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Trump Says He’s Doubling Tariffs on Canadian Steel, Aluminum · Bloomberg Intelligence

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Speaker 2: Tariff news coming out of Washington, d C. President Trump
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Speaker 2: raising the tariff on Canadian steal on aluminum from our
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Speaker 2: good friends. I like to think still in Canada, and
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Speaker 2: that is certainly roally in the markets. S and P's
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Speaker 2: off six tens a one percent, the nastacs off quarter
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Speaker 2: one percent. We're gonna break down with a couple of
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Speaker 2: experts over the next couple of segments. Let's go right
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Speaker 2: to Joe Dough. He covers all the metals I'm mining
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Speaker 2: for Bloomberg News. Joe, how much aluminum do we get
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Speaker 2: from Canada? I know it's a big deal for them.
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Speaker 2: Is it a big deal for US consumers?
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Speaker 3: Yeah, it's massive.
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Speaker 4: One of the numbers that we ran out and Richard
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Speaker 4: and probably get this a little closer, but it's something
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Speaker 4: around seventy percent of the aluminum consumed in the United
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Speaker 4: States per year is produced in Canada.
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Speaker 5: Oh boy, oh boy.
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Speaker 2: All right, So what's the feeling here within the industry
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Speaker 2: about what's happening, how the industry might react.
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Speaker 4: I think at this point there's quite a bit of
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Speaker 4: confusion with an industry. I mean, we don't know for sure,
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Speaker 4: but it's not clear that the President of the United
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Speaker 4: States had at least telegraph that he might be going
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Speaker 4: to double the aluminum and steel tariffs. So you probably had.
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Speaker 4: You're probably having a lot of chatter around boardrooms at
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Speaker 4: places like Ford and Molten Cores and Budweiser and Coca Cola.
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Speaker 2: I want to bring Richard Pork He covers the metals
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Speaker 2: and mining stocks for Bloomberg Intelligence. Richard, give us a
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Speaker 2: number on kind of how material this is in terms
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Speaker 2: of how much aluminum do we in fact steel all
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Speaker 2: that stuff do we get from Canada?
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Speaker 6: Okay, so Canada is the number one export as Joe mentioned,
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Speaker 6: they're also number one export of steel the US aluminum.
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Speaker 6: It's a much bigger problem because the US doesn't can't
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Speaker 6: needs to is that needs doesn't have the capability to
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Speaker 6: produce aluminum. Because our electricity electricity is number one costs
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Speaker 6: to produce aluminum, we're not competitive. Electrical Mark energy costs,
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Speaker 6: So therefore we need to import aluminum steel. On the
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Speaker 6: other hand, the US imports about twenty percent of its
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Speaker 6: steel needs. Our look, our analysis shows that maybe a
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Speaker 6: third of that is steal that the US producers don't
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Speaker 6: want to produce or maybe can't produce. So therefore, with
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Speaker 6: the current industry utilization at around seventy five percent, they
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Speaker 6: can ramp up and cover a short fall you know
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Speaker 6: on steel lunum. We don't have that capability.
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Speaker 7: Ryan Gribrins give stratigue is said another day, another tariff announcement.
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Speaker 7: How seriously should we take this? I mean, markets are reacting,
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Speaker 7: as we've seen the whiplash the past weeks, But when
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Speaker 7: do we know if it's the quote real deal.
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Speaker 6: Well, you know that's the twenty four dollars dollar question
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Speaker 6: that everybody's asking. You know, this one sounds like it
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Speaker 6: was in response to Canada coming with twenty five percent
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Speaker 6: energy tariff, so I could see it, you know, if
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Speaker 6: Canada rolls back there tariff, the US rolls back, you know,
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Speaker 6: maybe back down to twenty five percent.
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Speaker 2: Hey, Joe, so you mentioned kind of the people that
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Speaker 2: actually use a luminium, whether it's a you know, making
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Speaker 2: a can for beer or soda. Are we hearing anything
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Speaker 2: from just those types of people, because those are the
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Speaker 2: ones that can have to deal with as well.
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Speaker 4: Yeah, I mean the packaging companies in particular are a
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Speaker 4: little more careful because there's a lot more competition there.
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Speaker 4: Like the first time around, I remember hearing from one
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Speaker 4: of the big beer companies saying, you know, Joe, if
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Speaker 4: we raised the price of you know, a twelve pack
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Speaker 4: or a six pack of beers, you know, the other
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Speaker 4: company would come in and eat our lunch for it.
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Speaker 3: Right.
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Speaker 4: However, I was saying earlier with Richard on another segment,
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Speaker 4: you know, the Ford CEO came out a month ago
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Speaker 4: and said these terrafts will blow a hole through the industry.
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Speaker 4: So I think you are starting to hear more CEOs
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Speaker 4: actually be a bit more aggressive with what they're saying now.
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Speaker 4: Partly that is because of the bigger concerns that go
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Speaker 4: beyond just metal terrafts. You know, Mexico and Canada terraces
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Speaker 4: would be absolutely difficult to handle. But yeah, I think
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Speaker 4: you're hearing it from them. Rich Third thirty seconds. What
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Speaker 4: if some of any of the companies reacted yet so
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Speaker 4: far today we him you.
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Speaker 6: Know, a Cola on their latest call had kind of
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Speaker 6: outlied in scenario what they saw would happen, and what
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Speaker 6: they saw happen is they would shift their production to
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Speaker 6: Europe or shift their shipments to Europe, and they expect
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Speaker 6: a lower tariff country. You have to come in and
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Speaker 6: backfill what they didn't do to the US.
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Speaker 2: Okay, all right, appreciate getting both of you guys. Jojoe
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Speaker 2: covers medals of money for Bloomberg News. Richard Boord covers
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Speaker 2: it from Bloomberg Intelligence side, looking at the companies here,
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Speaker 2: so again the news President Trump doubling the tariff on
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Speaker 2: Canadian steel and aluminum to fifty percent, a bigger issue
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Speaker 2: for aluminums. What kind of what we're learning here.
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Speaker 2: Let's sit down to Houston. Right now, Bloomberg Intelligence co
5:37
Speaker 2: host Alex Steele speaks with Carlisle, chief strategy Officer of
5:41
Speaker 2: Energy Pathways, Jeff Curry. Let's go to Alex right now.
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Speaker 8: Hey, Paul, thanks lot, really appreciate it. Jeff, I've been
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Speaker 8: asking CEOs for the last day and a half, what
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Speaker 8: do you do with twenty five percent tariffs? And now
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Speaker 8: it's going to be what do you do with fifty
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Speaker 8: percent tariffs?
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Speaker 9: What's going to happen to the market.
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Speaker 10: Well, it's pricing it in, you know, copper, you know,
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Speaker 10: heading towards five dollars a pound right now. But I
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Speaker 10: think aluminum is the one to really watch because the
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Speaker 10: question is can you on shore aluminum.
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Speaker 5: Production and the answer is absolutely not.
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Speaker 10: You know, if you think data centers in AI are
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Speaker 10: power intensive, aluminum smelting is in a whole different world.
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Speaker 10: It's six times more power intensive per dollar revenue than
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Speaker 10: AI data centers. So if you're already power constrained, there's
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Speaker 10: no possible way you're going to bring all of this
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Speaker 10: aluminum smelting into the United States.
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Speaker 8: So where do we get most of our aluminum and steel?
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Speaker 8: Then the refined products, well.
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Speaker 10: A lot of it comes from the hydroelectric power up
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Speaker 10: in Quebec, so it comes down into the US from that.
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Speaker 10: So shutting down that cheap source of aluminum supply and
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Speaker 10: trying to replace it with really expensive produced domestically produced supply.
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Speaker 5: I think it's going to be a tall ordered ask.
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Speaker 8: It's been a tough commodity road in the last couple
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Speaker 8: of weeks. If we did with this moolatility, right oil,
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Speaker 8: was it a six month low? That's on recession fears,
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Speaker 8: tear fears, growth fears, et cetera.
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Speaker 9: What kind of cycle are we in right now?
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Speaker 10: Well, I think what we're going through is a huge
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Speaker 10: shift in the global order around security. And I think
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Speaker 10: you know what is the response that probably Ontario is
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Speaker 10: going to do to these Tariffsy're probably going to cut power.
