Latest / Silicon & Shale Podcast / Read the Order Book: Turbines on Backorder and an Agent on the Night Shift

Transcript

Read the Order Book: Turbines on Backorder and an Agent on the Night Shift · Silicon & Shale Podcast

0:00
SPEAKER_00: I ran out of highlighter this week. On what?
0:02
SPEAKER_00: Earnings week.
0:04
SPEAKER_00: It's the one week of the quarter when everybody in the patch reads the same transcript.
0:07
SPEAKER_00: The landman, the reservoir engineer, the guy who runs the compressor station,
0:11
SPEAKER_00: the mineral owner with a spreadsheet and too much coffee.
0:13
SPEAKER_00: Everybody's got the same PDF open.
0:15
SPEAKER_01: And you highlighted all of it?
0:17
SPEAKER_00: No, that's the thing.
0:19
SPEAKER_00: I gave myself one rule.
0:20
SPEAKER_00: I'd only highlight a sentence if it had a number and a name attached to it.
0:23
SPEAKER_00: A real customer, a real date, a real well.
0:26
SPEAKER_00: And the yellow ran dry on the Baker Hughes release about halfway down the page.
0:29
SPEAKER_01: Because there were too many numbers.
0:31
SPEAKER_00: Because I kept highlighting the numbers and then going back to find the name
0:34
SPEAKER_00: and the name wasn't there.
0:35
SPEAKER_00: A major U.S. technology company.
0:37
SPEAKER_00: A U.S. energy company.
0:39
SPEAKER_00: I highlighted unnamed so many times the pen just gave up.
0:42
SPEAKER_01: That's not a highlighter problem. That's an order book.
0:44
SPEAKER_00: It's an order book.
0:45
SPEAKER_00: And I want you to remember the pen because we're coming back to it.
0:48
SPEAKER_00: The pen died on the word unnamed.
0:50
SPEAKER_01: I'll put it next to the sticky note.
0:52
SPEAKER_00: Please do.
0:53
SPEAKER_00: Because here's the shape of the week.
0:54
SPEAKER_00: The AI energy trade showed up in the one place that's hard to spin,
0:57
SPEAKER_00: which is the order book and the operating stats.
1:00
SPEAKER_00: Gas turbines are getting bought by the Gigawatt for data centers.
1:03
SPEAKER_00: The flagship oil patch power project is still working toward a final investment decision.
1:07
SPEAKER_00: And inside the operators, the AI that's actually paying isn't the press release.
1:11
SPEAKER_00: It's a quiet agent watching wells overnight.
1:13
SPEAKER_01: Turbines on backorder and an agent on the night shift.
1:15
SPEAKER_00: That's the episode.
1:17
SPEAKER_01: Welcome to Silicon & Shale, where the oil patch meets the algorithm.
1:20
SPEAKER_01: This is episode 22 for the week of November 2nd, 2026. I'm Packer.
1:24
SPEAKER_00: And I'm Derek.
1:26
SPEAKER_00: And at the end, the messiest artifact of the week.
1:29
SPEAKER_00: Earnings Week is a strong field.
1:30
SPEAKER_00: Let's open the order book. So give it to me straight.
1:32
SPEAKER_00: No Exxon puts more robots on the Permian rig floor. Chevron calls this an inflection year for
1:41
SPEAKER_01: And at the end, The Messiest Artifact of the Week.
1:44
SPEAKER_01: Earnings Week is a strong field.
1:46
SPEAKER_00: Let's open the order book.
1:47
SPEAKER_01: So give it to me straight.
1:48
SPEAKER_01: No highlighter?
1:49
SPEAKER_00: Straight. Baker Hughes reported its third quarter on October 27th and held the call
1:54
SPEAKER_00: on the 28th.
1:55
SPEAKER_00: Total orders of $10.8 billion.
1:58
SPEAKER_00: Of that, $5.9 billion came from the segment they call IET, Industrial and Energy Technology.
2:04
SPEAKER_00: That's the turbines, compressors, and power gear side of the house.
2:06
SPEAKER_00: They said it was IET's second-largest order quarter ever.
2:10
SPEAKER_01: And the backlog?
2:11
SPEAKER_00: Remaining performance obligations, which is the accountant's word for backlog,
2:14
SPEAKER_00: ended at $46.4 billion.
2:17
SPEAKER_00: IET alone is a record $39.4 billion.
2:20
SPEAKER_00: Book-to-bill for IET was $1.7.
2:22
SPEAKER_00: For the whole company, $1.3.
2:25
SPEAKER_01: So for every dollar of IET gear they shipped, they booked $1.70 of new orders.
2:29
SPEAKER_00: That's what 1.7 means.
2:30
SPEAKER_00: And the headline order is the one that killed my pen.
2:33
SPEAKER_00: A major integrated power order to supply 1.1 gigawatts of power for a major U.S.
2:37
SPEAKER_00: technology company.
2:39
SPEAKER_00: 43 gas turbine packages.
2:40
SPEAKER_00: A mix of Novel T and Frame 5 units with gearboxes and generators.
2:44
SPEAKER_01: 1.1 gigawatts ordered.
2:45
SPEAKER_01: Zero spinning.
2:46
SPEAKER_00: Zero spinning. That's fair.
2:48
SPEAKER_00: It's an order.
2:49
SPEAKER_00: Nothing in the release says when it ships or when it turns on.
2:52
SPEAKER_01: What else was in there?
2:53
SPEAKER_00: A second power order, about 500 megawatts for AI infrastructure for a U.S. energy company.
2:58
SPEAKER_00: 18 frame 5 generator packages and then a pipeline order.
3:02
SPEAKER_00: Venture Global's Cloud Connector Pipeline project,
3:04
SPEAKER_00: 13 frame 5 and 2E turbine-driven compression systems to move feed gas to LNG.
3:09
SPEAKER_01: So the same turbine family shows up on both sides of the meter,
3:12
SPEAKER_01: powering the data center and pushing gas down the pipe.
3:14
SPEAKER_00: Which I think is the most oil patch sentence in the whole release.
