Latest / Silicon & Shale Podcast / Two Chevrons: Arena Joins the Table, Kilby Waits on Paper

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Two Chevrons: Arena Joins the Table, Kilby Waits on Paper · Silicon & Shale Podcast

0:00
SPEAKER_01: 5 o'clock yesterday afternoon,
0:01
SPEAKER_01: somewhere in Texas,
0:02
SPEAKER_01: a notary public was the most important person in the AI business.
0:05
SPEAKER_00: You're going to have to walk me into that one.
0:06
SPEAKER_01: Uricot sent a request for information to data center developers back on September 14th.
0:11
SPEAKER_01: Grid dependence, on-site generation, water, cooling, noise, light, traffic.
0:15
SPEAKER_01: Who actually owns the thing?
0:17
SPEAKER_01: Responses were due Monday,
0:18
SPEAKER_01: October 12th,
0:18
SPEAKER_01: 5 p.m. Central, and every complete response needed a notarized attestation.
0:23
SPEAKER_00: So after all the talk about gigawatts and frontier models and the future of compute,
0:26
SPEAKER_00: the critical path ran through a person with a rubber stamp and a little logbook.
0:29
SPEAKER_01: A stamp, a logbook, and probably a strip mall office next to a tax preparer.
0:33
SPEAKER_01: I've signed mineral deeds in rooms like that.
0:35
SPEAKER_01: You sit in a plastic chair,
0:37
SPEAKER_01: they ask for your driver's license,
0:38
SPEAKER_01: and they do not care how many parameters your model has.
0:41
SPEAKER_00: I love that.
0:42
SPEAKER_00: The whole AI build out in Texas,
0:44
SPEAKER_00: and at the very end of the hallway,
0:45
SPEAKER_00: a lady named something like Brenda saying, sign here and here and initial there.
0:49
SPEAKER_01: We don't know her name.
0:50
SPEAKER_01: I want to be clear.
0:51
SPEAKER_01: We are not inventing a notary.
0:53
SPEAKER_00: Fair.
0:54
SPEAKER_00: Hypothetical notary.
0:55
SPEAKER_00: But here's why I care.
0:57
SPEAKER_00: That same week, the same company showed up on both sides of that hallway.
1:00
SPEAKER_00: Chevron joined an AI-heavy subsurface software collaboration with SLB and Total Energies.
1:05
SPEAKER_00: That's the fast side.
1:06
SPEAKER_00: Signatures, engineers, roadmaps.
1:08
SPEAKER_00: And Chevron's giant gas power project for a Microsoft data center is sitting on
1:12
SPEAKER_00: the slow side, waiting on Texas paper.
1:14
SPEAKER_01: Two Chevrons, one walking into a technology center, one waiting in the plastic chair.
1:18
SPEAKER_00: Hang on to that stamp.
1:20
SPEAKER_00: I have a feeling it comes back.
1:22
SPEAKER_01: Welcome to Silicon and Shale, where the oil patch meets the algorithm.
1:26
SPEAKER_01: Episode 19, week of October 12th, 2026.
1:29
SPEAKER_01: I'm Derek.
1:30
SPEAKER_00: I'm Packer.
1:31
SPEAKER_00: This week, Chevron's Project Kilby and the Texas permit calendar on the energy side.
1:35
SPEAKER_00: On the AI side,
1:36
SPEAKER_00: Chevron joins SLB's arena collaboration and TGS teams up with
1:40
SPEAKER_00: a brand new Norwegian explorer built around AI.
1:42
SPEAKER_00: Then the collision zone, a field report, and the messiest documents of the week.
1:46
SPEAKER_01: Let's start with the steel, or the steel that would like to exist.
1:49
SPEAKER_01: Project Kilby.
1:51
SPEAKER_01: Quick recap because this one was announced back in June.
1:53
SPEAKER_01: On June 22nd,
1:54
SPEAKER_01: Chevron said Energy Forge One had signed an agreement with Microsoft to build
1:57
SPEAKER_01: a co-located power facility in West Texas.
2:00
SPEAKER_01: Dedicated electricity to a Microsoft-operated data center under
2:03
SPEAKER_01: a 20-year power purchase agreement.
2:05
SPEAKER_00: And the size?
2:06
SPEAKER_01: About 2.67 gigawatts, built in phases.
2:09
SPEAKER_01: Modular, so they can add as they go.
2:12
SPEAKER_01: Most of the generation from large GE Vernova turbines,
2:14
SPEAKER_01: with additional capacity from solar turbines, the Caterpillar subsidiary.
2:19
SPEAKER_01: Chevron called it among the largest co-located gas power
2:21
SPEAKER_01: and data center developments in the country.
2:23
SPEAKER_00: And the project site says Reeves County.
2:25
SPEAKER_00: So, Permian gas,
2:26
SPEAKER_00: burned next to the building that needs the power,
2:28
SPEAKER_00: and the grid never has to carry it.
2:30
SPEAKER_01: One detail people skip.
2:32
SPEAKER_01: Phased and modular.
2:33
SPEAKER_01: That word matters for the dates.
2:35
SPEAKER_01: When Chevron says first power in 2028,
2:37
SPEAKER_01: our read is that means the first block of turbines,
2:39
SPEAKER_01: not all 2.67 gigawatts lighting up on the same morning.
2:42
SPEAKER_00: That's our read, not theirs.
2:44
SPEAKER_00: To be clear, the release says phased approach and incremental expansion.
2:47
SPEAKER_00: It doesn't give a phase schedule.
2:49
SPEAKER_01: Right, and that's normal.
2:50
SPEAKER_01: You don't build a power plant that size in one pour.
2:52
SPEAKER_01: You set a few units, you commission them, you learn what broke, and you set the next few.
2:56
SPEAKER_01: Same as any big facility out here.
2:57
SPEAKER_00: So first power is a real milestone.
2:59
SPEAKER_00: It's just not the same milestone as the whole thing running.
3:02
SPEAKER_01: That's the pitch.
3:03
SPEAKER_01: Chevron also put some local numbers in the release.
3:05
SPEAKER_01: More than $10 billion in state and local tax revenue.
3:08
SPEAKER_01: Almost 2,000 jobs.
3:10
SPEAKER_01: Brackish non-potable groundwater for plant operations instead of freshwater.
3:14
SPEAKER_01: Selective catalytic reduction on the turbines for ENOX.