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Speaker 10: The governor's already threatened he's going to do it. He
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Speaker 10: cuts power into the US. Energy security is top of mind,
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Speaker 10: and I think that's what's going on right now, whether
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Speaker 10: it's in Germany. Actually Germany, the Norwegians threatened to cut
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Speaker 10: power into Germany back in December when a crisis occur there.
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Speaker 10: So I think energy security is top of mind for
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Speaker 10: everybody around the world right now.
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Speaker 9: Okay, so what does that look like?
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Speaker 8: Because what's so interesting about commodities is it'll always clear
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Speaker 8: it a price, right, You'll always buy something.
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Speaker 9: It just depends on what price you'll buy it. Is that
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Speaker 9: still true?
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Speaker 5: Absolutely?
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Speaker 10: And I think what we're going to start to see
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Speaker 10: is that's what's going on with aluminum and copper today.
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Speaker 10: Is there going to price in a security premium to
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Speaker 10: make sure you have that supply in your country domestically.
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Speaker 5: Protected, in duty paid.
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Speaker 10: You're seeing it in gold, and you're seeing it across
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Speaker 10: the metal space and then particularly an energy.
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Speaker 5: We're beginning to.
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Speaker 10: See that and I think that that is going to
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Speaker 10: be the primary driver of the you know, let's call
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Speaker 10: it the new cycle and commodities.
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Speaker 8: So it's not geopolitical risk, it's not a green premium,
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Speaker 8: it's a security premium.
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Speaker 9: Correct, you're gonna pay up to produce this stuff at home?
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Speaker 5: Yep, exactly. That.
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Speaker 9: That's a humongous shift.
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Speaker 10: It was huge, huge, and it's going to be really
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Speaker 10: difficult to do, you know, whether or not. And I
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Speaker 10: think the argument we take is it's going to be
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Speaker 10: a diversified set of energies.
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Speaker 5: That's why we call it the New Jewel Order.
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Speaker 10: Is because you're gonna want oil and gas, you're gonna
8:34
Speaker 10: want renewables, nuclear, you're gonna want everything, and you want
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Speaker 10: to diversify yourself because if you lose.
8:39
Speaker 5: One of those supplies.
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Speaker 10: You want to be diversified so that you can deal
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Speaker 10: with that that disruption. And I think the key point
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Speaker 10: here is when we think about fossil fuels, why do
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Speaker 10: we like fossil fuels so much, is because they're tradable,
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Speaker 10: they're portable, they're stortable, and they have high energy density,
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Speaker 10: which is why we move them around the world. Those
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Speaker 10: same reasons we like them, it's the same reasons so
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Speaker 10: dangerous because somebody can just take them from you. And
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Speaker 10: so when we think about what's driving I think this
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Speaker 10: new environment we're living in, let's call it peak trade
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Speaker 10: instead of you know peak.
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Speaker 5: Actually, look at the evolution of peak oil.
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Speaker 10: It started out peak supply, we're going to run out
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Speaker 10: a supply, and then peak demand. We got too much
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Speaker 10: of the stuff, so we need to reduce you know,
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Speaker 10: the emissions. And now it's peak trade, meaning I can't
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Speaker 10: get my hands on it.
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Speaker 8: So it's going to be really interesting then, is if
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Speaker 8: we get a piece in the Ukraine War, what happens
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Speaker 8: with Germany and Europe and buying Russian gas.
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Speaker 10: They're going to be hesitant, they'll probably take a little bit. Yeah,
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Speaker 10: they're still buying it, but they're going to diversify their sources.
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Speaker 10: And I think that's the key message here is diversify
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Speaker 10: your sources so you're not so dependent on one supplier
9:45
Speaker 10: one type of energy.
9:46
Speaker 5: And I like to point out what is the best selling.
9:48
Speaker 10: Car out there, a PHEV, a plug in hybrid. Why
9:51
Speaker 10: because it operates off oil, gas, solar, wind, nuclear, the
9:55
Speaker 10: entire gambit.
9:56
Speaker 5: Of all the energy sources.
9:57
Speaker 10: And I think that that type of diversity is to
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Speaker 10: be key in this new jewel order.
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Speaker 8: Okay, So if I'm looking at prices in general, like
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Speaker 8: does the band move up?
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Speaker 9: Do prices become more volatile? Do they move down? Like
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Speaker 9: if I'm looking at say oil or copper, what's my
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Speaker 9: trading band?
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Speaker 10: I think that the volatility is going to explode across
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Speaker 10: all these markets. You're already seeing it in power and
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Speaker 10: the metals and across the space.
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Speaker 5: That's going to lead to a higher average price.
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Speaker 10: By the way, the volatility then discourages the MS made
10:25
Speaker 10: I don't want to invest in this thing is too volatile.
10:27
Speaker 10: Lower investment creates more volatility, and it just feeds off
10:30
Speaker 10: of itself.
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Speaker 8: You're one of the first to invent the word supercycle,
10:33
Speaker 8: right I mean have big supercycles. There's big ups, there's
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Speaker 8: big downs, and there's an investment cycle that goes with it.
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Speaker 9: Are we no longer in that, you know?
10:40
Speaker 5: I think that's a great question.
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Speaker 10: And those supercycles before were created by demand pull creating
10:48
Speaker 10: big shortages, created these big trends that created that supercycle.
10:52
Speaker 5: This one's a malinvestment cycle.
10:54
Speaker 10: It's industrial policy push which creates pockets of ince is
11:00
Speaker 10: like to call it.
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Speaker 5: It's like a bubbling cauldron, a little mini.
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Speaker 10: Supercycles everywhere, and you get these high volatility and that's
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Speaker 10: what we're seeing. By the way, the opportunity for investors
11:09
Speaker 10: in this environment is phenomenal. In fact, one of the
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Speaker 10: themes going around here in Seer Week is the oil market.
11:15
Speaker 10: And these markets are micro bullish but macro bearish, So
11:19
Speaker 10: that micro creates these little opportunities inside there that you
11:22
Speaker 10: can take advantage of.
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Speaker 5: But you don't get that big upward trend.
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Speaker 10: And I think this bubbling cauldron of a little supply
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Speaker 10: and demand imbalance is probably the best way to distry.
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Speaker 8: Does it change the time horizon for investments or the
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Speaker 8: return for those investments When.
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Speaker 10: We think about long term investments, it's going to provide
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Speaker 10: a very similar return.
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Speaker 5: But you've got to manage that risk.
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Speaker 10: And I think that that's the real the message here
11:45
Speaker 10: we think about you know, the focus before was on
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Speaker 10: levelized cost of energy.
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Speaker 5: Get the l COE down. We got it down, but
11:54
Speaker 5: we were unable to deliver the jewels. So you think
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Speaker 5: about Germany.
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Speaker 10: It got its levelized cost, but it could only produce
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Speaker 10: the power when the wind blue or the sunshine. Now
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Speaker 10: the focus is on that delivered jewel. You can think
12:08
Speaker 10: about Now the focus is on Roe instead of LCOE.
12:13
Speaker 10: And so get another way to say it is dispatched
12:17
Speaker 10: power that goes through the consumer is opposed to a
12:20
Speaker 10: centralized production of power.
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Speaker 9: Okay, fascinating.
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Speaker 8: One more quick question, because you're you and it's an
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Speaker 8: oil conference, what's the lowest price of oil you think
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Speaker 8: we're going to see this year?
12:29
Speaker 9: And what's the highest? Totally bad question.
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Speaker 10: I think that's a great question because about this drill,
12:35
Speaker 10: baby drill, we're sitting on the bottom of the cost structure.
12:38
Speaker 10: You already see it, drillings coming off. You know, you
12:41
Speaker 10: know all the OPEC countries are under pressure.
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Speaker 5: Yeah, maybe you can get.
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Speaker 10: Down into the low sixties or something like that. I
12:47
Speaker 10: would argue you know, the markets to the upside. You know,
12:50
Speaker 10: looking at the amount of investment out there. Inventories are low,
12:53
Speaker 10: by the way, and now you put the security premium,
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Speaker 10: people are going to be scrambling to get the barrels
12:57
Speaker 10: bringing in and I think that that's going to get
12:59
Speaker 10: to be the key message.
13:00
Speaker 9: Jeff, always a pleasure. Love chatting with you.
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Speaker 8: Is always going to co w at Siah as well,
13:04
Speaker 8: Jeff Curry, Carlisle, chief strategy officer of Energy Pathways.
13:08
Speaker 2: Paul back to you, all right, Alex, thank you so much.