3:17
SPEAKER_00: And on the call, they said they've booked $4.9 billion of data center awards year to date.
3:22
SPEAKER_00: They raised full year IET order guidance,
3:25
SPEAKER_00: and they raised what they call the Horizon 2 IET order outlook to $50 billion plus.
3:29
SPEAKER_01: Okay, I have a confession, and I'd like to get it out before you translate anything.
3:33
SPEAKER_00: Go.
3:33
SPEAKER_01: Back in the summer, I assumed the turbine orders would slow down once the first wave
3:36
SPEAKER_01: of data center deals got signed.
3:38
SPEAKER_01: I figured the big buyers had placed their bets, the queue was full,
3:41
SPEAKER_01: and this quarter would look like a hangover.
3:42
SPEAKER_00: And instead it's IET's second biggest quarter ever.
3:45
SPEAKER_01: And instead it's the second biggest quarter ever. I was wrong.
3:49
SPEAKER_00: The quiet part is that you weren't wrong about the logic.
3:51
SPEAKER_00: You were wrong because you assumed somebody in this business would stop buying iron
3:54
SPEAKER_00: when they had enough.
3:55
SPEAKER_00: Nobody in this business has ever had enough iron.
3:57
SPEAKER_01: That's fair. That's painfully fair.
4:00
SPEAKER_00: Okay, now I want to translate one phrase, once.
4:03
SPEAKER_00: The release says the big order supports AI model training, inference, and physical AI workloads.
4:08
SPEAKER_01: Here we go.
4:09
SPEAKER_00: Here's my translation for this room.
4:11
SPEAKER_00: Physical AI workloads on a morning report would read,
4:14
SPEAKER_00: customer plans to use the power for computers, also possibly robots, will advise.
4:18
SPEAKER_01: That's a little unfair.
4:19
SPEAKER_00: It's a little unfair.
4:21
SPEAKER_01: Here's what the phrase actually tells you.
4:23
SPEAKER_01: It tells you the buyer isn't just thinking about one training cluster
4:26
SPEAKER_01: that runs flat out for a year and then gets replaced.
4:29
SPEAKER_01: Inference and physical AI are the always-on parts,
4:32
SPEAKER_01: the stuff that has to answer every time somebody asks.
4:34
SPEAKER_01: That's a load profile that wants firm power with no gaps,
4:37
SPEAKER_01: which is exactly why you'd buy 43 gas turbine packages instead of hoping
4:40
SPEAKER_01: the grid shows up.
4:41
SPEAKER_00: Okay, I'll accept that.
4:43
SPEAKER_00: The phrase is fuzzy, but the load it's describing isn't.
4:45
SPEAKER_01: Now, let me push on the order book itself, because I think we disagree on what this is.
4:49
SPEAKER_00: We probably do.
4:51
SPEAKER_01: Is a turbine backlog with unnamed customers real demand, or is it a queue?
4:55
SPEAKER_01: Because a queue is people standing in line in case they need something.
4:59
SPEAKER_01: I
5:01
SPEAKER_00: think it's real demand.
5:02
SPEAKER_00: These aren't letters of intent.
5:04
SPEAKER_00: Baker Hughes is counting them as orders.
5:06
SPEAKER_00: You don't book 43 packages for a tire kicker.
5:08
SPEAKER_01: But you might book them for a customer who's reserving a slot.
5:11
SPEAKER_01: If you think turbines are scarce, you order early and you sort out the site later.
5:15
SPEAKER_01: That's real money.
5:16
SPEAKER_01: But it's not the same as a power plant with an in-service date.
5:19
SPEAKER_00: Fair, but even a reserve slot is a signal.
5:21
SPEAKER_00: Somebody decided the cost of waiting was higher than the cost of ordering.
5:24
SPEAKER_00: That's demand.
5:25
SPEAKER_01: It's demand for turbines.
5:27
SPEAKER_01: I'm not sure yet it's demand for that many megawatts in that many places on that schedule.
5:32
SPEAKER_01: That's the part the release doesn't tell me.
5:33
SPEAKER_00: So where do we land?
5:35
SPEAKER_01: We land on the orders are real, the customers are unnamed,
5:38
SPEAKER_01: the delivery dates are missing, and backlog is equipment owed, not power running.
5:42
SPEAKER_00: I'll sign that with a fresh highlighter.
5:44
SPEAKER_01: Second story. And it's a status update on a project we talked about in episode 19.
5:48
SPEAKER_00: Kilby.
5:49
SPEAKER_01: Kilby, Chevron's behind the meter gas power project in West Texas, 2.67 gigawatts,
5:54
SPEAKER_01: 20-year power purchase agreement with Microsoft.
5:57
SPEAKER_01: On the third quarter call on October 30th, the CFO, Amir Bonner, gave the status,
6:01
SPEAKER_01: and I want to read it close to word for word, because the verbs matter.
6:05
SPEAKER_00: Go ahead.
6:05
SPEAKER_01: Quote, We are working towards our FID.
6:08
SPEAKER_01: We have our EPC contract that we are finalizing.
6:11
SPEAKER_01: We are working through the permit process.
6:13
SPEAKER_01: We have to secure our financing.
6:15
SPEAKER_01: And then on track for first power in 2028 and full energization in 2031.
6:19
SPEAKER_00: So which verb actually landed this week?
6:21
SPEAKER_01: Finalizing.
6:23
SPEAKER_01: That's the verb.
6:24
SPEAKER_01: Not signed.
6:25
SPEAKER_01: Not fitted.
6:26
SPEAKER_01: The EPC contract is being finalized.
6:29
SPEAKER_01: Permits are being worked through.
6:30
SPEAKER_01: Financing has to be secured.
6:32
SPEAKER_00: And then there's the new piece.
6:34
SPEAKER_01: There's a new piece.
6:35
SPEAKER_01: Bloomberg interviewed her and Insurance Journal ran it on November 2nd.
6:39
SPEAKER_01: Texas has a pause on data center permits right now,
6:41
SPEAKER_01: and she told Bloomberg she doesn't see permitting, engineering,
6:43
SPEAKER_01: or financing impacting the schedule of first power in 2028 and the ramp
6:47
SPEAKER_01: through 2031.