3:17
SPEAKER_01: Noise and light measures.
3:19
SPEAKER_00: Which reads, in hindsight, like somebody already knew what the governor was going to ask about.
3:23
SPEAKER_01: Maybe.
3:24
SPEAKER_01: Or that's just what you put in a release for a big plant in West Texas.
3:27
SPEAKER_01: Here's the line that matters, though.
3:29
SPEAKER_01: Chevron said the Microsoft agreement was an important milestone
3:32
SPEAKER_01: toward final investment decision,
3:33
SPEAKER_01: expected by the end of 2026,
3:35
SPEAKER_01: subject to the completion of other necessary conditions,
3:38
SPEAKER_01: targeting mid-teen returns, first power anticipated in 2028.
3:42
SPEAKER_00: And now we have to talk about what happened between June and October.
3:45
SPEAKER_01: We do.
3:45
SPEAKER_01: And I'll go first, because I have a confession.
3:48
SPEAKER_01: When that release came out in June,
3:49
SPEAKER_01: I wrote kill BFI'd year-end in my notes like it was a spud date, no asterisk.
3:54
SPEAKER_01: I read expected by the end of 2026, and my brain dropped the part where it said subject to.
3:59
SPEAKER_00: You penciled a press release into a calendar.
4:01
SPEAKER_01: I penciled a press release into a calendar.
4:03
SPEAKER_00: The quiet part is that subject to the completion of other necessary conditions is
4:07
SPEAKER_00: where all the actual news lives.
4:09
SPEAKER_00: That's the clause doing the work.
4:11
SPEAKER_00: Everything before it is the brochure.
4:12
SPEAKER_01: That's fair, and it's the clause that just got loud.
4:15
SPEAKER_01: September 21st,
4:17
SPEAKER_01: Governor Abbott directed the Texas Commission on Environmental Quality
4:19
SPEAKER_01: to halt all permits sought by data centers until ERCOT completes its audit.
4:23
SPEAKER_01: His words, simply put, Texans must come first.
4:26
SPEAKER_01: And then, until they do, TCEQ will issue no permits sought by data center projects.
4:31
SPEAKER_00: And the release goes further than TCEQ.
4:34
SPEAKER_00: It says,
4:34
SPEAKER_00: no state agency moves forward with regulatory approvals related
4:37
SPEAKER_00: to data center development until that audit information comes in.
4:40
SPEAKER_01: Then October 1st,
4:41
SPEAKER_01: Semaphore ran an interview with Daniel Droge,
4:43
SPEAKER_01: Chevron's vice president for power solutions.
4:46
SPEAKER_01: According to Semaphore,
4:47
SPEAKER_01: Droog said Kilby's final investment decision could be pushed to 2027 following
4:50
SPEAKER_01: the moratorium.
4:52
SPEAKER_01: He also said, quote,
4:53
SPEAKER_01: the permitting and regulatory side has caused some slowdown or potential delay in
4:56
SPEAKER_01: the system.
4:57
SPEAKER_01: And he said Kilby is still on track to produce first electrons by 2028.
5:01
SPEAKER_00: Important framing.
5:02
SPEAKER_00: That's a Chevron executive telling a reporter could.
5:05
SPEAKER_00: That's not Chevron issuing a new release that says the date moved.
5:08
SPEAKER_01: Right.
5:09
SPEAKER_01: Semaphore's interview,
5:10
SPEAKER_01: not a Chevron filing,
5:11
SPEAKER_01: and Semaphore reported preliminary earthmoving is already underway at the site,
5:14
SPEAKER_01: while the developers finalize construction contracts and wait
5:17
SPEAKER_01: for final state permits.
5:18
SPEAKER_00: So, let me do the thing we did last time.
5:20
SPEAKER_00: 2.67 gigawatts on paper.
5:23
SPEAKER_00: Zero spinning.
5:23
SPEAKER_00: Dirt moving.
5:24
SPEAKER_01: That's the honest scoreboard, and it's not a knock on Kilby.
5:28
SPEAKER_01: Dirt moving is further along than most of what we covered two episodes back,
5:31
SPEAKER_01: when the gas-to-GPU announcements were stacked about 90 gigawatts high and
5:34
SPEAKER_01: about two were actually running.
5:36
SPEAKER_00: Okay.
5:37
SPEAKER_00: Here's where I disagree with your it's not a knocktone.
5:39
SPEAKER_00: I think Kilby is the strongest possible version of this kind of project,
5:42
SPEAKER_00: and it still might slip a year.
5:44
SPEAKER_00: That should scare every smaller developer in the basin.
5:46
SPEAKER_01: I don't think scare is the word.
5:48
SPEAKER_01: I think it's the opposite.
5:49
SPEAKER_01: Look at what Kilby has.
5:50
SPEAKER_01: A 20-year offtake with Microsoft.
5:52
SPEAKER_01: Turbines already secured.
5:54
SPEAKER_01: Semaphore reports Julent,
5:55
SPEAKER_01: Chevron's partner,
5:56
SPEAKER_01: came out of engine number one, which bought turbines before the supply crunch.
5:59
SPEAKER_01: That's the hardest piece of hardware in the whole business right now when they have it.
6:02
SPEAKER_00: Sure, and that's my point.
6:04
SPEAKER_00: Hardware, customer, gas, land, money.
6:07
SPEAKER_00: Every box checked.
6:08
SPEAKER_00: And the thing that moves the date isn't any of those.
6:11
SPEAKER_00: It's a permit nobody can issue because a letter from Austin says, stop.
6:15
SPEAKER_00: If that slips the strongest project a year,
6:17
SPEAKER_00: what happens to the guy with a letter of intent and a leased pad?
6:19
SPEAKER_01: He was never going to make 2028 anyway.
6:21
SPEAKER_01: That's my point.
6:23
SPEAKER_01: The freeze hurts the weak projects worse, which sounds cruel, but it also clears the field.
6:27
SPEAKER_01: Kilby's CFO at Julant,
6:28
SPEAKER_01: Michael Wortley,
6:29
SPEAKER_01: told Semaphore the construction contracts were a couple weeks if not days away,
6:33
SPEAKER_01: and on the permits.
6:34
SPEAKER_01: If you're a part of the solution rather than the problem, ultimately you'll get your permits.
6:38
SPEAKER_00: That is a very confident sentence from a man who does not currently have his permits.
6:42
SPEAKER_01: It is, but look at the governor's conditions.