13:10
Speaker 2: We appreciate that. Bloomberg Intelligence co host Alex Steele speaking
13:12
Speaker 2: with Carlisle, chief strategy officer of Energy Pathways at Jeff Curry.
13:18
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 2: Let's head down to Houston, Texas h Town, as they say.
13:36
Speaker 2: Bloomberg Intelligence co host Alex Steele speaks with Carlisle. I'm
13:39
Speaker 2: sorry that was the last moment. Speaks with Total Energy
13:43
Speaker 2: CEO Patrick Puyoni about the French oil company. Let's go
13:47
Speaker 2: to Alex right now, Alex, all right, thanks.
13:52
Speaker 8: So much, Paul, I appreciate it. Right I'm here with
13:53
Speaker 8: Patrick Preona. He's chairman and CEO of Total Energies. And
13:57
Speaker 8: the amazing thing about Total it's a European energy company,
14:00
Speaker 8: but it uses its money from oil and gas to
14:02
Speaker 8: do stuff in power and alternative energy. That's a model
14:05
Speaker 8: that not a lot of other companies actually subscribe by.
14:08
Speaker 8: So it's great to get your perspective. Patrick, thank you
14:10
Speaker 8: so much for joining me.
14:11
Speaker 5: Thank you for welcoming me.
14:12
Speaker 8: News of today, we just heard that we have an
14:15
Speaker 8: emergency electricity issue in the United States. President Trump is
14:20
Speaker 8: now declaring fifty percent tariffs. I'm still on aluminum imports
14:23
Speaker 8: from Canada. Your reaction to a.
14:25
Speaker 11: Trade war, I think it's that I think this war should.
14:29
Speaker 11: I hope it will hand quickly. I think it's better
14:32
Speaker 11: not to have wars, to be honest. Maybe it's a
14:34
Speaker 11: tactic to negotiate, and I think, honestly, there are all
14:40
Speaker 11: these economies are interconnected. In facting in North America, you
14:43
Speaker 11: know in many ways the cars or bots, et cetera,
14:47
Speaker 11: including by the way electricity you know, of course you
14:50
Speaker 11: the northeast of the US are receiving electricity from the
14:54
Speaker 11: idea of Canada for the benefit of the citizens, so
14:57
Speaker 11: they have a lot of issues. I understand a about drugs, migrations,
15:01
Speaker 11: it's not.
15:02
Speaker 5: Only about trade.
15:03
Speaker 11: So my view is that as a global ward company,
15:06
Speaker 11: it's better to hope if you will take be so quickly,
15:09
Speaker 11: that's all what I can hope in the benefit of
15:12
Speaker 11: all the parties. And like it was for Trump, and
15:14
Speaker 11: I remember it was a debate at the end. Maybe
15:18
Speaker 11: the shortest would be the better for everybody, including by
15:20
Speaker 11: the way, for the US economy.
15:22
Speaker 8: Does it make you think two or three times about
15:24
Speaker 8: investing in the United States?
15:26
Speaker 11: No, No, because I'm an energy company.
15:30
Speaker 5: Energy.
15:31
Speaker 11: It's a nice country for energy. You have the cheapest gas,
15:34
Speaker 11: you have oil.
15:36
Speaker 5: We can explove, we.
15:37
Speaker 11: Can develop in the electricity booming market of xtricity.
15:41
Speaker 5: You need more electricity.
15:42
Speaker 3: It's gonna cost more now now, Yeah, but it's good too.
15:45
Speaker 11: We can build gas plants, cheap gas gas. Five poor
15:48
Speaker 11: plants we are building also in Texas. Were in Texas today.
15:51
Speaker 11: I have five giga webs or solar plants. It was
15:54
Speaker 11: easy to build here because you have a lot of space.
15:57
Speaker 11: Combining plants with gas plants, it's a nice way to
16:02
Speaker 11: produce more equicity. So for me, the US is a
16:05
Speaker 11: large market and we are ready to invest in the US.
16:09
Speaker 5: I understand that.
16:09
Speaker 11: The only point is that if we need to reshure,
16:12
Speaker 11: for example, all the solar panels that we use on
16:14
Speaker 11: our neway board films, why not. It's just a little
16:16
Speaker 11: more expensive, so the customers will have to pay somewhere.
16:19
Speaker 8: So not you, but the end market. Yeah, okay, but
16:22
Speaker 8: then let's just tackle say after win for.
16:24
Speaker 5: A second, I put it in the pools.
16:27
Speaker 9: A pause or like the garbage.
16:29
Speaker 5: Pine not garbage pause.
16:32
Speaker 11: We got a concession for fifty years, okay, So I
16:34
Speaker 11: understand during the next four years no way to obtain
16:38
Speaker 11: any federal license. So I don't want to spend my
16:40
Speaker 11: time to lose my time my team, so I don't
16:41
Speaker 11: need to spend pay money to spend money for that.
16:44
Speaker 5: So we say no, we put a poose.
16:46
Speaker 11: We have reduced our teams to minimum, and then four
16:49
Speaker 11: years we'll see if federal GLD policies are changed.
16:53
Speaker 8: Are you worried about any existing leases that you currently
16:55
Speaker 8: have and operating for wind and solar I was talking
16:57
Speaker 8: to the Secretary of the Interior, who didn't who didn't
17:00
Speaker 8: rule that out? To do what to take away those leases?
17:03
Speaker 11: To take away the leases, but the leazes, it can
17:06
Speaker 11: manage that on federal lands, so I check. I have
17:08
Speaker 11: no leazies on federal lands. So and by the way,
17:11
Speaker 11: in Texas there is no federal lands or most so
17:13
Speaker 11: no that we make. We make our due diligence. So
17:15
Speaker 11: we are fine. And I think, honestly when I discuss
17:18
Speaker 11: by the way, lund mask is a big fan of
17:20
Speaker 11: solar and batteries for good reasons, so I think, and
17:23
Speaker 11: we will see the debate. I trans choose the debate
17:26
Speaker 11: the Congress and the Senate would be interesting with the
17:29
Speaker 11: reconciliation bill.
17:30
Speaker 5: So that's clue.
17:31
Speaker 11: But for the time, I mean, we will wait to
17:32
Speaker 11: see what are the new physical conditions to develop solar
17:36
Speaker 11: in the US. But you know there are a lot
17:38
Speaker 11: of red states where we develop new way bores. And again,
17:42
Speaker 11: what the priority for Trump administration is. We want more
17:46
Speaker 11: electricity for AI for data centers.
17:49
Speaker 5: It's all of the above. More electricity is gas.
17:52
Speaker 11: It could be nuclear, but it could be also were
17:55
Speaker 11: bares with batteries.
17:56
Speaker 5: So I'm optimistic.
17:58
Speaker 11: I think at the end common sense in the US,
18:01
Speaker 11: but have observed at the end business interests are always respected,
18:05
Speaker 11: and you have a fundamentalism. Trum is very business friendly,
18:10
Speaker 11: So why not for energy, which is the core of
18:13
Speaker 11: all the program for golf.
18:16
Speaker 5: Okay, so I'm optimistic.
18:17
Speaker 8: Globally though, I mean, we're looking at starts taking a hit.
18:20
Speaker 8: The sentiment's not great. They're worries about recession, either in
18:24
Speaker 8: the US or elsewhere because of terrorsts are using any.
18:27
Speaker 9: Indication of that.
18:28
Speaker 11: Yeah, but what because you know what people ate, it's uncertainty.
18:31
Speaker 11: What has been created is uncertainty. We've all these started
18:35
Speaker 11: for us. So suddenly we don't like the markets. The
18:37
Speaker 11: stock markets do not like. We don't know what we go.
18:40
Speaker 11: So putting the caroos is a nice way to negotiate.
18:42
Speaker 11: I can use it myself from time to time. I'm
18:45
Speaker 11: not a big I'm not sure obtaining the good reserves.
18:48
Speaker 5: But short, callous please, that's all.
18:50
Speaker 11: But the markets are saying to the administration we don't
18:53
Speaker 11: like uncertainty.
18:54
Speaker 5: We are changing the world. Where do we go?
18:56
Speaker 11: So I think the shortest will be the better for
18:59
Speaker 11: all the interests, including fundamentally for the US. Economy, and
19:02
Speaker 11: I'm sure that President from Trump and his administration are
19:05
Speaker 11: very led by the un lf US economy, which was
19:09
Speaker 11: not too bad in fact, so stuff is uncertainty. But
19:12
Speaker 11: I think the best thing to do in order to
19:14
Speaker 11: avoidization and things, which honestly is the US economy SHO
19:18
Speaker 11: should not get again.