6:48
SPEAKER_00: Despite the pause.
6:50
SPEAKER_01: Despite the pause.
6:51
SPEAKER_01: And to be clear, FID has still not been taken.
6:53
SPEAKER_01: Nobody gave a date for it, and we're not going to guess one.
6:56
SPEAKER_00: Okay, let me count the calendars on this because 2031 sounds closer than it is.
7:00
SPEAKER_00: Between now and full energization in 2031,
7:02
SPEAKER_00: you've got roughly 20 more Chevron earnings calls,
7:05
SPEAKER_00: somewhere north of 200 rig count Fridays.
7:08
SPEAKER_00: At least one EPC contract that has to go from finalizing to signed,
7:11
SPEAKER_00: a permit process in a state that's currently paused, a financing package,
7:14
SPEAKER_00: and an FID.
7:15
SPEAKER_00: And that's before anybody pours a foundation.
7:18
SPEAKER_01: And first power in 2028?
7:19
SPEAKER_00: That's closer.
7:20
SPEAKER_00: Call it four to eight more earnings calls depending on where in 2028.
7:24
SPEAKER_00: Which honestly is not a lot of calls for a project that hasn't taken FID yet.
7:28
SPEAKER_01: And I'll say this, so nobody hears us calling it fake.
7:30
SPEAKER_01: The CFO is being clear about what's open.
7:33
SPEAKER_01: She's not hiding the four open items she listed them.
7:35
SPEAKER_01: That's more than most project announcements do.
7:37
SPEAKER_00: Agreed. She also said they could go from single cycle to combined cycle,
7:41
SPEAKER_00: subject to more permits, and that the project uses non-potable water
7:44
SPEAKER_00: and won't put pressure on the grid. That's the pitch.
7:47
SPEAKER_00: The list of open items is the honesty.
7:49
SPEAKER_01: Same quarter, a couple of other numbers.
7:51
SPEAKER_01: Chevron's earnings were $9.9 billion, 10.4 adjusted.
7:55
SPEAKER_01: They cut Bakken midstream tariffs by half,
7:57
SPEAKER_01: and they're going from three rigs to two in the Bakken at year-end while holding
8:00
SPEAKER_01: about 180,000 barrels of oil equivalent a day.
8:03
SPEAKER_00: Fewer rigs, same barrels.
8:04
SPEAKER_00: Remember that one for the AI block.
8:06
SPEAKER_01: Third story, Exxon.
8:08
SPEAKER_00: Exxon reported October 30th, earnings of $15.4 billion, 372 a share, 423 adjusted.
8:15
SPEAKER_00: They announced $20 billion of share repurchases for 2027,
8:19
SPEAKER_00: and Stabrick and Guyana passed 1 billion barrels of cumulative production.
8:22
SPEAKER_00: The release also cites Middle East volume impacts, and we'll just state that plainly.
8:26
SPEAKER_00: It's in their numbers.
8:27
SPEAKER_00: And the robots?
8:28
SPEAKER_00: And the robots are the headline. On the call, they said they're
8:31
SPEAKER_00: the only operator currently using automated drilling rigs in the Permian,
8:35
SPEAKER_00: three in operation, delivering, quote,
8:37
SPEAKER_00: some of the strongest drilling performance in our fleet.
8:39
SPEAKER_00: And they plan to expand to about a quarter of their Permian fleet next year
8:42
SPEAKER_00: and about half by 2028.
8:44
SPEAKER_01: Three running and a plan for half the fleet.
8:46
SPEAKER_00: Three on the steel, half on the paper.
8:47
SPEAKER_00: And to be fair, three is a real number.
8:49
SPEAKER_00: Those rigs are drilling.
8:51
SPEAKER_01: What I like about putting these two next to each other is that it's two majors in the same week.
8:54
SPEAKER_01: And one is trying to sell power and the other is automating the rig floor.
8:57
SPEAKER_01: Chevron is going outward, toward the data center.
8:59
SPEAKER_01: Exxon is going inward, toward the drill pipe.
9:02
SPEAKER_00: And Exxon gave no new data center power update this quarter.
9:05
SPEAKER_00: I looked, so we're not going to invent one.
9:07
SPEAKER_01: Good, because the robots are the story.
9:09
SPEAKER_00: The robots are the story.
9:11
SPEAKER_00: And here's the one pun I'm allowing myself this week.
9:13
SPEAKER_00: Exxon's automated rigs are really drilling down on efficiency.
9:16
SPEAKER_01: Oh no.
9:17
SPEAKER_00: I heard it as it came out of my mouth. I regret it. Moving on.
9:20
SPEAKER_01: Okay. AI block.
9:22
SPEAKER_01: And we're staying on the Chevron call?
9:24
SPEAKER_01: Because the most interesting thing Chevron said wasn't about Kilby.
9:27
SPEAKER_00: It was about the night shift.
9:28
SPEAKER_01: It was about the night shift.
9:30
SPEAKER_01: Here's the CFO, Aymir Bonner, quote,
9:32
SPEAKER_01: 2026 is also proving to be an inflection year for AI,
9:35
SPEAKER_01: with more than $100 million in value captured to date.
9:39
SPEAKER_01: And then she described what she called an AI production engineering, quote,
9:42
SPEAKER_01: kind of an agentic assistant, built in house, deployed in the Permian, the Bakken,
9:46
SPEAKER_01: and what they call PZ'd, the partition zone.
9:49
SPEAKER_01: And it is, quote, 24-7 optimizing the production from our wells.
9:53
SPEAKER_00: Okay, I get to translate one this week and I already used mine.
9:56
SPEAKER_01: You used yours on physical AI. This one's mine.
9:58
SPEAKER_00: Go.
9:59
SPEAKER_01: Inflection year for AI.
10:01
SPEAKER_01: On a lease, that means, the AI used to be a cost line in the IT budget,
10:05
SPEAKER_01: and now somebody in finance is willing to put a dollar figure next to it in front
10:08
SPEAKER_01: of analysts.