6:44
SPEAKER_01: Data centers must cover their electrical infrastructure costs,
6:47
SPEAKER_01: must not use water needed by local communities,
6:49
SPEAKER_01: must report electricity and water use, must follow setbacks.
6:53
SPEAKER_01: Kilby generates its own power, says it'll use brackish water, and it sits in a rural county.
6:57
SPEAKER_01: If any project fits the solution box, it's this one.
7:00
SPEAKER_00: Okay, I'll give you this much.
7:02
SPEAKER_00: Kilby is built to pass the test.
7:04
SPEAKER_00: But built to pass and passed are different verbs.
7:06
SPEAKER_00: And until TCEQ actually says what it's doing,
7:09
SPEAKER_00: nobody knows whether a behind-the-meter plant even sits inside this freeze
7:12
SPEAKER_00: or outside it.
7:13
SPEAKER_00: The governor's release doesn't say behind the meter anywhere.
7:15
SPEAKER_01: Agreed.
7:16
SPEAKER_01: That's genuinely open.
7:18
SPEAKER_01: So here's where we land.
7:20
SPEAKER_01: If you're a mineral owner or a midstream guy near a project like this,
7:23
SPEAKER_01: the practical read is that the schedule risk moved from hardware to paper.
7:26
SPEAKER_01: Plan around the paper.
7:28
SPEAKER_00: Which brings us to the paper calendar, because this week is basically a permit advent calendar.
7:32
SPEAKER_01: Please don't call it that.
7:34
SPEAKER_00: Too late.
7:35
SPEAKER_00: Door number one already opened.
7:36
SPEAKER_00: The ERCOT state and community impact request for information.
7:40
SPEAKER_00: This came out of a letter the governor sent August 3rd directing
7:42
SPEAKER_00: the Public Utility Commission and ERCOT to gather information
7:45
SPEAKER_00: about how data centers affect the state and local communities.
7:48
SPEAKER_00: ERCOT issued the RFI September 14th.
7:50
SPEAKER_01: Who had to answer?
7:51
SPEAKER_00: And the response doesn't come straight from the developer, which is the part I like.
8:18
SPEAKER_00: And if you skip it... And the water section is the sharp one.
8:42
SPEAKER_00: RCOT issued those questions on behalf of the Texas Water Development Board,
8:45
SPEAKER_00: and the notice says failing to fully answer them may subject a recipient
8:49
SPEAKER_00: to criminal penalties under the Texas Water Code.
8:53
SPEAKER_00: On the water part of a questionnaire.
8:55
SPEAKER_00: Last time we talked about this RFI,
8:56
SPEAKER_00: we couldn't verify the deadline on RCOT's own site, so we kept it off the air.
9:00
SPEAKER_00: This week it's right there in the market notice, so it's on the air.
9:03
SPEAKER_01: Good.
9:03
SPEAKER_01: And for the record, we don't know whether Kilby got this RFI.
9:06
SPEAKER_01: Its setup is behind the meter, and this went to projects in RCOT's interconnection process.
9:10
SPEAKER_01: Might apply, might not.
9:11
SPEAKER_01: We're not going to guess.
9:12
SPEAKER_00: Ducker number two.
9:14
SPEAKER_00: Monday, October 19th.
9:16
SPEAKER_00: That's when TCEQ owes the governor's office an update on how it's complying with
9:19
SPEAKER_00: the permit halt.
9:20
SPEAKER_01: That's the one I'm actually watching.
9:22
SPEAKER_01: Because that update is the first time the agency itself has
9:24
SPEAKER_01: to say what halt all permits sought by data centers means in practice.
9:28
SPEAKER_01: Which permits?
9:29
SPEAKER_01: Air permits for the turbines?
9:31
SPEAKER_01: Standard permits?
9:32
SPEAKER_01: Water?
9:33
SPEAKER_00: And doctor number three.
9:34
SPEAKER_00: No later than December 10th,
9:35
SPEAKER_00: ERCOT and the PUC published their report based on all those RFI responses.
9:39
SPEAKER_01: Plus, the governor's release says that next session he'll work with the legislature
9:42
SPEAKER_01: to eliminate financial incentives for data centers.
9:44
SPEAKER_00: So, the calendar is October 12th, October 19th, December 10th, then the session.
9:49
SPEAKER_00: And the Kilby FID sits somewhere downstream of all of it.
9:51
SPEAKER_01: Here's where I think you and I actually see this differently.
9:54
SPEAKER_01: I think this freezes a speed bump.
9:56
SPEAKER_00: Based on what?
9:57
SPEAKER_01: Semaphore's own reporter said as much.
9:59
SPEAKER_01: Tim McDonnell,
10:00
SPEAKER_01: in the analysis attached to that Kilby story,
10:02
SPEAKER_01: wrote that the toughest moratoria,
10:03
SPEAKER_01: Texas and New York,
10:05
SPEAKER_01: are likely temporary and will ease once the November elections pass
10:07
SPEAKER_01: and basic ground rules take shape.
10:09
SPEAKER_01: That's his view, labeled as his view.
10:11
SPEAKER_01: But it matches my gut.
10:13
SPEAKER_00: And my gut says the ground rules are the point.
10:15
SPEAKER_00: Even if the freeze lifts, the governor's conditions don't go away.
10:18
SPEAKER_00: Pay your own infrastructure costs.
10:20
SPEAKER_00: Report your water.
10:21
SPEAKER_00: Setbacks.
10:22
SPEAKER_00: Incentives on the chopping block next session.
10:24
SPEAKER_00: That's not a speed bump.
10:26
SPEAKER_00: That's a new road.
10:27
SPEAKER_01: A new road you can still drive on.
10:29
SPEAKER_00: Sure.
10:29
SPEAKER_00: Slower.
10:30
SPEAKER_00: With a toll booth.
10:32
SPEAKER_00: McDonnell said it himself in the same piece.
10:34
SPEAKER_00: The industry is moving from a wild west to a more regulated status quo.
10:37
SPEAKER_00: That part isn't temporary.
10:39
SPEAKER_01: Okay, freeze may be temporary.
10:41
SPEAKER_01: Rules probably permanent.
10:42
SPEAKER_01: I'll take that split.
10:43
SPEAKER_00: And for anybody planning around it, the rules are the part you budget for.
10:46
SPEAKER_01: That's the E&P side, a project with steel lined up waiting on a stamp.