19:20
Speaker 8: No globally for China, for example, China puts a tar
19:22
Speaker 8: uf on US energy that does directly impact your business.
19:25
Speaker 8: You're a huge gas and energy traders.
19:29
Speaker 5: It does not impact.
19:31
Speaker 11: I will tell you what, because the Chinese are smart
19:33
Speaker 11: if they choose that product is because it has a
19:35
Speaker 11: little impact. Because in fact, a company like Total we
19:38
Speaker 11: produce energy fourty million terms in twelve countries. So yes,
19:43
Speaker 11: my energy from the US will not go to China
19:46
Speaker 11: because there is a tariff, but I will use the
19:48
Speaker 11: energy from cat or from Australia to go to China.
19:51
Speaker 11: So in fact we made the analysis. The impact on
19:55
Speaker 11: China is very minimum, almost nothing. And for honestly, today
20:00
Speaker 11: for US we are the largest exporter of US energy
20:03
Speaker 11: more than Telemeton's. Our primary market is more Europe today,
20:07
Speaker 11: so we are so we bring recent Europe, which is
20:09
Speaker 11: fitting by the way, effect exactly with the Trump administration
20:14
Speaker 11: policy to expand the business the trade or to the
20:18
Speaker 11: trade with Europe food, energy, and in particular energy.
20:21
Speaker 8: What happens though, if there's peace in Ukraine and Europe
20:23
Speaker 8: starts buying Russian gas more.
20:25
Speaker 5: We'll see, First we need to have peace.
20:27
Speaker 11: Second we need to see if Europeans will buy more
20:29
Speaker 11: Russian gas.
20:29
Speaker 8: Any indication that they might from here where you say,
20:32
Speaker 8: I think you know, it's not an easy It will
20:34
Speaker 8: be a debate between economy and geopolitics.
20:37
Speaker 11: Economically, for sure, Russian gas is cheaper, so it was
20:41
Speaker 11: part of the competitiveness of the German industry. Politically, I
20:45
Speaker 11: think it still will be a big debate to see if.
20:48
Speaker 5: We take back some gas.
20:50
Speaker 11: Yes we'll take some Russian gas, but surely not at
20:52
Speaker 11: the same level before the war. The other dependency from
20:56
Speaker 11: Europe to the Russian gas. I think this eries over
21:00
Speaker 11: we will be in between will not be zero. It
21:02
Speaker 11: will not be one of the fifty percent per year,
21:04
Speaker 11: maybe alph of it eighty. And so that means that
21:07
Speaker 11: still we will need more energy after the peace when
21:12
Speaker 11: we were using energy.
21:13
Speaker 5: Before the war.
21:14
Speaker 11: So for the US energy it is a growing market.
21:18
Speaker 8: And also you have Germany that's trying to pass money
21:21
Speaker 8: to be able to rearm and reindustrialize. What kind of
21:24
Speaker 8: demand you like, what's your opportunity set there that really
21:27
Speaker 8: comes to pass.
21:30
Speaker 11: But I think Germany is a very strong market for us.
21:32
Speaker 11: We love it because the Germans in an excity have
21:34
Speaker 11: decided to get a non nuclear get.
21:37
Speaker 5: Off of coal, so it will be a mix of
21:39
Speaker 5: gas plants.
21:40
Speaker 11: We need to build a twenty GigE out of gas
21:41
Speaker 11: for appartments and renewables exactly of strategy.
21:44
Speaker 5: So there is for us.
21:45
Speaker 11: We have invested in the last two years strongly in
21:49
Speaker 11: Germany to build what we call our integrated power business.
21:52
Speaker 11: So I think, yeah, Germany, and it's true as well,
21:55
Speaker 11: but we need to gain the kis. We need to
21:58
Speaker 11: produce more weapons in Europe for sure, in order to
22:02
Speaker 11: be more independent somewhere. And because the message from the
22:05
Speaker 11: US is clear we need to take ourselves of future
22:09
Speaker 11: in our hands. So that's good for globally, for the economy,
22:12
Speaker 11: in the industry.
22:12
Speaker 9: So what's on your M and A list right now?
22:15
Speaker 8: Yeah, you're going to buy something for that's a opportunity.
22:18
Speaker 11: First, we have a huge organic growth. I have five
22:20
Speaker 11: percent in front of me for the next five years now.
22:23
Speaker 5: We have been clear that we.
22:24
Speaker 11: Want to in particular to build a larger gas business
22:29
Speaker 11: production business in the US. So we made so many
22:32
Speaker 11: ideas last year. Maybe there is more to come because
22:35
Speaker 11: I need to increase my gas production in the US.
22:38
Speaker 9: But boltons or bigger deals.
22:40
Speaker 5: Boltons is fine.
22:41
Speaker 11: It depends opportunities, some matter of to make good m
22:44
Speaker 11: n as.
22:45
Speaker 5: It's good to become a cyclical.
22:46
Speaker 11: So I will not announce that today.
22:52
Speaker 5: I need to, Okay.
22:54
Speaker 9: I get that.
22:55
Speaker 8: Is this also a good time to get out of
22:57
Speaker 8: certain assets that aren't working for you, say Ista, maybe
23:00
Speaker 8: on the list.
23:02
Speaker 11: Yeah, we last year one of our piers has done
23:04
Speaker 11: a very good deal. You know Argentina. We have the
23:06
Speaker 11: strongest gas producer in Argentina.
23:08
Speaker 5: We have also some share roll.
23:10
Speaker 11: We are not very keen to develop the share all
23:12
Speaker 11: for different reason. And so last year one of our
23:15
Speaker 11: piers has done a very good MNA. So yes, I'm
23:17
Speaker 11: ready to at the same price one of our coolies.
23:20
Speaker 11: I'm ready to divest my share old production license in
23:23
Speaker 11: Argentina as part of the divestment.
23:25
Speaker 3: But you know, we have been getting close to that, and.
23:27
Speaker 5: I don't know we have processes. Well, it is good news.
23:33
Speaker 8: All right, let's go to one other area that mona
23:35
Speaker 8: make some news. So Mozambique, El gie. I know you've
23:38
Speaker 8: been working very very hard on that project. To get
23:40
Speaker 8: it restarted. You need approval reapproval from the US Import
23:44
Speaker 8: Export Bank for a four point seven billion dollar loan.
23:47
Speaker 9: How's that gone?
23:48
Speaker 11: I think it's for US In first, this was approved
23:50
Speaker 11: on the Trump one administration. So it's a contract which
23:52
Speaker 11: has been signed. I just would like to remember, and
23:55
Speaker 11: I believe in a rule of roof. Fundamentally the contract exists.
23:57
Speaker 11: What happens is that in twenty one were to declare
24:00
Speaker 11: force measure because there were some security events, we had
24:02
Speaker 11: to stop the and so it's just a matter to
24:05
Speaker 11: amend this contract to put a new completion date in
24:07
Speaker 11: twenty thirty to reflect the fact that between twenty one
24:10
Speaker 11: and twenty four we are forced to stop. That's what
24:13
Speaker 11: we want be amendment. So it's not a big amendment,
24:16
Speaker 11: you know the debate. I think now you have a
24:18
Speaker 11: functional USXEM. President Trump has decided to put in place
24:23
Speaker 11: a new board.
24:24
Speaker 5: So we'll say, but I'm optimistic.
24:26
Speaker 8: But years, days, hours, month, Okay, I don't know Tondamentally,
24:33
Speaker 8: I think honestly there is normal debate with this administration.
24:37
Speaker 11: The mandate of USXIV is to be neutral in terms
24:40
Speaker 11: of support. In fact, why USXM is supporting us because
24:44
Speaker 11: most of the contracts have been awarded to US companies,
24:47
Speaker 11: US contractors. This project represents sixteen thousand jobs in the US.
24:52
Speaker 11: That's why USXM is supporting it. We inevited the project
24:55
Speaker 11: from Manadako. We are not a US company, but we
24:57
Speaker 11: kept all the US contractors and that is the driver behind.
25:02
Speaker 5: Which supports USXEM.
