The Offshore Energy Podcast
Offshore energy and ocean innovation in the United States is transforming the way we power our nation. Join our hosts Ian Voparil and Jim Bennett as they discuss current events, innovation, technology, and the future of the offshore energy ecosystem.
With decades of combined experience, these two industry veterans bring a unique blend of expertise, humor, and captivating stories from the high seas of offshore energy innovation.
Whether you’re an industry expert or just starting to learn about offshore energy, The Offshore Energy Podcast provides a platform for meaningful conversation and exploration. Tune in to enhance your understanding and stay updated on the latest advancements in this exciting field.
Let’s embark on this journey together!
The Offshore Energy Podcast
Does Every Administration Flip Create Years of Offshore Energy Development Chaos?
For decades, oil and gas development in the Gulf of Mexico represented a model of political and regulatory predictability for all the world – companies knew that regardless of which party held power, following the rules meant projects could move forward. Today, that certainty has vanished, with each new administration seemingly determined to reverse course on energy priorities. This volatility creates massive challenges for industries where planning horizons stretch decades beyond presidential terms.
In this episode, hosts Jim Bennett and Ian Voparil are joined by Jon Hrobski, Policy Director at Brownstein Hyatt Farber Schreck, to dive deep into how political volatility has reshaped America's energy landscape and what it means for our offshore future.
Uncertainty affects capital investment. When offshore projects require billions in upfront investment and years of development before Forst Oil or First Electron, companies must factor in political risk. This political risk was once minimal in U.S. energy markets but has become a major consideration, potentially driving investment to more predictable regions.
Come listen and see how we can keep responsible, resilient development offshore moving forward.
Well, hey everybody. In the last few weeks we've seen an upheaval like no other in several decades now in the federal approach to energy policy. Ocean energy and offshore wind narratives have moved to the extremes, with the last administration approaching things from a no-holds-barred standpoint as far as renewable is concerned and opposition to conventional energy and the current administration pursuing pretty much exactly the opposite. Amidst these competing narratives, it's hard to sort out legitimate policy differences that can be worked on, as they are clouded by exaggeration and ambiguity. Let's try to separate the wheat from the chaff and clarify what the debate is really about Right now on the Offshore Energy Podcast at.
Speaker 3:I'm Jim Bennett and I have over 40 years of experience developing energy in the ocean. I'm Ian Valparo and I've spent the last 20 years developing offshore energy projects around the world, and this is the Offshore Energy Podcast energy projects around the world, and this is the Offshore Energy Podcast.
Speaker 2:Hey, how you doing, Ian. Hey, jim, good morning. I'm doing fantastic. How are you Good? And we have a guest speaker today, which we'll get to in just a moment, but we're going to be talking about a number of issues with regard to offshore energy and the developments that have occurred since the change in administrations Should be an interesting discussion.
Speaker 3:Boy. Jim, there is a lot going on. We see it, and we see it in all kinds of different facets and dimensions of it, both in policy shifts but also personnel changes, and we can talk about that all. I'm also very lucky not to be complaining about shoveling snow this week, jim. So for those of you in New England, here's to spring at March in like a lamb, in like a lion, out like a lamb. I hope it's true this year. My fingers are crossed, jim, how are you, and everything good with you.
Speaker 2:Everything's good. We don't have as much of a snow issue here in Virginia. We've had a cold winter, for sure, but it's not as bad as you guys face up there. But you know, if I can, I'd like to welcome John Robski to the podcast. He's joined us for our discussion today and I'll give a brief introduction just to let everybody know that he has very, very extensive experience with offshore energy, both on the Hill and with the Hill Energy. Both on the Hill and with the Hill, he served as deputy director with BOM's predecessor in the Minerals Management Service. He's been involved in and helped shape Outer Continental Shelf Energy policy for multiple decades now. He also worked with the National Ocean Industries Association, noia, and he's now the policy director at Brownstein, hyatt, farber and Shrek. I'd like to welcome you, john.
Speaker 1:Thank you very much. Guys Appreciate being on hey.
Speaker 3:John, it's great to see you, and now we have two DC folks and I'm the lone private sector representative. But I'm going to do my best too. Okay, I'm here to represent today, john. You know we wanted your take as someone who has worked so closely with policy and energy policy development over the last couple of decades. Now we're seeing these dramatic shifts, with each administration sometimes feeling like it's 180 degrees in the shift of priorities and, in fact, in the shift of priorities and in fact, in the shift of policies and even the interpretation of regulations. To me, from the private sector side, that's a lot of uncertainty. And how do we feel, or how do you feel, john, that uncertainty is affecting the development of energy, energy investment and the delivery of power to move the US forward into the future.