10:09
SPEAKER_01: On an AFE, it means, we'd like to spend more on this next year,
10:13
SPEAKER_01: and we're telling you now so it doesn't surprise you.
10:15
SPEAKER_00: That's a little unfair.
10:17
SPEAKER_01: It's a little unfair.
10:18
SPEAKER_01: What's the fair version?
10:19
SPEAKER_00: The fair version is that inflection is a CFO word,
10:22
SPEAKER_00: and CFOs don't usually say it unless the curve actually bent.
10:25
SPEAKER_00: She gave a number, she gave the basins, and she said the tool runs around the clock.
10:29
SPEAKER_00: That's three things you can go check against next quarter.
10:32
SPEAKER_00: Most AI strategy slides give you zero.
10:34
SPEAKER_01: Okay. That's what the phrase commits them to.
10:37
SPEAKER_01: A bigger number next time.
10:39
SPEAKER_00: And there were more specifics from the vice chairman, Mark Nelson.
10:42
SPEAKER_00: He said they hit first quartile reliability in the DJ basin in the third quarter
10:45
SPEAKER_00: by applying AI to anticipate and minimize downtime,
10:48
SPEAKER_00: and they reduced loss production events by 50%.
10:51
SPEAKER_01: That's the one I care about.
10:53
SPEAKER_01: Loss production events is a boring phrase for the well was supposed to be making oil and wasn't.
10:57
SPEAKER_00: And remember the Bakken line from the E&P block?
10:59
SPEAKER_00: Three rigs going to two at year-end, holding about 180,000 barrels a day.
11:04
SPEAKER_00: Chevron didn't say the agent is why, but fewer rigs, same barrels,
11:08
SPEAKER_00: is the kind of math that gets easier when fewer
11:09
SPEAKER_00: of your existing wells are sitting down overnight.
11:12
SPEAKER_01: That's us connecting it, not them.
11:13
SPEAKER_00: That's us connecting it, flag it as ours.
11:15
SPEAKER_00: And on the exploration side, a tool called Scout AI is deployed in 10 new basins,
11:20
SPEAKER_00: building basin assessments in hours, not weeks.
11:23
SPEAKER_00: And AI Pattern Recognition found more than 150 leads in their Gulf
11:26
SPEAKER_00: of America portfolio, with 16 prospects moved into evaluation.
11:30
SPEAKER_01: 150 leads, 16 in evaluation.
11:33
SPEAKER_01: Paper and steel again, just in rock.
11:35
SPEAKER_00: Okay, now I want to fight about the 100 million.
11:37
SPEAKER_01: I figured.
11:38
SPEAKER_00: Is $100 million of AI value at Chevron a big deal or a rounding error?
11:42
SPEAKER_00: Because Chevron made $9.9 billion this quarter.
11:46
SPEAKER_00: 100 million year-to-date is about 1% of one quarter's earnings.
11:49
SPEAKER_01: It's a big deal.
11:50
SPEAKER_01: Not because of the size, because of the direction.
11:53
SPEAKER_01: A year ago, most operators couldn't tell you $1 of AI value with a straight face.
11:57
SPEAKER_01: Now there's a CFO saying $100 million on a call with the lawyers listening.
12:01
SPEAKER_00: But we don't know how it's measured.
12:03
SPEAKER_00: Is that production that wouldn't have happened?
12:05
SPEAKER_00: Is it engineer hours saved?
12:06
SPEAKER_00: Is it a cost avoided compared to what?
12:08
SPEAKER_00: $100 million of value capture could mean a lot of different things.
12:12
SPEAKER_01: That's true.
12:13
SPEAKER_01: And she didn't say.
12:14
SPEAKER_01: But we don't know the method isn't the same as the number is small.
12:17
SPEAKER_01: 50% fewer loss production events in a basin is not a rounding error if you're
12:20
SPEAKER_01: the one paying for the workover.
12:22
SPEAKER_00: I'll give you that it's real.
12:23
SPEAKER_00: I won't give you that it's big.
12:25
SPEAKER_00: Not yet.
12:26
SPEAKER_00: At Chevron scale, 100 million is the warm-up.
12:29
SPEAKER_01: She said that too.
12:30
SPEAKER_01: Much more building quickly.
12:31
SPEAKER_00: Which is a CFO saying see me next quarter.
12:34
SPEAKER_01: So we land where?
12:35
SPEAKER_00: Real, small, unexplained method and pointed in the right direction.
12:38
SPEAKER_01: Okay. Now I have to ask you the question.
12:40
SPEAKER_00: Here it comes.
12:42
SPEAKER_01: Would you let a 24-7 agent move the chokes on your own wells overnight?
12:45
SPEAKER_00: Mine? Honestly?
12:46
SPEAKER_01: Honestly.
12:47
SPEAKER_00: Not on day one.
12:48
SPEAKER_00: On day one, I'd let it watch and I'd let it recommend and I'd want to wake up
12:51
SPEAKER_00: to a list that says, here's what I would have changed and why.
12:55
SPEAKER_00: After a month of that list being right, I'd let it make small changes inside a band I set.
12:59
SPEAKER_00: Choke a little, not choke a lot.
13:00
SPEAKER_00: And I'd want every change logged with a timestamp and a reason.
13:03
SPEAKER_01: So you'd let it touch yours with a leash?
13:05
SPEAKER_00: With a leash, a log, and a pumper who still drives by.
13:08
SPEAKER_00: And the thing Chevron didn't say on the call is exactly that.
13:11
SPEAKER_00: What is the agent allowed to change without a human?
13:13
SPEAKER_00: They said it's optimizing 24-7.
13:16
SPEAKER_00: They didn't say whether optimizing means recommending or acting.
13:18
SPEAKER_01: That's the question I'd want answered before I put a number on it.
13:22
SPEAKER_01: Next story is Oman, Petroleum Development,
13:26
SPEAKER_01: Oman PDO on October 26th through the Oman News Agency.
13:31
SPEAKER_01: They held what they called an autonomous and digital transformation day and launched
13:34
SPEAKER_01: an autonomous production program.