10:50
SPEAKER_00: Now the fast side.
10:51
SPEAKER_00: Chevron,
10:52
SPEAKER_00: a week ago,
10:52
SPEAKER_00: joined SLB and Total Energies in a digital subsurface collaboration called Arena.
10:56
SPEAKER_01: Give me the actual release, not the vibe.
10:58
SPEAKER_00: October 6th, SLB Newsroom.
11:01
SPEAKER_00: Chevron Technical Center,
11:02
SPEAKER_00: a division of Chevron USA,
11:04
SPEAKER_00: has joined the long-term digital subsurface collaboration that SLB
11:07
SPEAKER_00: and Total Energies set up in 2024.
11:09
SPEAKER_00: SLB calls Chevron the second global operator in the co-development.
11:13
SPEAKER_00: The focus is next-generation digital technology for reservoir engineering and geoscience.
11:17
SPEAKER_01: And what is Chevron putting in?
11:18
SPEAKER_00: Three things.
11:19
SPEAKER_00: Per the release, investment, intellectual property, and technical expertise.
11:24
SPEAKER_00: Specifically expertise in uncertainty analysis, optimization, and field development planning.
11:29
SPEAKER_00: And the operating model is that total energies
11:31
SPEAKER_00: and Chevron subject matter experts get embedded inside SLB technology centers
11:34
SPEAKER_00: to shorten the feedback loop between the operator and the product team.
11:37
SPEAKER_01: Okay, so here's my question, and I'm going to ask it about every release this week.
11:40
SPEAKER_01: Which verb actually happened?
11:42
SPEAKER_00: Meaning?
11:43
SPEAKER_01: Partnership, collaboration, AI-enabled.
11:45
SPEAKER_01: Those are nouns and adjectives.
11:47
SPEAKER_01: What did somebody actually do this week?
11:48
SPEAKER_00: Chevron joined.
11:50
SPEAKER_00: That's the verb.
11:51
SPEAKER_00: Joined an existing collaboration.
11:53
SPEAKER_00: Not launched a product.
11:54
SPEAKER_00: Not shipped a model.
11:55
SPEAKER_00: Not deployed in a field.
11:57
SPEAKER_00: Joined.
11:58
SPEAKER_01: Thank you.
11:58
SPEAKER_01: That's a real verb.
11:59
SPEAKER_01: Joining with IP and money is not nothing,
12:02
SPEAKER_01: but it's not AI is now running Chevron's reservoirs either.
12:05
SPEAKER_00: And there's a real lineage here.
12:07
SPEAKER_00: The release says the three companies are building on the collaboration that gave
12:09
SPEAKER_00: the industry the Intersect Simulator.
12:11
SPEAKER_00: And a couple of episodes back,
12:12
SPEAKER_00: we talked about Total Energies pairing up with Mistral on reservoir work.
12:16
SPEAKER_00: Total has been busy.
12:17
SPEAKER_01: And SLB's digital president,
12:19
SPEAKER_01: Rakesh Jagi,
12:20
SPEAKER_01: frames it as bringing SLB's digital and subsurface expertise together
12:23
SPEAKER_01: with operator knowledge,
12:25
SPEAKER_01: which is a polite way of saying the vendor wants the customer's engineers in
12:27
SPEAKER_01: the room early instead of hearing complaints after the release ships.
12:31
SPEAKER_00: Which, honestly, every software team wants and almost none of them get.
12:34
SPEAKER_01: Here's the thing I'll admit, because I think it's actually impressive.
12:37
SPEAKER_01: Embedding operator engineers inside a vendor's tech center is the right shape.
12:41
SPEAKER_01: I've watched too many software products get built by people who have never sat
12:44
SPEAKER_01: through a reserves review.
12:45
SPEAKER_01: If Chevron's uncertainty people are in the room when the roadmap gets written,
12:48
SPEAKER_01: that's the best fix for that problem I know of.
12:50
SPEAKER_00: Derek said something nice about a software vendor.
12:52
SPEAKER_00: Somebody mark the date.
12:53
SPEAKER_01: Don't get used to it.
12:54
SPEAKER_01: Now push back on me.
12:55
SPEAKER_00: Gladly.
12:56
SPEAKER_00: My worry is the opposite of yours.
12:58
SPEAKER_00: When the two biggest customers co-write the roadmap,
13:00
SPEAKER_00: the product gets built for the two biggest customers.
13:02
SPEAKER_00: The release says, scalable, open, and extensible.
13:05
SPEAKER_00: Great,
13:06
SPEAKER_00: but the small Permian operator with three geoscientists and a shared drive isn't in
13:09
SPEAKER_00: that tech center.
13:10
SPEAKER_01: Neither were they when Intersect got built, and they ended up with a better simulator anyway.
13:15
SPEAKER_01: Big operators paying for development is how a lot of this stuff reaches everybody else.
13:18
SPEAKER_00: Eventually, at a price, with a license model somebody else negotiated.
13:23
SPEAKER_00: I'm not saying it's bad.
13:24
SPEAKER_00: I'm saying open in a press release is a promise, not a property.
13:28
SPEAKER_01: Fair.
13:28
SPEAKER_01: And the release is quiet on the stuff we'd want.
13:30
SPEAKER_01: No dollar figure, no product names, no timeline, no IP terms.
13:35
SPEAKER_01: Jitendra Kakani,
13:36
SPEAKER_01: Chevron's Vice President of Subsurface,
13:37
SPEAKER_01: says they're combining our world-class expertise in uncertainty analysis
13:41
SPEAKER_01: with digital technologies and AI-enabled workflows to improve decision quality.
13:45
SPEAKER_00: AI-enabled.
13:45
SPEAKER_00: There it is.
13:47
SPEAKER_01: There it is.
13:47
SPEAKER_01: So where do we land?
13:48
SPEAKER_00: Realverb.
13:49
SPEAKER_00: Joined.
13:50
SPEAKER_00: Good structure.
13:51
SPEAKER_00: Engineers in the building.
13:52
SPEAKER_00: Watch for the product and the license terms before you believe the open part.
13:55
SPEAKER_01: And the thing I'd watch for is the first name product that comes out of Arena
13:58
SPEAKER_01: with Chevron's fingerprints on it.
14:00
SPEAKER_01: That's when joined turns into shipped.
14:02
SPEAKER_00: Next verb on the list.
14:03
SPEAKER_00: We'll check back.
