don’t think we quite finished the complete question. So when we returned from break Duane, Amy, I’d like to get back on the topic of how is the oil and gas industry specifically going to handle the downward turn and what should they be prepping for? What should we all be prepping before when we hit this? But we do have to take a quick break. You are listening to and the oil patch radio show and we’ll be right back.

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Kym Bolado: (28:40)
We’re back. You’re listening to In The Oil Patch radio show. We’re being joined today by Duane Dickson and Amy Chronis with Deloitte. And y’all, before the break we were talking a little bit about the downward turn, the global downward turn we’re expecting. How is this going to impact the oil and gas industry, Duane?

Duane Dickson: (28:59)
Well, I think first we need to look a little bit region by region and look at some of the factors that we expect to contribute to the downturn. So we’d like to see a more robust growth come in China. But right now we’re seeing relative slow down in China. We’re also seeing some trade issues. And I believe the oil and gas industry is watching both of those indicators pretty carefully. So the China market is obviously a big market for them. And in addition to that, the ability for trade, the flow freely is a big, you know, it’s a big issue at the moment. So that, that is one area. I think another area in oil and gas is, we’re seeing just a very, very large wave of investment in making things more efficient, more productive. And really with the digital tools that we have available these days are pretty substantial. And we’re starting to see some real breakthroughs in companies that are deploying digital technologies in their plants and in their distribution systems and with their customer base.

Kym Bolado: (30:06)
Interesting. What do you see the pace of the end market transition to alternative sources of energy?

Duane Dickson: (30:14)
So I think when we look at alternative sources of energy we look at wind and solar and we watch those trends. And right now we would have to say that the way those trends have been moving pretty much doubling every six months for a long period, a reasonably long period of time, a couple, three, four years. We would say that that has the potential to be an exponential trend, not just a linear trend. And if that is the case, then we’re going to see more and more of the grid first work its way, you know, through wind and solar and have sort of a more even distribution of energy sources. And then over time, if it continues to grow the way it has, it could start to, to cut into the traditional energy supply.

Kym Bolado: (31:01)
Interesting. Amy, what do you see the most progress being made in the oil and gas sector that’s driving the energy transition agenda?

Amy Chronis: (31:10)
Energy transition I think is profoundly challenging. The sustainability and resilience of traditional business models. So a huge need for a far more agility and nimbleness on both the sides of a private and government bodies. As energy sector faces this manager major transition, I think there’s a lot of uncertainty over the trajectory and pace at which it will unfold. Many in the oil and gas sector are in the process or preparing for or prepared for renewables. The pace of battery storage, product deployment and mark developments accelerating. Other factors include falling costs and maturing technology. Multiplying opportunities to add value to very noble is by combining them with energy storage and helping them to compete with conventional technologies. A natural gas producer, shippers and consumers are increasing their focus on mitigating methane emissions. Downstream chemicals in particular petrochemical companies, are ramping up their efforts to find solutions for plastic waste elimination and big decreases through recycling, repurposing, use of new materials and processes. So I think a lot of movement towards this need for action. Just a couple other things, the cost of solar and wind energy along with battery storage has been dropping consistently for several years. While performance is improved, as Duane mentioned. On the other hand, natural gas with a lower carbon content than core or oil is widely now available at affordable cost. And that’s likely to remain a mainstay for power generation for decades to come. But so both the oil and natural gas provide the main feedstocks for petrochemicals and we expect to see continued growth for the foreseeable future in that, I think petrochemicals will have a far bigger part of the pie growing forward.

Kym Bolado: (32:52)
Interesting. What about governments, any government leading the way in this energy transition and what can oil and gas companies basically do that to stay in front of this, to create some solutions?

Amy Chronis: (33:07)
Sure. There are pressure on economies for industry to be on the forefront of driving climate change. Yet governments seem to be leading the way with regulations. We heard the same theme at CERAWeek in Houston. For example, tax and trade policies will likely continue to impact renewable growth. Potentially accelerated project schedules ahead of tax credit phase down suggest a favorable outlook for renewable growth in 2019 and beyond. What tariffs could continue to create headwinds. A new and renewed policies and initiatives at the local state and federal level will likely boost renewable growth. There needs to be more public private partnerships. Driving sustainable in a circular economy is, I think, a big, big bottom line. Companies in the oil and gas industry have to leverage their core competencies while using smart digital technologies. It’s really exciting as both you and Duane have mentioned to see the digital technology is paving the way to lead the energy transition agenda. We’re seeing a lot of oil field service companies in particular that are innovating through digitization analytics to drive not only efficiency but to be more sustainable and environmentally cautious. The harnessing of the data we’re getting through all the sensors on equipment and the really creative ways that we’re seeing oil field service companies in particular use this enhancement, a way of operating, I think is really going to continue to lead costs down to a level that is very sustainable.

Kym Bolado: (34:31)
Oh, I couldn’t agree with you more. Looking at CERAWeek and seeing like you said, all of the new technology where most companies, service companies, don’t even have to go out in the field anymore. You’ve taken advantage of drones and technology that exists that just a heat sensors, water sensors. They’ve just truly become so efficient and it’s just growing. When we return from break, Duane, i’d like to go back to these energy transition and what it means and then is there any other alternative fuels that might be on the radar that are not as popular right now? Wind and solar that we might want to keep an eye on but we are going to take a quick break. You are listening to In The Oil Patch radio show and we’ll be right back.