Speaker 1:Thanks, ian. I think the point you're making on uncertainty is the one that I agree I find the most bothersome. You know, as somebody who, within energy, kind of cut my teeth in the Gulf of America, the hallmark of dealing with offshore was that you know there were other basins that maybe had as much potential, but everyone knew if you did business in the Gulf you lived by the rules, you operated safely, you were going to be able to go forward, and that was whether Democrats were in charge, republicans were in charge, didn't matter, and so you could attract people. You got huge lease sales. You know, when Jim and I were at the agency, back when it was the Minerals Management Service, we were there for lease sale 206, you know $3.6 billion in revenue in that one lease sale. Yeah, that was obviously great geology, but it also certainly had to have been based, at least in part, on predictability of being able to move forward on projects.
Speaker 1:And so you know, and this shift, it didn't happen overnight, it didn't happen with the Biden administration and what they thought of offshore oil and gas, and it's not just happening now because of the Trump administration and how they think of offshore wind. It was a slow burn and obviously Macondo, deepwater Horizon, whatever term people want to use. That's where a lot of this started and the regulatory regime changed significantly, but that's really been, in my opinion, that certainty for the entire offshore, regardless of form of energy, that has really entered the equation. I don't think the offshore wind folks had previously dealt with uncertainty in the same way that offshore oil and gas had, and so I think that dynamic obviously is new right now, but I think now anyone in the offshore energy industry is looking at the world through that lens and that's unfortunate for any business planning, regardless of sector, regardless of if it's energy, uncertainty is obviously the enemy of being able to long-term planning and stable, investment.
Speaker 2:John, I think that's a great point and probably the most fundamental point going forward amidst all the issues that we're hearing about, and I do think that in order to be able. First I want to say it's interesting that you brought up the certainty associated with oil and gas in the Gulf of America, as you say, because that certainty is something that developed over a long period of time and in the wind industry, in a very short number of years we had auction bid prices that exceeded some of the longstanding oil and gas activities in the Gulf of Mexico, and now we're back to a different situation and all of it revolves around the uncertainty that you're talking about. But to my mind, as we talk about uncertainty and have this discussion, one of the most fundamental things is a common language. We have an awful lot of discussion of things that we don't really have the same understanding amongst the various parties.
Speaker 2:Just as an example, we're hearing about the intermittent nature of wind and while those people who are in the wind industry or associated with it or educated about it, know that it's not really intermittent, it doesn't shut off completely. There's certainly fluctuations, but there aren't any sort of energy development. But it's measurable and it can be planned for, but the narratives grab things like that and just the whole concept of transition is another example and we'll get to that in a minute. But the language becomes a difficulty for us to discuss, to move forward. Any thoughts on that?
Speaker 1:To move forward. Any thoughts on that agree? I think that, um, neither side has decided it's in their interest to raise um the other side's version of events and and things that may matter to them, and so you end up with people probably intentionally talking past each other. Um, and to your point, for those who want to have an intellectually honest policy debate, it often feels like there's no space for those people.
Speaker 2:But don't we need that, don't? We have to have that in order to be moving forward.
Speaker 1:Yeah, I certainly. You know, we get better outcomes as government, better outcomes as citizens when we end up being able to be transparent. And you know, I think that the politicization of energy in general is just it's at the highest levels I can remember general is just it's at the highest levels I can remember. Um, and I think that really um again, both sides of these competing talking points and use whatever information they think advances their agenda but let's, let's play this a little bit, jim, what kind of politicized language have you heard?
Speaker 3:And we can play both sides of this, you know, because I think it's important to show that there are some real fundamentals that we all should understand, respect and move forward from.
Speaker 2:It is.
Speaker 2:It is absolutely on both sides, and the one example I gave about intermittent wind and the nature of the use of that term to suggest that it's unreliable or not predictable is one example.
Speaker 2:But I think the more fundamental concept of an energy transition is something that is viewed very differently by different participants.
Speaker 2:Have this concept of an energy transition, of total movement from conventional energy and fossil fuels we're going to flip the switch and just be 100 percent renewables. In fact, many of the states have long term goals that are based on 100 percent renewables, and I don't think that's what the transition is, or I don't think that's what you're going's what the transition is that you're going to see, the transition is going to be a combination and we throw the term around all the time, all of the above, but it's going to be some kind of mixing of things that hopefully will be to the best advantage of the public and the American people, and that's another example. Transition to me means often suggests replacing one with the other, either in whole or in part, and I don't think that that's the case. I think we're really looking at something more along the lines of energy addition, given the fact that energy demand is going to continue to increase and all sources will be needed.