25:03
Speaker 11: It's not total energy, it's fundamentally the support of U
25:06
Speaker 11: SXEM is an export credit supporting the fact. But we
25:09
Speaker 11: have awarded more than forty percent of the contracts to
25:13
Speaker 11: US contractors, which are all asking me please resetart because
25:17
Speaker 11: we have the jobs, and they have written to all
25:19
Speaker 11: their congressmen, to all their this is for what, But
25:22
Speaker 11: this is the reason why we can be also pro
25:25
Speaker 11: US industry when we invest abroad, when we give jobs
25:29
Speaker 11: to US companies. And this is the reason why I
25:32
Speaker 11: think USXEM will honor his word for simple reason. It's
25:36
Speaker 11: not because it's energy, it's just because it's US jobs.
25:39
Speaker 5: That's the fundamental reasons.
25:40
Speaker 9: That's a good pat to You're one hundred percent component
25:42
Speaker 9: that money is going to come your way.
25:43
Speaker 8: Yeah, pernfident Patrick. It's a real pleasure. I love speaking
25:48
Speaker 8: with you. Thank you so very much for joining me.
25:49
Speaker 8: I really appreciate a package pre and a chairman and
25:52
Speaker 8: CEO of to Hotel Energy.
25:53
Speaker 2: I'll sign it back to you, all right, Alex, thank
25:55
Speaker 2: you so much.
25:55
Speaker 3: We appreciate that.
25:56
Speaker 2: That's Bloomberg Intelligence co host Alex Steel speaking with Total
25:59
Speaker 2: Energyopatrick P and A on the global oil and gas
26:04
Speaker 2: business down there in Houston, Texas.
26:07
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
26:11
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
26:14
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
26:17
Speaker 1: you get your podcasts, or watch us live on YouTube.
26:22
Speaker 2: Well, yesterday Toby Rice, CEO of e QT, spoke with
26:25
Speaker 2: Boomberg Intelligence co host Alex Steele about the impact of
26:29
Speaker 2: tariffs on energy investments. And it's Sarah Week in Houston.
26:33
Speaker 5: Let's take a listen.
26:34
Speaker 12: So for our business, surprisingly from a cost perspective, doesn't
26:38
Speaker 12: have a material impact on our costs. But when you
26:41
Speaker 12: step back and you look at energy as a whole.
26:43
Speaker 12: Tariffs on a country like I say, Canada would actually
26:46
Speaker 12: be bullish on natural gas prices here domestically. So that's
26:50
Speaker 12: a big why gus more demand because of the fact
26:54
Speaker 12: that Canada imports so much gas into the United States,
26:57
Speaker 12: which would have terrifs which would lift lift the price
27:00
Speaker 12: of natural gas here domestically, but from a minor amount.
27:04
Speaker 12: I mean, if you think about it, gas prices are
27:05
Speaker 12: four dollars and fifty cents. That's the energy equivalent of
27:09
Speaker 12: call it thirty dollars a barrel. So I mean, natural
27:12
Speaker 12: gas still is the most cost effective energy solution, but
27:14
Speaker 12: tariffs are certainly a big theme of the conversations we're
27:17
Speaker 12: hearing this.
27:18
Speaker 9: Week with some o real services.
27:19
Speaker 8: Say, look, we're looking at shale, you're gonna drill a well,
27:22
Speaker 8: like it could really increase those costs to actually get
27:25
Speaker 8: more oiler get more gas out of the ground.
27:27
Speaker 12: True for you guys, absolutely, that definitely is an issue
27:31
Speaker 12: for people that are playing the spot market for their
27:33
Speaker 12: services and looking to gauge their activity levels based on
27:36
Speaker 12: the current commodity price.
27:37
Speaker 5: At EQT, we take a much.
27:38
Speaker 12: More long term, steady focus on our activity levels and
27:42
Speaker 12: because of the fact we've contracted so much of our services.
27:44
Speaker 12: We've muted or we've insulated the impact of these tariffs,
27:47
Speaker 12: but they are going to be felt by others playing
27:49
Speaker 12: the spot market.
27:50
Speaker 8: Unleashing American energy is a cornerstone of the Trump administration.
27:53
Speaker 8: You have been saying that for a very long time. Also,
27:56
Speaker 8: when we talk about unleashing, do you interpret that to
27:59
Speaker 8: me unleashing oil or unleashing gas?
28:02
Speaker 5: All of it at all American energy?
28:04
Speaker 12: I mean, Alex, we are in a place right now
28:06
Speaker 12: in this country where we are producing record amounts of energy.
28:10
Speaker 12: If you added up the oil in the gas that's
28:11
Speaker 12: being produced today, it's over thirty million barrels a day
28:15
Speaker 12: of energy.
28:15
Speaker 5: OK. But here's the challenge. People are scratching their.
28:19
Speaker 12: Heads at home because Americans have seen their energy bills
28:23
Speaker 12: increase over thirty five percent. How can we live in
28:26
Speaker 12: a world where energy production is up but prices are
28:30
Speaker 12: still still going up. The answer is quite simply, because
28:35
Speaker 12: political force has overwhelmed market forces, and that's made it
28:38
Speaker 12: incredibly difficult for the.
28:40
Speaker 3: Market forces to work.
28:42
Speaker 12: And that means we see big disconnects between where energy
28:45
Speaker 12: is produced and where it's consumed. I'm selling Gas and
28:47
Speaker 12: Appalachia today for four dollars, and in Boston they're paying fifteen.
28:52
Speaker 12: There's an incredible opportunity for us to get ourselves out
28:55
Speaker 12: of this. It's not about drill, baby drill, It's about
28:58
Speaker 12: build baby build. That needs to be the mantra that's
29:01
Speaker 12: going to unleash America energy and unleash energy dominance here
29:04
Speaker 12: in this country, which is going to lower energy bills
29:06
Speaker 12: for American and strengthen our energy security.
29:08
Speaker 9: And by built, you're basically goo pipelines.
29:10
Speaker 8: Like the reason why people in Boston are paying fifteen
29:12
Speaker 8: bucks is because there's no pipeline that's going to get
29:14
Speaker 8: a gas efficiently there. Do you think we're going to
29:17
Speaker 8: get East Coast pipeline? Would you bet money on that?
29:20
Speaker 12: Well, you know, you look at the headlines last couple
29:23
Speaker 12: of weeks. The Trump administration has already thrown support behind
29:26
Speaker 12: the Constitution pipeline, which could bring up to a BCF
29:29
Speaker 12: day of natural gas. That was one of the travesties
29:34
Speaker 12: that has happened in the past, was one of the
29:35
Speaker 12: pipelines those blocked cancels are opposed. So for the fact
29:38
Speaker 12: that this administration is putting focus on that, I'm optimistic,
29:42
Speaker 12: but it's not just going to be executive order or
29:46
Speaker 12: political support that's going to make this happen. We need
29:48
Speaker 12: to see real permit reform in addition to legislative reform
29:52
Speaker 12: to give our pipeliners the confidence to get these projects built.
29:56
Speaker 12: Because the market is screaming in four.
29:58
Speaker 9: Years, I get built in four years. That's a tough
30:01
Speaker 9: that's a tough road.
30:02
Speaker 3: Yeah.
30:02
Speaker 12: Hopefully the legislation reform, the perperform that takes place, will
30:08
Speaker 12: include some some litigation reform that will prevent people from
30:12
Speaker 12: actually going back and trying to vacate permits for assets
30:16
Speaker 12: that are already built. I mean, this is the type
30:18
Speaker 12: of situation that that's happened in this country. Imagine a
30:21
Speaker 12: pipeline company getting their permits, starting construction and then having
30:25
Speaker 12: their permits yanked away from them. Yeah, okay, that's exactly
30:28
Speaker 12: what happened with Mountain Valley Pipeline, one of the most
30:31
Speaker 12: controversial pipelines in this country. And that's an asset that
30:34
Speaker 12: eqt owns today. And for people that maybe say, hey,
30:38
Speaker 12: we don't need these pipelines, well, let me tell you
30:41
Speaker 12: what's happened on that pipeline this last winter. That pipeline
30:44
Speaker 12: that people have said is not necessary for this energy
30:46
Speaker 12: for this country's energy security, have flowed at max capacity
30:49
Speaker 12: over to bcf a day. And here's a shocker, the
30:52
Speaker 12: price at the tail pipe of that pipeline reached over
30:54
Speaker 12: thirty five dollars per mcf. What would have happened if
30:59
Speaker 12: that pipeline was not built. Clearly there's a sign that
31:01
Speaker 12: we need to get more infrastructure built. And if you
31:03
Speaker 12: think it's hard to get a pipeline built, understand this.