14:05
SPEAKER_01: I can live with that.
14:06
SPEAKER_00: Second AI story, and this one is a day old.
14:09
SPEAKER_00: Monday, October 12th, out of Oslo.
14:11
SPEAKER_00: TGS announced a framework agreement for a strategic collaboration with
14:14
SPEAKER_00: a newly formed company called Galdor Exploration.
14:17
SPEAKER_01: How newly formed?
14:18
SPEAKER_00: Galdor was formally established July 19, 2026.
14:21
SPEAKER_00: TGS points out that lines up with the 60th anniversary of the spud
14:24
SPEAKER_00: of Norway's first exploration well.
14:26
SPEAKER_01: That's a nice touch.
14:27
SPEAKER_01: I'll give them that.
14:28
SPEAKER_01: Somebody picked that date on purpose.
14:30
SPEAKER_00: Somebody absolutely picked that date on purpose.
14:32
SPEAKER_00: The deal.
14:33
SPEAKER_00: Galdor gets access to TGS's integrated data across the energy data value chain.
14:37
SPEAKER_00: And TGS will help Galdor implement advanced AI exploration workflows,
14:41
SPEAKER_00: including TGS's proprietary seismic foundation model.
14:44
SPEAKER_00: Target area is the Norwegian continental shelf and the broader North Sea.
14:47
SPEAKER_01: A seismic foundation model.
14:49
SPEAKER_01: At least it's built on solid... No, I'm not finishing that.
14:52
SPEAKER_00: You finished it in your head and so did everyone listening.
14:54
SPEAKER_00: That's worse.
14:55
SPEAKER_01: I regret it.
14:56
SPEAKER_01: Moving on, what's Galdor's actual pitch?
14:58
SPEAKER_00: Galdor's founder and CEO,
14:59
SPEAKER_00: Ariane Gerda,
15:00
SPEAKER_00: says the strategy combines deep exploration experience with premium subsurface data
15:04
SPEAKER_00: and next-generation AI-enabled workflows.
15:06
SPEAKER_00: And the goal is to find opportunities that, quote,
15:08
SPEAKER_00: by using conventional approaches may have been overlooked,
15:11
SPEAKER_00: underestimated, or left behind.
15:12
SPEAKER_01: So, again, which verb?
15:14
SPEAKER_00: Signed.
15:15
SPEAKER_00: A framework agreement?
15:16
SPEAKER_00: Which is a cousin of signed.
15:18
SPEAKER_00: A framework is the agreement to figure out the agreement.
15:20
SPEAKER_01: Right.
15:21
SPEAKER_01: Nobody drilled anything.
15:22
SPEAKER_01: Nobody got a license.
15:22
SPEAKER_01: No money in the release.
15:23
SPEAKER_01: No blocks.
15:24
SPEAKER_01: No wells.
15:25
SPEAKER_00: And here's where I'll admit something about myself.
15:27
SPEAKER_00: I'm an AI optimist.
15:28
SPEAKER_00: And whenever I read AI Native Explorer, I get the tingle.
15:31
SPEAKER_00: I start picturing a model that looks at decades of seismic and points at
15:34
SPEAKER_00: the thing everybody missed.
15:36
SPEAKER_00: And I have to remind myself that the press release says, aim to and support the goal.
15:40
SPEAKER_01: That's the most self-aware thing you've said all year.
15:42
SPEAKER_00: I have my moments.
15:44
SPEAKER_00: Okay.
15:44
SPEAKER_00: Disagree with me.
15:45
SPEAKER_00: I think the Galdor model is the future,
15:47
SPEAKER_00: and I think it comes to the Permian and the MidCon sooner than people think.
15:50
SPEAKER_01: I think the left-behind pitch is older than you are.
15:53
SPEAKER_01: Every generation of explorers says the last generation missed things.
15:56
SPEAKER_01: Sometimes they're right.
15:58
SPEAKER_01: Usually the stuff was left behind because it wasn't there.
16:00
SPEAKER_00: Sure, but the data's different now.
16:02
SPEAKER_00: TGS has an enormous library.
16:04
SPEAKER_00: If you can run a model over all of it at once instead of a geoscientist looking
16:08
SPEAKER_00: at one survey at a time, you can at least rank the leftovers faster.
16:11
SPEAKER_01: Ranking faster is real, I'll grant that.
16:14
SPEAKER_01: But ranking isn't finding.
16:15
SPEAKER_01: Someone still has to drill a well and the well still doesn't care how confident the model was.
16:19
SPEAKER_00: Agreed on that.
16:20
SPEAKER_00: But here's the bit that maps to us.
16:22
SPEAKER_00: Galdor is a tiny company that bought access to a giant data library.
16:26
SPEAKER_00: And a model instead of building a big in-house team.
16:28
SPEAKER_00: That's a shape a small operator or a mineral fund in Texas could copy.
16:32
SPEAKER_01: Careful.
16:32
SPEAKER_01: We don't actually know how big Galdor is.
16:34
SPEAKER_01: The release has a highly experienced exploration team.
16:37
SPEAKER_01: It doesn't give a headcount.
16:38
SPEAKER_00: Fair.
16:39
SPEAKER_00: Newly formed then, not tiny.
16:41
SPEAKER_00: And the point still stands.
16:42
SPEAKER_00: They went to a data company for the library and the model instead of building both from scratch.
16:46
SPEAKER_01: And out here, that maps to old 3D.
16:48
SPEAKER_01: There's a lot of seismic over the Permian and the Midcon that got shot
16:51
SPEAKER_01: for one target and never looked at again for anything else.
16:54
SPEAKER_01: If a small team could rent that and run a model over it, the question gets interesting.
16:58
SPEAKER_00: That's the version I'd want to see.
16:59
SPEAKER_00: Not a headline about AI finding oil.
17:01
SPEAKER_00: A small team re-ranking old surveys for a new target.
17:04
SPEAKER_01: Now that I agree with...
17:05
SPEAKER_01: The interesting thing isn't the model, it's that a startup can rent the library.
17:10
SPEAKER_01: TGS's CEO Christian Johansson said it plainly,
17:13
SPEAKER_01: working in a different, more collaborative way with our customers.
17:16
SPEAKER_00: So, landing it.
17:17
SPEAKER_00: Real verb, signed a framework.
17:19
SPEAKER_00: Interesting structure, data, plus model rented by a small team.