13:36
SPEAKER_00: What's in it?
13:37
SPEAKER_01: They say it brings together AI, advanced process control, real -time data analytics,
13:41
SPEAKER_01: drones The That's
13:44
SPEAKER_01: a long sentence
13:51
SPEAKER_01: for
13:54
SPEAKER_00: we'll let the machine do more slowly
13:56
SPEAKER_00: with a supervisor.
13:57
SPEAKER_01: It is, and honestly, I like the sentence.
13:59
SPEAKER_01: Progressively and under human oversight are doing real work.
14:03
SPEAKER_01: That's a company telling you the ladder before they climb it.
14:05
SPEAKER_00: Which is a callback.
14:07
SPEAKER_00: In episode 21, we talked about an autonomy ladder, and in episode 18, we did off,
14:11
SPEAKER_00: manual, and auto on a control loop.
14:13
SPEAKER_00: PDO is describing the same climb at national operator scale.
14:16
SPEAKER_01: They also launched a digital twin project,
14:18
SPEAKER_01: and they announced their first agentic AI initiatives built on Atom,
14:21
SPEAKER_01: which is PDO's internal generative AI assistant.
14:24
SPEAKER_01: They say it'll move beyond information retrieval to supporting decisions and, quote,
14:28
SPEAKER_01: executing defined tasks within appropriate governance and control frameworks.
14:32
SPEAKER_00: And there's a partnership.
14:33
SPEAKER_01: A five-year partnership with SLB and Halliburton on digital well construction.
14:37
SPEAKER_01: Seven integrated digital capabilities linking subsurface planning with well execution.
14:41
SPEAKER_00: Okay, program, partnership, platform.
14:44
SPEAKER_00: Which verb actually landed this week?
14:45
SPEAKER_01: Launched and signed.
14:47
SPEAKER_01: The program was launched, meaning announced and started.
14:50
SPEAKER_01: The partnership was signed.
14:51
SPEAKER_01: What didn't land is a number.
14:53
SPEAKER_01: The coverage we read gave no investment figure, no timetable, and no savings estimate.
14:57
SPEAKER_00: So that's the contrast with Chevron.
15:00
SPEAKER_01: That's the whole contrast.
15:01
SPEAKER_01: Chevron gave you a number and not much of a method.
15:04
SPEAKER_01: PDO gave you a method, a governance story, and a ladder, and no number.
15:08
SPEAKER_00: And honestly, if I had to pick which one I'd rather inherit as an engineer, I might take PDOs.
15:12
SPEAKER_00: The method is the part that's hard to bolt on later.
15:15
SPEAKER_01: And if you're an analyst, you take chevrons.
15:16
SPEAKER_01: Because you can track it.
15:18
SPEAKER_00: Which is why you want both.
15:19
SPEAKER_00: A number and a rule for what the agent can touch.
15:22
SPEAKER_01: Everything there is attributed to PDO, by the way.
15:24
SPEAKER_01: That's their description of their program.
15:26
SPEAKER_00: Understood. And we'll find out what it does when it does it.
15:29
SPEAKER_01: Collision zone.
15:30
SPEAKER_01: Where the oil patch and the algorithm run into each other.
15:32
SPEAKER_00: And this week they run into each other at the turbine.
15:35
SPEAKER_01: Walk me through it.
15:36
SPEAKER_00: Okay, put stories one, two, and four on the same table.
15:39
SPEAKER_00: Story one, the AI boom is buying gas turbines faster than anybody can tell you
15:43
SPEAKER_00: where they'll run.
15:44
SPEAKER_00: $39.4 billion of IET backlog, customers unnamed, no in-service dates in the release.
15:50
SPEAKER_00: Story two, the flagship oil patch power project Kilby has a customer, a PPA, a size,
15:55
SPEAKER_00: and a date, and it's still working toward EFID.
15:58
SPEAKER_00: Story four, inside the operator,
15:59
SPEAKER_00: the AI that's paying is an agent watching wells around the clock.
16:02
SPEAKER_01: So the iron is moving faster than the project's.
16:05
SPEAKER_00: The and here's the collision.
16:08
SPEAKER_00: Every one of those turbines, once it's spinning,
16:10
SPEAKER_00: needs the same thing the wells need—someone or something watching it 24 -7.
16:14
SPEAKER_01: Because the customer won't tolerate downtime?
16:16
SPEAKER_00: Because the customers are a data center.
16:18
SPEAKER_00: And a data Center buying behind the meter gas power is buying it precisely
16:22
SPEAKER_00: because it can't tolerate the grid's downtime.
16:24
SPEAKER_00: So the whole pitch is reliability.
16:26
SPEAKER_00: And right now, reliability in most of these announcements is an adjective.
16:29
SPEAKER_01: Reliable scalable power?
16:30
SPEAKER_00: That's from the Baker Hughes release.
16:33
SPEAKER_00: Reliable, scalable power for advanced computing infrastructure. It's an adjective.
16:37
SPEAKER_00: It's a good adjective.
16:38
SPEAKER_00: I'm sure the turbines are good turbines.
16:40
SPEAKER_00: But the data center buyer is eventually going to want a record, not an adjective.
16:44
SPEAKER_01: And the oil patch actually has a record.
16:46
SPEAKER_01: That's the part I think is interesting.
16:48
SPEAKER_00: Say more.
16:48
SPEAKER_01: The DJ Basin number.
16:50
SPEAKER_01: 50% fewer lost production events.
16:52
SPEAKER_01: That's not a turbine stat, but it's the same muscle.
16:55
SPEAKER_01: An operator who can show, well by well, how many times something went down, why,
17:00
SPEAKER_01: for how long, and who or what caught it,
17:02
SPEAKER_01: is an operator who can eventually walk into a data center negotiation and say,
17:06
SPEAKER_01: here's our uptime record, not our uptime promise.
17:08
SPEAKER_00: So the field reliability work is the sales deck for the power business.
17:11
SPEAKER_01: Eventually.
17:13
SPEAKER_01: Not this quarter.