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Hi, this is Kym Bolado host of In The Oil Patch Radio show. Do you have questions on global warming about seismicity, air quality, water issues? What’s OPEC? What’s OPEC plus? Oil prices and gas prices? You probably have a bunch of questions and now there is a place for you to go and ask your questions and get answers. Starting every second Saturday of the month at 2:00 PM we will have a live call in show in which John Tintera, the president of Texas Alliance of Energy Producers will be joining me in studio to answer all your questions. So be sure to take advantage of getting your most important oil and gas questions answered live and join us on the show. The call in live line is (210) 526-3656 Again, the call in live number is (210) 526-3656 Be sure to call in at 2:00 PM. If you want more information, how to call in life or the phone number, again, be sure to email us at [email protected] that’s [email protected] or just go to our Facebook page In The Oil Patch radio show. You’ll find the information there as well. We’d love to talk to you every second Saturday at 2:00 PM so be sure to call in. I’d love to get your questions answered. So be sure to call in at area code (210) 526-3656

Kym Bolado: (38:08)
We’re back. You’re listening to In The Oil Patch radio show. We’re being joined today by Duane Dickson and Amy Chronis with Deloitte. And before the break we were talking about energy transition. I want to get back on that, Duane. Tell me how fast will we see this energy transition and then what of course are going to be, some of the biggest challenges in then Amy, I’ll have you weigh in as well.

Amy Chronis: (38:30)

Duane Dickson: (38:31)
I think we’re going to start to see the impact of some of these changes in the 2025 to 2030 period. We won’t necessarily have our whole world changed or turned upside down, but we’re going to start to see the presence of technologies such as electrified vehicles and autonomous vehicles and so forth. And we’ve done a lot of work in the future of mobility area and we think it’s so profound that a statistic and our research basically says that by 2040, there’ll be a 25% increase in miles driven per passenger and there will be a 40% decrease in the number of units produced, number of a new vehicle units produced. So that’s quite a profound change. And so we see two trends that make that happen. Number one, we’re, we’re going to see a larger percentage over time of electrified vehicles because of the sustainability questions and especially in urban areas because there’s a very strong utility for vehicles there. But in addition to that, we’re, we’re going to also see shared vehicles, autonomous vehicles, and other ways of getting around, which is going to, you know, sort of make fleets have much higher utilization. They’re actually going to be fleets in the first place. They’re going to be much more highly utilized and that’s why the miles are going to go up, but they’re not gonna need as many units. So, we’re going to see a lot of changes.

Kym Bolado: (40:02)
Interesting. Amy, what do you think, what do you feel we’ll see here?

Amy Chronis:

The drive towards a low carbon future catalyzed by the Paris Agreement and coupled with a series of socioeconomic and technological trends, It’s leading many in the oil and gas industry to fundamentally re-imagine what the energy company of the future looks like very rapidly. So petrochemical companies are not going away and are sending an example of how to take the intermediate step to transition from crude to chemicals. Downstream companies are part of the equation will set the pace for energy transition adoption. And I believe the biggest challenge may very well be the consumer driving energy transition quicker than anticipated. The consumers making decisions and choices that may ultimately expedite the agenda quite a bit, especially as with electric vehicles as Duane mentioned. Governments and private companies are going to have to jointly work together to help solve one of the challenges and, as I said, need to be as agile as possible and collaborate in public private partnerships.

Kym Bolado: (40:59)

Very interesting. Any fuels that are on the market or anything that we should be looking at? Maybe not on the radar as much as solar and wind, Duane?

Duane Dickson: (41:09)
Well, I think Amy referred to the use, the much more prevalent use of natural gas and we still have, you know, abundant natural gas. So, because it will be very affordable for a long period of time. I think you’ll continue to see efforts to harness that or liquefy that and make it a sort of much more globally available product rather than a locally available product. And we have significant interest and emphasis and research programs at universities and in government labs all over the world on how to actually take carbon dioxide andapply it to problems. In other words, it could be feedstock someday and help us make plastics or other materials and this would, would solve a big problem with our greenhouse gases and climate change. So I do think we need to watch the future for innovation and looking for ways to make things that are problems today, you know, the solutions of tomorrow.

Kym Bolado: (42:12)
Very interesting. It’s an exciting time that we’re living in right now. Amy, I’d like to close with you. So you are here. What are we seeing in the Houston area with the energy and how busy are we still with the prices kind of coming back up? I see a lot of activity here in Houston still.

Amy Chronis: (42:30)
There is a lot of activity, particularly around the large integrated companies, you know, all cylinder is running. I think the oil field service companies are still trying to come out of the industry downturn to in some ways because of the lower for longer a cost reduction needs aren’t going to go away. To your point, around millennials in the workforce, the future, it’s exciting to us that in terms of our future workforce, Our millennials are clearly gravitating towards, no cars, or you know, very high adaptability around, you know, a ride share and other technologies that I think that’s very positive and helpful to the transition agenda and sustainability overall.

Kym Bolado: (43:11)
Well, very good. I’d like to thank you both for coming into the studio and being our guest today with In The Oil Patch radio show and we look forward to you all coming back on here in the near future and discussing again. What are you guys working on in researching at Deloitte.

Duane Dickson: (43:26)
Thank you, it’s great to be back.

Amy Chronis: (43:27)
Thank you.

Kym Bolado: (43:27)
Well that’s all the time that we have for this show, but please be sure to like us on Facebook. That’s or follow us on Twitter @ShaleMag. And if you have any questions for me or if you have questions on oil and gas, I encourage you to email me at [email protected] that’s going to wrap up another great show. See you next week with more exciting news and insightful interviews. Until then, adios.

Alvin Bailey: (43:58)
In The Oil Patach is where together, we explore topics that affect us all in oil, gas, business, and in your community. Every week, your host Kym Bolado will visit with the movers and shakers in this fast paced industry. You’ll hear from industry experts, elected officials, and many more, right here on In The Oil Patch.

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