31:06
Speaker 12: It's hard to get a transmission line built. It's hard
31:08
Speaker 12: to get an oil and gas location built. It's hard
31:10
Speaker 12: to get a five thousand acre solar facility or wind farm.
31:13
Speaker 12: I don't care what type of energy you're building. It's
31:16
Speaker 12: gotten incredibly difficult to get things built in this country.
31:18
Speaker 12: That's why to get out of this, we need to
31:20
Speaker 12: get back to letting market forces rule and build baby built.
31:23
Speaker 9: Okay, So that's the pitch. I get that.
31:25
Speaker 8: The other side of it is not only to get
31:27
Speaker 8: say gas to the East Coast, but also to get
31:29
Speaker 8: our gas out of the US and export it and
31:31
Speaker 8: form of lag. You're going to need a pipeline from
31:33
Speaker 8: the Haynesville to get to the Gulf Coast.
31:35
Speaker 12: As it happen, there is going to be some more
31:38
Speaker 12: opportunities that people are looking at leveraging existing assets.
31:41
Speaker 5: That we have.
31:42
Speaker 12: It's one of the questions that I think a lot
31:45
Speaker 12: of pipeline operator looking at, is the right of ways
31:48
Speaker 12: that we've already established. What is the extra capacity we
31:52
Speaker 12: get put inside those right aways? You know, the environmental
31:54
Speaker 12: disturbance from creating a right away can be muted when
31:58
Speaker 12: you're using existing core doors that have already been created.
32:01
Speaker 12: That can be an opportunity. But the theme isn't just
32:05
Speaker 12: the three themes I look at it when it comes
32:06
Speaker 12: to natural gas. One, continue to evolve our energy systems
32:10
Speaker 12: using natural gas to replace coal. Two is this LNG
32:15
Speaker 12: theme that's taking place. And the third big theme that's
32:17
Speaker 12: taking place is with AI. So there's a really amazing
32:21
Speaker 12: opportunity for natural gas in the future.
32:24
Speaker 8: Well, currently you can't benefit off of the LNG export
32:27
Speaker 8: trade right now, right because you need your gas to
32:29
Speaker 8: get there.
32:30
Speaker 12: Well is America's largest natural gas or Big America's natural
32:34
Speaker 12: gas champion EQT. We sell our gas all over the
32:37
Speaker 12: country and so to the Gulf Coast specifically, we move
32:40
Speaker 12: about one point three bcf a day of our product
32:43
Speaker 12: down to the Gulf Coast. About eight hundred million a
32:45
Speaker 12: day of that is going to the Energy Corridor. So
32:48
Speaker 12: we do have access to that market, and we are
32:51
Speaker 12: excited about the America's ability to continue to supply LNG
32:56
Speaker 12: to the world and help them lower their global emissions
32:59
Speaker 12: and also provide energy security.
33:00
Speaker 8: At the same time, you also brought up AAI and
33:02
Speaker 8: power demand. How are you guys going to play in
33:04
Speaker 8: that space? What are conversations like? It feels like it's
33:06
Speaker 8: not just independent power players, it's now regulated utilities. It's
33:10
Speaker 8: also energy companies that are now trying to become power
33:12
Speaker 8: companies in essence, what are your conbos like?
33:15
Speaker 12: So AI is the thing that everybody's talking about. Whether
33:17
Speaker 12: you're at an energy conference or any conference, people are
33:20
Speaker 12: talking about AI.
33:21
Speaker 5: Just remember it's only.
33:22
Speaker 12: Been twelve months since people really started saying this is
33:25
Speaker 12: going to be a big deal. So in less than
33:27
Speaker 12: twelve months we've seen the momentum for AI only continue
33:30
Speaker 12: to strengthen. How big could this be is there's a
33:34
Speaker 12: lot of wide ranges. Some people are saying fifty gigawats
33:37
Speaker 12: or seventy five gigawatts. That's people are basically saying between
33:41
Speaker 12: ten or fifteen New York cities power to feed in
33:44
Speaker 12: New York cities. This is a really big deal. We're
33:47
Speaker 12: seeing some technology investors come into EQT that have estimates
33:50
Speaker 12: that we're going to see one hundred and seventy five
33:52
Speaker 12: gigawatts of power demand when you do the build up
33:54
Speaker 12: on how many chips?
33:55
Speaker 9: So, but how do you play in that right now?
33:57
Speaker 12: Well, right now EQT, about a third of our now
34:00
Speaker 12: gas in this country is used for power generation. So
34:03
Speaker 12: we've consistently seen year over year higher and higher natural
34:08
Speaker 12: gas utilization to meet power. So when you're talking about AI,
34:11
Speaker 12: you're talking about power, you're talking about natural gas. The
34:14
Speaker 12: evolution that's taking place over the last twelve months, people
34:18
Speaker 12: have questioned, say, well, how will natural gas.
34:20
Speaker 5: Meet this power demand? Will they play a role?
34:23
Speaker 12: Well, twelve months ago people were thinking they were going
34:25
Speaker 12: to be able to meet that security or meet that.
34:27
Speaker 5: Demand with renewables. We've moved past that.
34:30
Speaker 12: Then they looked to nuclear and realize it's hard to
34:34
Speaker 12: get nuclear built, it's probably going to meet the time
34:36
Speaker 12: ambitions that they have, and so now they've moved to
34:39
Speaker 12: natural gas, which is the most cost effective most reliable
34:42
Speaker 12: form of power generation and most importantly, it's the fastest
34:47
Speaker 12: speed to market, and we think those attributes are going
34:49
Speaker 12: to allow natural gas to lie and share of the
34:51
Speaker 12: power gen that's coming.
34:53
Speaker 5: All right.
34:53
Speaker 2: That was Bloomberg Intelligence co host Alex Steele speaking with
34:56
Speaker 2: Toby Rice, the CEO of EQT, at Sarah Week down
35:01
Speaker 2: in Houston, and my takeaway was not much so much build.
35:06
Speaker 2: I mean, drill, baby, drill, but build baby build. So
35:11
Speaker 2: that's kind of a takeaway there. We need more pipelines
35:14
Speaker 2: to get the energy that we do produce to.
35:17
Speaker 3: Where it needs to be.
35:18
Speaker 7: It's actually great. I'm learning a lot just watching Alex's interview.
35:21
Speaker 7: I mean, this is a space that's very important and
35:23
Speaker 7: crucial to the economy, but I think doesn't really get
35:25
Speaker 7: a lot of headlines, not like that.
35:27
Speaker 9: S and P.
35:28
Speaker 3: Yeah, exactly exactly.
35:29
Speaker 2: So the energy business is front and center down there
35:32
Speaker 2: in Houston, Texas. And again you know the EQT. They
35:36
Speaker 2: have a lot of oil and gas coming out of
35:38
Speaker 2: their shale areas, but the challenge in some markets is
35:42
Speaker 2: to get it efficiently to where it needs to be,
35:43
Speaker 2: whether it is via pipeline to the East coast or
35:46
Speaker 2: down to the Gulf for export LNG market. So again,
35:50
Speaker 2: great stuff there.
35:52
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
35:56
Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto
36:00
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
36:03
Speaker 1: get your podcasts, or watch us live on YouTube.
36:06
Speaker 2: All right, let's head down to Houston once again. Bloomber
36:09
Speaker 2: Intelligence co host Alex Steele speaks with Williams, CEO of
36:13
Speaker 2: Alan Armstrong.
36:15
Speaker 9: Take it away, all right, thanks so much, Paul.
36:19
Speaker 8: That's right, I'm here with Allan Armstrong, CEO of Williams.
36:21
Speaker 8: Williams is one of the largest natural gas infrastructure companies
36:24
Speaker 8: in the United States.
36:27
Speaker 9: Great to see you, Thank you for joining me.
36:28
Speaker 3: Glad to be here.
36:29
Speaker 5: Thank so.
36:29
Speaker 8: The news of the last hour is that President Trump
36:32
Speaker 8: is increasing tariffs on steel aluminum imports from Canada to
36:35
Speaker 8: fifty percent.
36:36
Speaker 9: What does that do to your business?
36:38
Speaker 13: Well, you know, we we have a number of suppliers
36:41
Speaker 13: the large diameter pipeline business, a lot of European suppliers,
36:46
Speaker 13: Korean suppliers for that space as well, so you know
36:49
Speaker 13: the market will have to react to that certainly.