17:14
SPEAKER_01: I don't want to overclaim.
17:15
SPEAKER_01: Chevron didn't say that. We're saying it.
17:17
SPEAKER_00: We're saying it. That's the collision zone.
17:19
SPEAKER_00: And here's my worry.
17:21
SPEAKER_00: The order book is full of iron with unnamed customers.
17:23
SPEAKER_00: Kilby has a named customer and no FID.
17:26
SPEAKER_00: If I'm a data center buyer, I've got turbines on back order
17:28
SPEAKER_00: and a power project that's finalizing,
17:30
SPEAKER_00: and I'm signing a 20-year deal on the assumption somebody's watching
17:33
SPEAKER_00: the equipment every night for 20 years.
17:35
SPEAKER_01: 20 years is a lot of night shifts.
17:37
SPEAKER_00: Let me count that one.
17:38
SPEAKER_00: A 20-year PPA is about 7,300 nights.
17:41
SPEAKER_00: Every one of them is a night where a turbine trips or doesn't, and somebody notices or doesn't.
17:45
SPEAKER_01: And the agent's job is to be the somebody.
17:47
SPEAKER_00: Okay, but let me be the one and to write down what it did.
17:50
SPEAKER_00: That's the capability side.
17:52
SPEAKER_00: Agents that watch equipment around the clock and log what they changed
17:55
SPEAKER_00: so that reliability stops being an adjective in a release and becomes
17:59
SPEAKER_00: a record you can audit.
18:00
SPEAKER_01: Okay, but let me be the one who names the embarrassment here.
18:03
SPEAKER_00: Go ahead.
18:04
SPEAKER_01: We just spent two segments asking what is the agent allowed to change?
18:08
SPEAKER_01: And the honest answer
18:09
SPEAKER_01: across the whole industry right now is nobody said it out loud. Chevron didn't.
18:13
SPEAKER_01: PDO said, within established operational controls, which is the right instinct but not a spec.
18:18
SPEAKER_01: Baker Hughes is selling turbines, not agents.
18:21
SPEAKER_01: So the collision isn't that the problem's solved.
18:24
SPEAKER_01: It's that the problem is the same on both sides and nobody's published the rules.
18:27
SPEAKER_00: And I'll still be the one who kind of likes it.
18:29
SPEAKER_00: Because the rules exist.
18:31
SPEAKER_00: They exist in every control room in the Permian.
18:33
SPEAKER_00: Every operator already has a book that says who can change a set point,
18:36
SPEAKER_00: how far and when they have to call somebody.
18:38
SPEAKER_00: It's just written for humans.
18:40
SPEAKER_01: So the job is to rewrite the book for a non-human operator.
18:43
SPEAKER_00: The job is to rewrite the book for a non-human operator
18:45
SPEAKER_00: and then make it log every page it touched.
18:47
SPEAKER_01: Would you let that touch a turbine island serving a data center? Not your wells.
18:51
SPEAKER_01: The power plant.
18:52
SPEAKER_00: That's harder.
18:53
SPEAKER_00: On my own wells, if the agent makes a bad choke change,
18:56
SPEAKER_00: I lose some production overnight and I'm annoyed in the morning.
18:59
SPEAKER_00: On a power island, a bad change means a data center goes dark.
19:02
SPEAKER_00: So my honest answer is, I'd let it watch everything,
19:04
SPEAKER_00: I'd let it recommend everything,
19:06
SPEAKER_00: and I'd let it act on almost nothing until it had a year of logs
19:08
SPEAKER_00: that said it would have been right.
19:10
SPEAKER_01: A year?
19:11
SPEAKER_00: At least a year. Four earnings calls.
19:13
SPEAKER_00: And I'd want the log to be readable by the customer, not just the operator.
19:16
SPEAKER_01: That's a real product requirement, by the way. Not a joke.
19:19
SPEAKER_00: It's the realest thing we've said today.
19:21
SPEAKER_01: Okay, pay off the pen.
19:23
SPEAKER_00: Right. The pen.
19:24
SPEAKER_00: My highlighter died on the word unnamed.
19:26
SPEAKER_00: And here's why that matters for the collision zone.
19:29
SPEAKER_00: The whole problem this week is missing names.
19:31
SPEAKER_00: The turbine customers are unnamed.
19:33
SPEAKER_00: The Kilby FID date isn't given.
19:34
SPEAKER_00: The method behind Chevron's hundred million isn't named.
19:37
SPEAKER_00: PDO's program doesn't name a budget.
19:39
SPEAKER_01: And the agent's job is to never leave the name blank.
19:42
SPEAKER_00: That's it.
19:42
SPEAKER_00: The night shift agent's entire value is that the log has a name in every column.
19:46
SPEAKER_00: Which well? Which cause? How many minutes?
19:48
SPEAKER_00: And who or what caught it?
19:50
SPEAKER_00: If the agent writes unnamed in the who caught it column, the pen dies again.
19:54
SPEAKER_01: So the order book runs out of names and the night shift is where you get them back.
19:57
SPEAKER_00: That's the collision.
19:58
SPEAKER_00: Read the order book for what it is, which is equipment owed.
20:01
SPEAKER_00: Read the night shift for what it could be,
20:02
SPEAKER_00: which is the record that makes the power worth buying.
20:05
SPEAKER_01: And until somebody names the customers and the in-service dates,
20:07
SPEAKER_01: the honest phrase is 1.1 gigawatts ordered, zero spinning,
20:11
SPEAKER_01: and a lot of night shifts between here and there.
20:13
SPEAKER_00: I'll take that.
20:14
SPEAKER_01: One more angle before we leave the collision zone.
20:16
SPEAKER_01: The mineral owner and the landman.
20:18
SPEAKER_00: Go.
20:19
SPEAKER_01: If you're sitting on acreage in West Texas, you're going to hear about turbines.
20:22
SPEAKER_01: You're going to hear a major technology company and a U.S. energy company and AI infrastructure.
20:28
SPEAKER_01: And your instinct is going to be, my gas just got more valuable.
20:31
SPEAKER_01: Or my surface just got more valuable.