Speaker 3:I think what we've seen, certainly through the history of energy use in the United States and probably the world too, is we've seen shifting sources over time. And if we go back far enough, you know, wood was the number one source right, and coal was the number one source in the US until the 1950s, and then petroleum products and then natural gas came on in the 80s, and coal was the number one source in the US until the 1950s, and then petroleum products and then natural gas came on in the 80s. And so we don't see energy dips in consumption. As those sources change. We see pretty stable and in fact often rising energy consumption. And so, jim, I think the point around energy addition is really important we were all thinking about.
Speaker 3:I know those of us in the energy business are thinking about data centers, right, and the potential Dramatic use of energy, and that's still that is still happening right now. We're in the middle of that transition and it Projections may or may not be right. We'll see. There's a lot of new technology, but we don't think our energy use or consumption is ever going to decrease in the United States in the reasonable future. So indeed, it's all of these different facts and that part seems to be missed when at least administrations are flipping from preferred source to preferred source. And, john, that's, you know, that's. How do we keep that, that foundation, sorry, that foundational discussion, still front and center in the discussion?
Speaker 1:That's so normal for all of us in the energy industry. Yeah, these are all great points, I think, ian, to the point you made, you look up historically and even wood you go through that is still consumed at a higher rate and used for energy purposes as a higher rate today around the world than it ever has been. And you can keep going through all the other materials and you end up getting to that place. Jim, I think transition has been bastardized to the point that you were the one who said it that there's a good chunk of people who believe the word transition really means replacement and again, you guys are both saying this and I wholeheartedly agree Energy right now.
Speaker 1:The only way I think one can be intellectually honest about this is that it is additive and demand, if anyone believes. You know demand forecasts in the future and they could be wrong, but everything we're seeing tells us we need so much more Energy. And the Department of the Interior, respectively, both talked about fears of future blackouts and the inability to be able to handle. You know, I live in Virginia as well, along with Jim, and this is a part of the country where data centers are really active and the governor wants to bring them in and they're trying to figure out how do they power that?
Speaker 1:we don't have a lot of nuclear here in virginia. Maybe that's something that's going to be part of the mix. Obviously there's the huge dominion offshore wind project. Is that part of the mix? There's a lot going on but um uh, you know this additive doesn't seem to be. When you hear either side talk about what they want going forward, you don't really hear additive on either side.
Speaker 2:I think that's a great point. That's a great point and with regard to conventional energy, notwithstanding the larger arguments about climate change and the like but in terms of having the resources in conventional energy, we have this longstanding presumption of finite resources and we're going to run out. And yet, although that has an intuitive appeal to it, my experience has been from a practical standpoint. I'm not sure that's the model that is most useful. And when we talk about what we can do in different portions of the energy mix, do we have the information? Do we really have a good handle on what the conventional energy resources can and should be over the next couple decades?
Speaker 1:You know when I think about this issue, jim, there's a crowd out there who doesn't like energy, doesn't want new energy, would prefer that we consume less, and I think we all want efficiency. But in terms of you know Ian made the point earlier that's not how this is going to work. And, truthfully, for most Americans, they want to use their iPads and their computers and their cell phones, etc. And that's not changing. I don't believe their iPads and their computers and their cell phones, et cetera, and that's not changing. I don't believe. I don't think we're going to tell the American people, hey, you're just going to have to use less and get used to it. And I think where that comes is, you know, we go back to the Gulf. I think the Gulf has produced six, seven times what the original estimate was and is still chugging along and looks like it has a long life.
Speaker 1:The history of energy is the more you look, the more you find. And you know, you guys both know the types of folks who work at some of these companies, these engineers. There's a lot of brilliant individuals who you show them a problem. They eventually figure out how to get to. Yes, you even think about recovery rates and you look at what's in the rock and you know just, you move that up by percentage points and the amount of energy that somehow comes out of the ground becomes that much greater. I think there's a lot of technology still to make its way. We haven't seen AI dominate the field yet, but it sounds like and feels like that's what's coming next. And so I think that from that standpoint, the concept that obviously there's a finite, but I think we're so far away from reaching anywhere close to where scarcity is an issue. And I think, politically, there's a crowd who enjoys talking about scarcity because it tries to force the conversation in another direction, and I think that's it's just inaccurate in my opinion. But, jim, I think to's crowds in the US who don't want us to know information and and prefer kind of living in this scare tactic world. And you know, from somebody who really wants to see as much certainty and as much policy into the decision making. You know, the three of us have talked previously.