17:22
SPEAKER_00: Proof comes later with a drill bit.
17:23
SPEAKER_01: Proof always comes with a drill bit.
17:26
SPEAKER_00: Collision zone.
17:27
SPEAKER_00: This is where we take an oil patch problem and an AI capability and smash them into each other.
17:31
SPEAKER_01: And this week the collision is inside one company.
17:34
SPEAKER_01: On the software side, Chevron moves at the speed of a signature.
17:37
SPEAKER_01: Joint arena, engineers walk into SLB's buildings, roadmap meetings start.
17:41
SPEAKER_01: On the steel side, Chevron moves at the speed of a stamp.
17:44
SPEAKER_00: And here's the stamp finally.
17:45
SPEAKER_00: The notary from the cold open.
17:47
SPEAKER_00: Remember the plastic chair?
17:48
SPEAKER_01: I remember the plastic chair.
17:50
SPEAKER_00: That stamp is a perfect symbol of the problem.
17:52
SPEAKER_00: Every AI system in the world can generate a thousand-page answer
17:55
SPEAKER_00: to Eric Hott's questions in an afternoon.
17:58
SPEAKER_00: What it can't do is make the answer true.
18:00
SPEAKER_00: And it can't make the attestation.
18:02
SPEAKER_00: A person has to swear to it in front of another person with a stamp.
18:05
SPEAKER_00: That's the speed limit.
18:06
SPEAKER_01: And honestly, that's correct.
18:08
SPEAKER_01: If I'm the state of Texas
18:09
SPEAKER_01: and someone's telling me how much brackish water they'll pull from an aquifer
18:11
SPEAKER_01: for 20 years, I want a human on the hook for that, not a model.
18:15
SPEAKER_00: Agreed.
18:16
SPEAKER_00: So here's the problem we're actually looking at.
18:18
SPEAKER_00: The slow part of an Energy for AI project isn't the engineering.
18:21
SPEAKER_00: And increasingly, it isn't the hardware either.
18:23
SPEAKER_00: It's assembling a truthful,
18:25
SPEAKER_00: consistent record about a project across a dozen different agencies,
18:27
SPEAKER_00: each asking slightly different questions on slightly different clocks.
18:31
SPEAKER_00: And each of those gets answered by a different person at the developer at
18:33
SPEAKER_00: a different time out of a different spreadsheet.
19:01
SPEAKER_00: I've
19:06
SPEAKER_00: seen that
19:11
SPEAKER_01: exact thing in a division order.
19:13
SPEAKER_01: Two numbers, both right, neither labeled.
19:15
SPEAKER_01: Takes six months and a lawyer to untangle.
19:17
SPEAKER_00: And the project itself changes while the paper is in flight.
19:20
SPEAKER_00: Look at Kilby.
19:22
SPEAKER_00: 2.67 gigawatts in Chevron's release.
19:24
SPEAKER_00: Nearly 3 gigawatts in Semaphore's story.
19:26
SPEAKER_00: Both fine.
19:27
SPEAKER_00: One is just rounder.
19:28
SPEAKER_00: Wholly-owned subsidiary in June, 50-50 joint venture on the project website now.
19:33
SPEAKER_00: None of that is scandal.
19:34
SPEAKER_00: It's just a living project.
19:36
SPEAKER_01: But every one of those differences is a question some reviewer gets to ask.
19:39
SPEAKER_01: Why does this filing say one owner and that one say two?
19:42
SPEAKER_00: Exactly.
19:43
SPEAKER_00: And if you're the developer,
19:44
SPEAKER_00: you want to have answered that question before the reviewer asks it.
19:47
SPEAKER_00: Not after.
19:48
SPEAKER_01: That's the part that costs months.
19:49
SPEAKER_01: Not the answer.
19:50
SPEAKER_01: The back and forth to get to the answer.
19:52
SPEAKER_00: So here's the vision.
19:54
SPEAKER_00: Not the build.
19:55
SPEAKER_00: Just the problem and the direction.
19:57
SPEAKER_00: Imagine the same kind of thing ARENA is trying to do for reservoir decisions,
20:00
SPEAKER_00: applied to the regulatory record.
20:02
SPEAKER_00: One source of truth about the project.
20:04
SPEAKER_00: Every number has a label.
20:05
SPEAKER_00: Peak or average, design or permitted, gross or net.
20:08
SPEAKER_00: Every agency answer gets drafted from that same record,
20:10
SPEAKER_00: and every place two answers disagree gets flagged before a human signs anything.
20:14
SPEAKER_01: And the human still signs.
20:16
SPEAKER_00: The human always signs.
20:17
SPEAKER_00: The notary keeps her job.
20:19
SPEAKER_00: The point is that by the time someone's in the plastic chair,
20:21
SPEAKER_00: the document they're swearing to is consistent with everything else they've sworn
20:24
SPEAKER_00: to.
20:24
SPEAKER_01: Okay, here's my pushback.
20:26
SPEAKER_01: That sounds like every compliance software pitch I've heard for 15 years.
20:30
SPEAKER_01: Why is this time different?
20:31
SPEAKER_00: Two reasons.
20:32
SPEAKER_00: First, the questions are now public and structured.
20:34
SPEAKER_00: ERCOT literally published a question reference guide.
20:37
SPEAKER_00: That's a schema.
20:38
SPEAKER_00: Second, the stakes changed.
20:41
SPEAKER_00: A year ago, a mismatched water number meant an annoyed reviewer.
20:44
SPEAKER_00: Now the governor's office gets a list of who didn't answer,
20:46
SPEAKER_00: and the water section carries criminal exposure.
20:48
SPEAKER_01: That's a fair answer, and there's a version of this on the reservoir side too.
20:52
SPEAKER_01: The thing Chevron says it's bringing to ARENA is uncertainty analysis.
20:55
SPEAKER_01: Ranges, not single numbers.
20:57
SPEAKER_01: P10, P50, P90.
20:59
SPEAKER_00: Oh, that's good.
20:59
SPEAKER_00: Go.
21:00
SPEAKER_01: The regulatory record has the same problem.
21:03
SPEAKER_01: A developer files a single water number,
21:04
SPEAKER_01: but the real answer is a range depending on load, weather, and cooling.
21:08
SPEAKER_01: If you file the P50 and the agency reads it as a ceiling,
21:10
SPEAKER_01: you're out of compliance on a hot August afternoon.