20:33
SPEAKER_01: And maybe it did.
20:34
SPEAKER_01: But the order book doesn't tell you where.
20:36
SPEAKER_01: It doesn't tell you when.
20:37
SPEAKER_00: The order book tells you there are turbines coming somewhere in America.
20:40
SPEAKER_00: It does not tell you there's a power plant coming to your section.
20:43
SPEAKER_01: Right.
20:44
SPEAKER_01: So the collision for the mineral owner is the same collision.
20:47
SPEAKER_01: Big order, missing name, missing date.
20:49
SPEAKER_01: Price the date, not the order.
20:51
SPEAKER_00: Price the date. That's going in the field report.
20:54
SPEAKER_01: Field report and build list.
20:55
SPEAKER_01: What do you actually do with this on Monday morning?
20:57
SPEAKER_00: Three things. One question set, one build idea, and one thing to do this week.
21:01
SPEAKER_01: Start with the questions.
21:02
SPEAKER_00: Three questions for any earnings call AI claim.
21:05
SPEAKER_00: You can use these on Chevron, on PDO, on your own vendor, on anybody.
21:09
SPEAKER_00: First, what is the number?
21:10
SPEAKER_00: Not the adjective, the number.
21:12
SPEAKER_00: A hundred million, fifty percent, ten basins.
21:14
SPEAKER_00: If there's no number, write none and move on.
21:16
SPEAKER_01: Second?
21:17
SPEAKER_00: Second, what is it measured against?
21:19
SPEAKER_00: A hundred million compared to what?
21:21
SPEAKER_00: Fifty percent fewer loss production events compared to which quarter in which wells.
21:25
SPEAKER_00: If you don't know the baseline, the number is a mood, not a measurement. And third?
21:30
SPEAKER_00: Third, what is the agent allowed to change without a human?
21:32
SPEAKER_00: This is the one nobody's answering yet. Is it recommending?
21:35
SPEAKER_00: Is it acting inside a band?
21:36
SPEAKER_00: Is It acting outside a band and telling you later?
21:38
SPEAKER_00: That one question tells you more about the tool than the dollar figure does.
21:42
SPEAKER_01: And I'd add, for the folks listening who aren't at a major,
21:45
SPEAKER_01: ask those three questions of your own team before you ask them of a vendor.
21:48
SPEAKER_01: Because if you can't answer them about your own setup,
21:50
SPEAKER_01: the vendor's going to answer them for you.
21:52
SPEAKER_00: That's a good addition.
21:53
SPEAKER_01: Build idea.
21:55
SPEAKER_00: Build idea is the most boring dataset in the oil patch, and I mean that as a compliment.
21:58
SPEAKER_00: A lost production event log for a small operator, five columns, date, well, cause,
22:03
SPEAKER_00: minutes down, who or what caught it.
22:06
SPEAKER_01: That's it?
22:07
SPEAKER_00: That's it.
22:07
SPEAKER_00: You can do it in a spreadsheet, you can do it on a clipboard if you have to,
22:10
SPEAKER_00: and type it in on Friday.
22:12
SPEAKER_00: The point isn't the tool.
22:13
SPEAKER_00: The point is that six months from now,
22:15
SPEAKER_00: when somebody sells you an AI reliability product and says it cuts downtime in half,
22:18
SPEAKER_00: you have the before picture.
22:20
SPEAKER_00: You can check them.
22:21
SPEAKER_01: And the who or what caught it column is the important one.
22:24
SPEAKER_00: It's the whole thing.
22:25
SPEAKER_00: Because if the answer is always the pumper on his morning route, that tells you something.
22:29
SPEAKER_00: If the answer starts being the alarm or the agent, that tells you something different.
22:33
SPEAKER_00: And if the answer is blank, you've found your problem.
22:36
SPEAKER_01: The pen dies.
22:37
SPEAKER_00: The pen dies. Don't leave it blank.
22:39
SPEAKER_01: What's the cause column look like?
22:41
SPEAKER_01: Because I've seen these logs turn into other pretty fast.
22:44
SPEAKER_00: Keep it to a short list.
22:46
SPEAKER_00: Power, mechanical, chemical, surface equipment, midstream curtailment, weather, unknown.
22:50
SPEAKER_00: And make unknown something you have to come back and fix within a week.
22:54
SPEAKER_00: If unknown is more than a tenth of your rows, the log is telling you to go look.
22:57
SPEAKER_01: In minutes, not hours.
22:59
SPEAKER_00: Minutes. Because the data center buyer is going to think in minutes.
23:02
SPEAKER_00: You might as well start now.
23:04
SPEAKER_01: Okay. The one actionable item.
23:06
SPEAKER_00: If a midstream or power project near your acreage cites a turbine order,
23:10
SPEAKER_00: ask two questions, in writing, before you price anything off it.
23:14
SPEAKER_00: What is the in-service date and what is the FID status?
23:17
SPEAKER_01: In writing.
23:18
SPEAKER_00: In writing. Not on a phone call, not at a dinner.
23:21
SPEAKER_00: Because we've ordered turbines and we've taken FID
23:23
SPEAKER_00: with an in-service date are two completely different stages of a project.
23:27
SPEAKER_00: One of them is a slot in a queue, the other one is a commitment.
23:30
SPEAKER_01: And if they won't put it in writing?
23:32
SPEAKER_00: Then you've learned the answer.
23:33
SPEAKER_00: Price the date you can get, not the date you're hoping for.
23:36
SPEAKER_01: And for the landman specifically.
23:37
SPEAKER_01: If you're negotiating surface use or an easement for something that's described
23:40
SPEAKER_01: as data center power, put the in-service date and the FID status in your own file,
23:45
SPEAKER_01: with the source and the date you heard it.
23:46
SPEAKER_01: Because in two years, somebody's going to ask you what you knew and when.
23:49
SPEAKER_00: That's a good one. A two-line note in the file.
23:52
SPEAKER_00: On this date, the developer said FID not taken, first power target 2028.
23:56
SPEAKER_00: That note is worth more than the brochure.
23:58
SPEAKER_01: And one for the field.