36:54
Speaker 8: Though.
36:54
Speaker 3: You know.
36:56
Speaker 13: Something that companies will have to react to and respond
36:59
Speaker 13: to in terms to the supply chain. It's always been
37:01
Speaker 13: a great relationship with Canada, you know, as a supplier,
37:05
Speaker 13: particularly in the still into the energy business and the
37:07
Speaker 13: large diameter pipeline. So a lot of people don't appreciate,
37:11
Speaker 13: you know the fact that the still pipe making process
37:15
Speaker 13: involves making the plate still and then converting that into
37:19
Speaker 13: large diameter pipeline.
37:20
Speaker 3: A lot of capacity here in the US for smaller diameter.
37:25
Speaker 13: Still products like is used in the drilling and uh
37:28
Speaker 13: in in the production area, but when you get the
37:30
Speaker 13: large diameter pipeline, pretty limited capacity here in the universe.
37:35
Speaker 9: Capacity to be built would be.
37:37
Speaker 3: Quite the build.
37:38
Speaker 13: Yeah right, it takes a while to to gear that up,
37:41
Speaker 13: and a lot of those mills are already you know,
37:43
Speaker 13: booked out pretty far so so but the good news is,
37:46
Speaker 13: you know a lot of really good suppliers in Europe
37:48
Speaker 13: that we've always used, as Williams, those.
37:50
Speaker 9: Traffs are coming up.
37:51
Speaker 13: Yeah, so we'll see I mean, I think you know them.
37:55
Speaker 8: Certainly laying pipe right now on the ground where this
37:58
Speaker 8: would be an immediate issue, or.
38:00
Speaker 13: We've already i mean anywhere we've got a project like
38:02
Speaker 13: that we've already bought the steel well in advance, and
38:05
Speaker 13: we line those up well in advance. So it's not
38:08
Speaker 13: it's not a situation where we've got pipe coming across
38:11
Speaker 13: the border and we're gonna have to figure out how
38:13
Speaker 13: the tariffs work. So most of our pipe gets bought.
38:17
Speaker 13: You know, we contract the business. Once it's contracted, then
38:21
Speaker 13: we go by the pipe. And so you know, the
38:24
Speaker 13: kind of ironic thing about that is because our permitting
38:26
Speaker 13: processes take so long here in the US that we
38:30
Speaker 13: have plenty of time, unfortunately, to go buy the pipe's
38:34
Speaker 13: while we're working on the permitting.
38:35
Speaker 8: So the theme here the administration originally it was sort
38:38
Speaker 8: of a drill, Baby drilled, But the theme here among
38:41
Speaker 8: CEOs is build baby built, which was is one hundred
38:43
Speaker 8: percent up your ally and in your business, right, what
38:46
Speaker 8: are the biggest hurdles, Like is it permitting?
38:49
Speaker 9: Is it going to be sourcing? Is it labor?
38:51
Speaker 13: Yeah, no, it's I mean it is first and foremost
38:53
Speaker 13: permitting in the markets that we serve.
38:55
Speaker 3: We serve some of the more.
38:56
Speaker 13: Heavily populated areas like Seattle, Portland markets, New York, New Jersey.
39:03
Speaker 3: Up provides supplies.
39:04
Speaker 13: Up into New England and all along the eastern seaboard,
39:07
Speaker 13: so areas that have a lot of data center load
39:12
Speaker 13: right now going on, and as well as some big
39:16
Speaker 13: projects here in the Gulf Coast area serving LNG market.
39:19
Speaker 3: So we've got a forty.
39:20
Speaker 13: Two inch pipeline right now that is being built from
39:24
Speaker 13: the Hainesville down into the Tying into our Transco system,
39:29
Speaker 13: large diameter pipeline. So we've got a lot of big
39:32
Speaker 13: projects going on. But truly, when you get into the northeast,
39:36
Speaker 13: the state's ability to block pipelines has been pretty chronic,
39:41
Speaker 13: particularly in the New York City mark into New York City,
39:44
Speaker 13: Like you know, Governor Cuomo block two of our big pipelines.
39:48
Speaker 13: The outcome of that is ninety eight dollars natural gas
39:51
Speaker 13: in the winter this year into New York City, which
39:54
Speaker 13: is going to make.
39:55
Speaker 9: The federal government fit. That said, if that's a state.
39:58
Speaker 13: Issue, if the federal government, I would say that I
40:04
Speaker 13: think what's going to fix that is people being really
40:06
Speaker 13: upset about their utility bills. Yeah, and you know you
40:09
Speaker 13: saw yeah, so you saw a couple of weeks ago
40:13
Speaker 13: where where Governor Hokeel actually went out in supported the
40:18
Speaker 13: Iroquoid pipeline expansion into Long Island, and she recognized that
40:23
Speaker 13: it was because customers on the con ed system, while
40:26
Speaker 13: they were providing low income.
40:28
Speaker 3: Assistance for people's utility bills.
40:30
Speaker 13: That was being completely eaten up by the fact that
40:33
Speaker 13: the cost of gas into those markets. And it's not
40:36
Speaker 13: because natural gas is high. Natural gas is, you know,
40:39
Speaker 13: so much cheaper than crude oil or fuel oil. It's
40:41
Speaker 13: used for heating there. But it's just the fact that
40:44
Speaker 13: there's a bottleneck on infrastructure.
40:46
Speaker 8: And then you add on to the fact that AI
40:48
Speaker 8: data demand need for power is going to increase a lot.
40:51
Speaker 8: You recently struck an agreement with an undisclosed investment grade
40:54
Speaker 8: company to provide natural gas and power infrastructure at the
40:57
Speaker 8: tenure purchase power agreement. The total cost of projects about
41:01
Speaker 8: one point six billion dollars.
41:02
Speaker 9: Can you tell us anything about who the customer is?
41:05
Speaker 13: No, we cannot, so, and you know, the good news
41:07
Speaker 13: is we have a customer that really wants to make
41:09
Speaker 13: sure we get all the permitting done that we work
41:13
Speaker 13: closely with the local authorities to get permitting done there.
41:17
Speaker 13: So we very much respect that as much as we'd
41:20
Speaker 13: like to, you know, talk about who that is.
41:22
Speaker 8: Are you in other conversations that with other companies do
41:25
Speaker 8: something similar.
41:26
Speaker 9: How far long are those conversations.
41:27
Speaker 13: I would say they're pretty advanced. And one thing we've
41:30
Speaker 13: learned is that speed to market is so critical right now.
41:35
Speaker 3: And what we learned in this last process was actually that.
41:39
Speaker 13: These companies don't really want to have to go to
41:41
Speaker 13: the gas company to buy their supply and to the
41:45
Speaker 13: power generator to build the generation and then to manage that.
41:49
Speaker 13: They just want somebody to show up with the power
41:51
Speaker 13: and provide the gas supply to provide that power. And
41:54
Speaker 13: that's obviously something that Williams is really well positioned.
41:57
Speaker 8: We'll talk about that because I think of you guys
41:58
Speaker 8: as like a pipe that like moves liquids, Like, what
42:01
Speaker 8: are you to do with power?
42:02
Speaker 3: Yeah?
42:03
Speaker 13: So, you know, if you think about today, most of
42:05
Speaker 13: the natural gas now in the US.
42:07
Speaker 3: Is produced are sorry, most of the power.
42:09
Speaker 13: Generation in the US today is coming off the backs
42:12
Speaker 13: of natural gas. We've been in the generation we've been
42:14
Speaker 13: in and out of the generation business for years. But
42:17
Speaker 13: what people probably don't appreciate is those same gas for
42:20
Speaker 13: our generators that are used to compress the gas and
42:23
Speaker 13: move the gas on our pipelines are exactly the same
42:26
Speaker 13: piece of equipment that's used to spend the generator to
42:30
Speaker 13: provide power. So we're one of the largest buyers for
42:33
Speaker 13: solar turbines, which is a Caterpillar arm and so we
42:39
Speaker 13: have a great relationship with Caterpillar through that.
42:42
Speaker 3: So we're able to get access.
42:44
Speaker 13: To these, you know, very in demand power generation facilities
42:48
Speaker 13: because of our relationship there.
42:49
Speaker 8: So when you came to this deal and the conversations
42:52
Speaker 8: that you're also in, what's it like to come to pricing?
42:56
Speaker 9: Top part?