21:13
SPEAKER_00: So the same uncertainty discipline Chevron's selling into ARENA is exactly what
21:16
SPEAKER_00: the permitting side is missing.
21:18
SPEAKER_00: The two Chevrons should probably have lunch.
21:20
SPEAKER_01: They're probably in the same building in Houston, just different floors.
21:23
SPEAKER_00: Different floors, different clocks.
21:24
SPEAKER_00: One floor counts in sprints, one counts in notarized data stations.
21:28
SPEAKER_01: And here's the irony I can't let go of.
21:30
SPEAKER_01: Go back to Microsoft's quote in the June release.
21:33
SPEAKER_01: Noel Walsh,
21:33
SPEAKER_01: President of Cloud Operations and Innovation,
21:35
SPEAKER_01: said AI growth requires energy infrastructure that can scale quickly and reliably.
21:40
SPEAKER_00: Quickly?
21:41
SPEAKER_01: Quickly.
21:41
SPEAKER_01: And a dedicated gas plant next to the data center is pitched in part as the faster path.
21:46
SPEAKER_01: Generate your own and you're not waiting on the grid to carry it.
21:49
SPEAKER_00: And it turns out you can skip the grid's line but not the state's line.
21:51
SPEAKER_01: That's the whole collision in one sentence.
21:53
SPEAKER_01: The software side of the industry assumes everything can move at the speed of a code release.
21:57
SPEAKER_01: The power side just learned it moves at the speed of the slowest agency in the chain.
22:01
SPEAKER_00: And to be fair to the agencies, the slow one is slow because nobody gave it good information.
22:05
SPEAKER_00: That's literally why the RFI exists.
22:07
SPEAKER_00: Austin is saying, we don't know enough about these projects to approve them, so tell us.
22:11
SPEAKER_01: Which means the fastest way through the stamp is a better record, not a louder press release.
22:15
SPEAKER_00: Better record, faster stamp.
22:17
SPEAKER_00: That's the thesis.
22:18
SPEAKER_01: And here's where I want to be careful.
22:19
SPEAKER_01: We are not saying Chevron's Kilby team is doing any of this badly.
22:22
SPEAKER_01: We have no idea how good their filings are.
22:25
SPEAKER_01: Wortley sounded confident,
22:26
SPEAKER_01: and they've got brackish water and emissions controls built into the design.
22:30
SPEAKER_00: Right.
22:30
SPEAKER_00: This isn't about Kilby screwing up.
22:32
SPEAKER_00: Kilby is the case that shows even the good projects live on this clock.
22:35
SPEAKER_00: The opportunity is for everyone who isn't Kilby.
22:38
SPEAKER_01: The developer with a 60 megawatt site in the 25 to 75 bucket,
22:41
SPEAKER_01: who just got an RFI and has one person doing compliance part-time.
22:45
SPEAKER_00: Exactly that person.
22:46
SPEAKER_00: And the mineral owner or landman next door who's going to be asked about setbacks
22:49
SPEAKER_00: in traffic and water wells and who'd like the answers to match what got filed.
22:53
SPEAKER_01: Last piece of the collision.
22:55
SPEAKER_01: The Galdor story fits here too.
22:57
SPEAKER_01: Small team, rented library, model on top.
22:59
SPEAKER_01: The regulatory version of that is a small developer renting a structured record and
23:02
SPEAKER_01: a tool instead of hiring a 12-person permitting department.
23:06
SPEAKER_00: Problem and direction.
23:07
SPEAKER_00: That's all we're putting on the air.
23:08
SPEAKER_00: If somebody wants to build it, they can call us and we'll talk about the hard parts privately.
23:12
SPEAKER_01: Which is a good time for the field report.
23:14
SPEAKER_00: Field report.
23:15
SPEAKER_00: Practical stuff you can actually use this week.
23:17
SPEAKER_01: First, for anybody near a proposed data center or power project in Texas.
23:21
SPEAKER_01: Mineral owners, surface owners, landmen, county folks.
23:24
SPEAKER_01: Put October 19th on your calendar.
23:26
SPEAKER_01: That's the TCEQ update to the governor.
23:29
SPEAKER_01: It's the first time we'll hear the agency describe what the halt means
23:31
SPEAKER_01: for specific permit types.
23:33
SPEAKER_01: If you've got a project near you,
23:34
SPEAKER_01: that update tells you more about its schedule than any developer press release will.
23:38
SPEAKER_00: Second, for developers and the utilities working with them.
23:41
SPEAKER_00: If you were supposed to answer the ERCOT RFI and you missed the 5 p.m.
23:44
SPEAKER_00: deadline yesterday,
23:45
SPEAKER_00: ERCOT's notice says that gets reported to the PUC and the governor's office.
23:49
SPEAKER_00: Don't wait to be found.
23:50
SPEAKER_00: And ERCOT also says it may send follow-up RFIs with their own deadlines.
23:54
SPEAKER_00: Keep your record clean, because round two will ask you to explain round one.
23:58
SPEAKER_01: Third, read the subject two.
24:00
SPEAKER_01: Every release this week had one.
24:02
SPEAKER_01: Chevron's FID was subject to the completion of other necessary conditions.
24:06
SPEAKER_01: Galdor's goal was something TGS will support.
24:08
SPEAKER_01: Arena's tech will be open and extensible, eventually.
24:12
SPEAKER_01: When you read a release, find the conditional clause first.
24:14
SPEAKER_01: That's where the schedule lives.
24:15
SPEAKER_00: That's the confession turned into a habit.
24:17
SPEAKER_01: It's cheaper than a confession.
24:19
SPEAKER_00: Fourth, for the small operators and mineral funds, look hard at the Galdor shape.
24:23
SPEAKER_00: A small team that rents a big data library plus AI tooling instead of building it.
24:27
SPEAKER_00: You don't need to be in Norway for that idea to work.
24:30
SPEAKER_00: Ask your data vendor what they'd do for a small customer
24:32
SPEAKER_00: who wants their library plus a model under one agreement.
24:35
SPEAKER_01: And ask what happens to your interpretations.
24:37
SPEAKER_01: Who owns the output when you run their model on their data with your geologist's judgment?
24:41
SPEAKER_00: Good catch.
24:42
SPEAKER_00: That's the IP question Arena didn't spell out publicly either.
24:45
SPEAKER_01: Chevron is contributing intellectual property to Arena,
24:47
SPEAKER_01: so somebody negotiated what happens to it.