24:00
SPEAKER_01: If your company starts piloting a 24-7 production agent,
24:02
SPEAKER_01: the best person to check its work is the pumper who already knows what
24:05
SPEAKER_01: that well sounds like on a normal day. Put them in the loop.
24:08
SPEAKER_01: Let them flag the changes that look wrong.
24:10
SPEAKER_00: Make the pumper the reviewer, not the casualty.
24:12
SPEAKER_01: Exactly. Can I add one more to the build list? A small one.
24:16
SPEAKER_00: Go.
24:17
SPEAKER_01: How to read an order book in five minutes for people who don't read order books.
24:20
SPEAKER_01: Step one, find the backlog number and write it down.
24:23
SPEAKER_01: Step two, find the book to bill.
24:26
SPEAKER_01: Above one means the pile is growing.
24:28
SPEAKER_01: Below one means they're shipping faster than they're selling.
24:31
SPEAKER_01: Step three, go looking for customer names and in-service dates and count how many you find.
24:35
SPEAKER_00: And this week the count was zero and zero.
24:37
SPEAKER_01: Zero names, zero in-service dates, in the orders that mattered most to us.
24:42
SPEAKER_01: That's not a scandal.
24:43
SPEAKER_01: Lots of customers don't want to be named, and equipment makers don't control the startup date.
24:47
SPEAKER_01: But it means the order book tells you about demand for equipment,
24:50
SPEAKER_01: not about power on a specific site.
24:52
SPEAKER_00: Step four?
24:53
SPEAKER_01: Step four. Look for the same equipment showing up on both sides.
24:56
SPEAKER_01: This week, frame five units showed up in a data center power order,
24:59
SPEAKER_01: and in a pipeline compression order.
25:01
SPEAKER_01: That tells you the gas has to move and get burned, and both halves need iron.
25:04
SPEAKER_00: That's a good habit.
25:05
SPEAKER_00: Five minutes, four steps and you've read the order book better than most
25:08
SPEAKER_00: of headlines did.
25:09
SPEAKER_00: And if you want help with any of this setting up the log writing the three questions
25:13
SPEAKER_00: into your vendor process or figuring out what your agent should be allowed
25:17
SPEAKER_00: to touch that's we do.
25:18
SPEAKER_00: You can reach us at siliconandshaleatgmail .com.
25:21
SPEAKER_00: We work with operators landmen and mineral owners on exactly this kind of problem
25:25
SPEAKER_01: where the oil patch meets
25:27
SPEAKER_01: the algorithm siliconandshaleatgmail .com okay messiest artifact
25:30
SPEAKER_00: of the week This week we rate in units of unanswered call-outs.
25:33
SPEAKER_00: One call-out means somebody will get to it.
25:35
SPEAKER_00: Five call-outs means the well's been down since Tuesday and nobody wrote it down.
25:39
SPEAKER_01: First nominee.
25:40
SPEAKER_01: Physical AI workloads.
25:42
SPEAKER_01: From the Baker Hughes release.
25:43
SPEAKER_00: Two unanswered call-outs.
25:45
SPEAKER_00: It's fuzzy, but Packer already defended it and he was right.
25:48
SPEAKER_00: It means always on load.
25:49
SPEAKER_00: It just says it like a conference badge.
25:51
SPEAKER_01: Second nominee.
25:52
SPEAKER_01: Kind of an agentic assistant.
25:54
SPEAKER_01: From the Chevron call.
25:55
SPEAKER_00: One call-out. Honestly, I love it.
25:57
SPEAKER_00: It's the most human phrase anyone said on an earnings call all week. Kind of.
26:01
SPEAKER_00: That's an engineer telling you the truth in real time.
26:04
SPEAKER_01: Third nominee, inflection year.
26:06
SPEAKER_00: Three unanswered call-outs.
26:07
SPEAKER_00: Not because it's wrong, because it's a promise with a dollar figure attached,
26:10
SPEAKER_00: and now we get to check it every quarter.
26:12
SPEAKER_00: That's three call-outs of homework.
26:14
SPEAKER_01: So inflection year wins.
26:16
SPEAKER_00: Inflection year wins.
26:17
SPEAKER_00: It gets assigned to the night shift.
26:19
SPEAKER_01: Before we go, if somebody wants to sponsor this show,
26:21
SPEAKER_01: if you sell into the oil patch or the AI side of it,
26:23
SPEAKER_01: and you want to reach the people actually running wells, turbines, and data rooms,
26:26
SPEAKER_01: write us at siliconandshale at gmail.com.
26:28
SPEAKER_01: We'll keep it honest and we'll keep it short.
26:30
SPEAKER_00: And one small ask.
26:32
SPEAKER_00: If this helped you read past an adjective to the number underneath it,
26:34
SPEAKER_00: a rating or a quick review wherever you listen helps other folks
26:37
SPEAKER_00: in the patch find us.
26:38
SPEAKER_00: That's the whole ask.
26:40
SPEAKER_00: So, quick recap for the folks who skipped to the end.
26:42
SPEAKER_00: Baker Hughes booked turbines for AI by the Gigawatt, with unnamed customers and no dates.
26:47
SPEAKER_00: Chevron's Kilby kept its first power and full energization dates
26:50
SPEAKER_00: and is still working toward FID.
26:52
SPEAKER_00: Exxon has three automated rigs in the Permian and a plan for half the fleet.
26:56
SPEAKER_00: Chevron put $100 million on AI and an agent on the night shift.
26:59
SPEAKER_00: And PDO launched a program with a ladder and no number.
27:02
SPEAKER_01: And the thread through all of it is the same.
27:04
SPEAKER_01: Read the number, find the name, ask for the date.
27:08
SPEAKER_00: And ask what the agent is allowed to touch. That too.
27:11
SPEAKER_00: Next week there'll be another rig count, another quarter of backlog,
27:13
SPEAKER_00: and if we're lucky, one customer name. Just one.
27:16
SPEAKER_00: And if Baker Hughes is listening, we don't need the customer's name.
27:19
SPEAKER_00: We just need a new highlighter.