42:57
Speaker 13: Is it you know, the main issue use While I
43:00
Speaker 13: would say, you know, we were very transparent about what
43:03
Speaker 13: our pricing expectations were, the main issue at the negotiating
43:07
Speaker 13: table was speed and reliability.
43:10
Speaker 9: Okay, so they're willing to pay a premium or does pay.
43:12
Speaker 3: I wouldn't say it's a premium.
43:14
Speaker 13: I would say it was it was, you know, better
43:17
Speaker 13: than they could get off the grid, and certainly from
43:20
Speaker 13: a timing standpoint, a lot better than they could get
43:22
Speaker 13: off the grid. And so the grid in some of
43:25
Speaker 13: these areas is so you know, one of the areas
43:27
Speaker 13: that we serve a lot is the PGAM market Northeast,
43:31
Speaker 13: and it takes you know, people are getting told it's
43:34
Speaker 13: going to be eight years before they can get an interconnection,
43:36
Speaker 13: get somebody to study the interconnection for some of these
43:39
Speaker 13: large loads. So the market just has no appetite for
43:43
Speaker 13: tangling with that kind of bureaucracy, and that's why we're
43:46
Speaker 13: going to see more of this kind of behind the meter.
43:48
Speaker 13: You know, people use this term behind the meter like
43:50
Speaker 13: everybody would understand what that means. It simply means. It
43:53
Speaker 13: simply means that these people are buying their own generation
43:57
Speaker 13: facilities and they're not being connected into the grid.
44:00
Speaker 8: Well, funnily enough, my next question was about behind the
44:02
Speaker 8: meter projects. So what's your willingness to increase capex if
44:06
Speaker 8: those kind of projects go through or those you have
44:10
Speaker 8: potential like thirty behind the meter projects that could come through, Like,
44:13
Speaker 8: what's your capex tolerance?
44:15
Speaker 13: Yeah, I mean we have a lot of capacity right now.
44:17
Speaker 13: The good news is that our gas pipeline business and
44:21
Speaker 13: our gathering business has been producing very high returns for
44:24
Speaker 13: so a lot of incremental cash flow.
44:26
Speaker 3: So we have a lot of capital, a.
44:29
Speaker 13: Lot of financial capacity right now to invest in this space. Obviously,
44:33
Speaker 13: it's going to have to be you know, secured with
44:36
Speaker 13: strong credits for us to take that on. But it's
44:40
Speaker 13: it's we've got quite a bit of capacity right now.
44:45
Speaker 13: Six months ago, our investors were asking us what are
44:47
Speaker 13: you guys going to do with all this cash flow?
44:49
Speaker 13: Like cash flow is piling up on you, what are
44:52
Speaker 13: you going to do with it all? So this is
44:53
Speaker 13: actually kind of a nice place for us to be
44:56
Speaker 13: able to go, a nice investment for us to be.
44:58
Speaker 3: Able to go to.
44:59
Speaker 8: So you do have a cap cycle going there. There's
45:01
Speaker 8: also potential M and A opportunities. There's been a lot
45:04
Speaker 8: of action in this space, particularly as it surrounds power.
45:09
Speaker 9: What would you be in the market for.
45:11
Speaker 13: You know, we've been very successful at doing setting our
45:15
Speaker 13: strategy each year with our board and so we kind
45:19
Speaker 13: of predetermine, hey, here's the stuff we want to go after.
45:23
Speaker 13: For instance, last year and the year before that, it
45:26
Speaker 13: was going after the storage business because we knew with
45:30
Speaker 13: both LNG loads and with intermittent power loads that the
45:34
Speaker 13: amount of storage demand for storage.
45:37
Speaker 3: Was going to go up.
45:37
Speaker 13: We've seen the demand for gas over the last ten
45:41
Speaker 13: years go up by forty seven percent and storage only
45:45
Speaker 13: went up by two percent. So store new storage capacity
45:47
Speaker 13: only went up by two percent. So we kind of
45:51
Speaker 13: sit back, study and get real conviction at the board
45:54
Speaker 13: level on this is what we're going to go after.
45:57
Speaker 13: Until we see the signals change, we're going to go
45:59
Speaker 13: after that. So we went out and we're the largest
46:02
Speaker 13: owner of storage now in.
46:03
Speaker 3: The Gulf Coast area.
46:04
Speaker 9: So now what's the.
46:05
Speaker 13: Theme and so so now we are in the process
46:08
Speaker 13: of continuing to do bolt on transactions in particularly in
46:12
Speaker 13: areas where we think there's going to be a.
46:14
Speaker 3: New call on gas. We talk about all.
46:16
Speaker 13: This demand side you know investment, Well, there's going to
46:21
Speaker 13: have to be a lot of supply side investment in
46:23
Speaker 13: the gathering areas to be able to keep up with
46:25
Speaker 13: all this demand. And so that's the kind of the
46:28
Speaker 13: next area we're looking at is where is all this
46:30
Speaker 13: gas going to come from? And how do we position
46:32
Speaker 13: ourselves to be able to take advantage of that.
46:34
Speaker 8: Is volatility an uncertainty good for helping make those decisions?
46:38
Speaker 13: No, No, you know, you know, we have a we
46:42
Speaker 13: have a you know, a gas trading arm that you
46:44
Speaker 13: know loves to see volatility obviously, but but no, in general,
46:49
Speaker 13: you know, we like to see gas prices at a
46:51
Speaker 13: level that producers are making a decent return, and that
46:55
Speaker 13: it's low enough that it incents people making big capital
46:59
Speaker 13: investments like LNG export facilities, like power generation facilities. You know,
47:07
Speaker 13: it depends on you know, where we are in the
47:08
Speaker 13: inflation cycle. But right now we think, you know, kind
47:12
Speaker 13: of the high threes is a pretty good number, and
47:15
Speaker 13: a lot of producers are saying, no, no, no.
47:16
Speaker 3: It's four fifty, it's five dollars.
47:18
Speaker 13: Well, you know, we're seeing pretty good response right now
47:21
Speaker 13: from the producing community at these kind of prices. So,
47:25
Speaker 13: but we definitely have got to get after it because
47:29
Speaker 13: there is a lot of incremental demand coming on between
47:32
Speaker 13: L and G and the power generations, and at least
47:35
Speaker 13: for the time period, it's going to be pretty sticky demand.
47:37
Speaker 13: It's going to be some pretty pretty heavy loads on
47:40
Speaker 13: the system. And so, you know, in January of this year,
47:43
Speaker 13: this is an amazing stat to me. We get so
47:46
Speaker 13: much attention from our investors on oh my gosh, you
47:48
Speaker 13: guys got a data center project that it's so cool. Yeah,
47:50
Speaker 13: well it's not that big a load, frankly, I mean,
47:52
Speaker 13: it's nice load and it's a nice return and hopefully
47:57
Speaker 13: the first of many to come. But what we did
47:59
Speaker 13: in now said earning scoll this year was in January
48:02
Speaker 13: of this year, on trans Goo alone, we saw a
48:05
Speaker 13: ten percent increase over the highest January we'd ever seen
48:09
Speaker 13: on our system.
48:10
Speaker 3: And it wasn't cold weather.
48:12
Speaker 13: This is on top of the January of twenty two
48:14
Speaker 13: when we had a blizzard that hit the Northeast and
48:17
Speaker 13: that really peaked a demand. So a ten percent increase
48:21
Speaker 13: for the entire month in terms of volumes on our system.
48:24
Speaker 3: And this winner alone, we.
48:26
Speaker 13: Have seen eighteen now of the top twenty peak days
48:31
Speaker 13: ever on our systems, all the weather cycles we've ever
48:34
Speaker 13: seen eighteen the top twenty peak days. So the demands
48:38
Speaker 13: on our system are really picking up. If I was
48:40
Speaker 13: an investor, I'd be wanting to know more about that.
48:43
Speaker 9: Frankly, I'm sure.
48:44
Speaker 8: And so that's more business opportunity for you and not
48:47
Speaker 8: just out of center demand. Really appreciate Alan, thanks very much.
48:49
Speaker 8: On I'mstrong William's CEO joining.
48:51
Speaker 2: Us there, Paul, back to you, all right, Alex Steel,
48:54
Speaker 2: thank you so much.
48:54
Speaker 3: We appreciate that.
48:55
Speaker 2: That's former intelligence co host Alex Seal speaking with Williams
48:58
Speaker 2: Company CEO Alan Armstrong. That it's Sarah Week down in Houston. Texas.
49:03
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