24:49
SPEAKER_01: We just don't get to see that part.
24:50
SPEAKER_00: And a small operator won't have Chevron's lawyers.
24:53
SPEAKER_00: So ask early and get it in writing.
24:55
SPEAKER_01: Fifth for anybody negotiating near one of these projects.
24:58
SPEAKER_01: The phrase to listen for is behind the meter.
25:00
SPEAKER_01: Right now,
25:01
SPEAKER_01: it's an open question whether behind-the-meter plants fall inside or outside
25:04
SPEAKER_01: the TCEQ halt.
25:06
SPEAKER_01: The governor's release doesn't use the term.
25:08
SPEAKER_01: If someone tells you their project is exempt because it's behind the meter,
25:10
SPEAKER_01: ask them which document says so.
25:12
SPEAKER_00: Sixth, longer range.
25:14
SPEAKER_00: December 10th is the ARCOT and PUC report built on all those RFI answers.
25:19
SPEAKER_00: That should be the first public picture of what all those responses say about water,
25:22
SPEAKER_00: on-site generation, and incentives across the Texas data center pipeline.
25:26
SPEAKER_00: If you're doing land or minerals work near any of this, read it when it lands.
25:30
SPEAKER_01: And the session after that.
25:31
SPEAKER_01: If incentives go away, some of the marginal projects on paper go away with them.
25:35
SPEAKER_01: That changes which pads get built and which ones stay a rendering.
25:38
SPEAKER_00: And the build list.
25:39
SPEAKER_00: One actionable item for this week.
25:41
SPEAKER_00: Take one project you care about, yours, or a neighbor's, and build a one-page record.
25:46
SPEAKER_00: Every number you've seen published about it.
25:48
SPEAKER_00: Capacity, water source, first power date, decision date.
25:52
SPEAKER_00: Next to each number, write where it came from and what verb it describes.
25:56
SPEAKER_00: Announced, signed, permitted, joined, built.
25:58
SPEAKER_01: And when two sources disagree, write both down.
26:00
SPEAKER_01: Don't pick one.
26:01
SPEAKER_00: That's a real example, actually.
26:03
SPEAKER_00: Chevron's June release called Energy Forge One a wholly owned subsidiary.
26:07
SPEAKER_00: The Kilby Project website now calls it a 50-50 joint venture between Chevron and Julent.
26:11
SPEAKER_00: Both are published.
26:12
SPEAKER_00: We don't know what changed or when.
26:14
SPEAKER_00: So on our one-pager, both go down.
26:15
SPEAKER_00: With dates?
26:16
SPEAKER_01: That's exactly the habit.
26:17
SPEAKER_01: Two numbers, both labeled, neither erased.
26:20
SPEAKER_00: And if you're a company working through any of this,
26:22
SPEAKER_00: whether it's turning AI subsurface tools into something your team actually uses,
26:25
SPEAKER_00: or getting a handle on what your data center neighbor is filing,
26:28
SPEAKER_00: that's the kind of consulting work we do.
26:30
SPEAKER_00: Email siliconandshale at gmail.com.
26:33
SPEAKER_01: Real problems, real data.
26:34
SPEAKER_01: We'll tell you if the answer is, don't buy that.
26:37
SPEAKER_00: We will absolutely tell you not to buy that.
26:39
SPEAKER_01: All right, messiest artifacts of the week.
26:41
SPEAKER_00: Rated, as always, in thread protectors.
26:43
SPEAKER_00: Five is a clean box.
26:45
SPEAKER_00: One is a protector you found in a ditch.
26:47
SPEAKER_01: Item one, Chevron's June release calling Energy Forge.
26:50
SPEAKER_01: Want a wholly owned subsidiary next to the project website calling it a 50-50 joint venture.
26:54
SPEAKER_01: Not wrong, maybe just old.
26:56
SPEAKER_01: Two thread protectors.
26:57
SPEAKER_01: Somebody update the boilerplate.
26:59
SPEAKER_00: Item two.
27:00
SPEAKER_00: A data center questionnaire where the water section carries possible criminal penalties.
27:04
SPEAKER_00: Not messy as policy.
27:05
SPEAKER_00: Very messy as a vibe for a form.
27:07
SPEAKER_00: Three thread protectors.
27:08
SPEAKER_00: Respect the stakes.
27:10
SPEAKER_00: Fear the form.
27:11
SPEAKER_01: Item three.
27:12
SPEAKER_01: Framework agreement for a strategic collaboration.
27:15
SPEAKER_01: Three nouns stacked in a trench coat pretending to be a verb.
27:18
SPEAKER_01: Two thread protectors.
27:19
SPEAKER_00: And a bonus from the cold open.
27:21
SPEAKER_00: A notary stamp that for one afternoon outranked every GPU in Texas.
27:26
SPEAKER_00: Five thread protectors.
27:27
SPEAKER_00: Clean box.
27:28
SPEAKER_00: Undefeated.
27:29
SPEAKER_01: Credits.
27:30
SPEAKER_00: Silicon & Shale.
27:32
SPEAKER_00: Practical conversation where the oil patch meets the algorithm.
27:35
SPEAKER_00: Siliconandshale at gmail.com.
27:37
SPEAKER_00: Every source we use today is linked in the show notes.
27:40
SPEAKER_00: SLB, Chevron,
27:41
SPEAKER_00: the Kilby Project site,
27:43
SPEAKER_00: TGS, ERCOT's market notice, the governor's office, and Semaphore's interview.
27:47
SPEAKER_01: If you'd like to sponsor the show and reach people who actually read the subject
27:50
SPEAKER_01: to clause, same address, siliconandshale at gmail.com.
27:54
SPEAKER_00: And if TCEQ says something on October 19th that changes what we said today,
27:58
SPEAKER_00: we'll come back and say so.
27:59
SPEAKER_01: One small ask.
28:01
SPEAKER_01: If this helped you find the real verb in a press release,
28:03
SPEAKER_01: a rating or a quick review wherever you listen helps other folks in
28:06
SPEAKER_01: the patch find us.
28:07
SPEAKER_01: That's it.
28:08
SPEAKER_01: That's the whole ask.
28:09
SPEAKER_01: And to the hypothetical notary named Brenda,
28:11
SPEAKER_01: you were the most powerful person in the AI economy for one Monday afternoon.
28:15
SPEAKER_01: We hope you got a good lunch out of it.