Speaker 1:Nobody wants to drill for oil where there's not oil. This is simple, right? That should be a pretty simple concept. Should be a pretty simple concept. But you know, for basically almost the entire East Coast, the Pacific Coast, alaska.
Speaker 1:Most of our data is really old and used with technology that produced the video game Pong instead of, you know, playstation 5. And that is the difference we're dealing with, right, and you know the seismic that was shot was shot down to 10,000 feet or so during that time, because that's where you explored to using really old technology that, as you know, jim, the BOEM folks are constantly reprocessing and using new computer technology to try to get better use that same data set and get better answers out of it. But at the end of the day, it's only can do so much. And so you know, I'd love to be in a world where we were talking about this place doesn't have any, so let's quit talking about it. If somebody wants to take it off limits, that's great.
Speaker 1:Let's talk about where the energy is, and that doesn't mean we should go after every single drop and every drop, every single inch. But you know, one of the most frustrating parts of my long career in this space has been geography and geology do not match. You know, cartographers never drew their maps to match the geology, and I'm not saying they should, but there are a lot of people I encounter who think that when you have the three by three square blocks in the outer continental shelf. That means that there's an equal amount of oil and gas underneath each block, and so we're really just making a decision of this area. Sounds like it's good to explore this area. Seems bad and, as we know, that's not how nature created things, we can help them.
Speaker 3:We could do a podcast on that for sure, john. I do want to touch on a couple of points from a private sector perspective too. I think in the total mix and we've been focusing on conventional and mostly oil and gas resources for our discussion you're highlighting what I think is exactly the problem. Oil and gas development offshore because this is the Offshore Energy Podcast in any greenfield or new basin takes more than an administration. There are so many different factors that have to be prepared in order to potentially successfully develop a reservoir. In order to potentially successfully develop a reservoir, produce oil and deliver it to a market. It's more than four years and, as you were saying, the costs of doing offshore exploration are quite significant. And so even exploration wells in the deep water, even in the Gulf of Mexico, where the technology exists you know there's a, there's an ecosystem that's ready to build into are still incredibly expensive, and putting the capital at risk.
Speaker 3:From a private sector perspective, to go drill an exploration well is a pretty significant decision. I can't imagine a lot of folks who are thinking well, now that there's this other opportunity on a new coast, in a new green field. Think of it. You could also say in a new country, as I used to do. The political risk factor is much higher in the US than it used to be. Not even to speak of the potential. Ge know, the potential geological assessment, the potential other technical and market developing factors. This is one of those key conundrums that I feel like we're we're getting into as we flip, you know, every four years. And so where should we go to have these? You know, what I would say is substantive discussions about the timelines that it takes for potential success, while also recognizing the environmental concerns and addressing them appropriately. So we're not just flipping a light switch back and forth.
Speaker 1:Yeah, there's a, you know, a real practical question of how does one move the needle, and the answer is it's really hard, especially living in a world of the United States Senate and 60 votes. Could you get a bill to look a certain way? Obviously, that's been really hard to achieve. Budget reconciliation, which we are going to see happen relatively soon, I believe, is going to do certain things, but it's constrained in terms of its revenue impacts and how they write things, and we'll see what that looks like. If I'm, you know, getting I don't know that it's a full magic wand, because I'd probably ask for different things if you gave me the full, but if partial, is there a market-based solution where Congress could encourage seismic companies to shoot speculative seismic and the government get the data, possibly contract for that information and then use market-based solutions to recoup that revenue? You know, obviously we're living in a world where the government's going to be more serious about looking at its finance and the value of programs, and so, you know, in order to move forward, you would think you'd have to have something that could offer return to taxpayer, but that would really be. The question is, you know, can you shoot and obviously you pick the most prospective areas that have a chance.
Speaker 1:You know, I remember during 2008,. You guys might recall that summer I don't remember exactly what day it was, either early July or late June Oil hits $145 per barrel and you can imagine the Bush administration was in complete scramble mode of what do we do about this? And, of course, as was Congress, and so you go up to Congress and explain to them well, it's going to take two and a half years for us to write a new five-year plan, and that's when we can deal with this. And your problem is now, and I just always, I mean with energy, again, conventional renewable. There's so many of these stages where you look back and say, if we had just done x, we wouldn't be in this situation today. And so you know, I recognize that's always going to be the case, but I would love better information so that we're actually debating about.
Speaker 2:I mean, so during that 2008.
Speaker 1:You know, the discussion we had with a number of folks was well, look, if you're telling us no law exists and just go get the energy out of the ground, well, the answer would have been Southern California, right, like there's existing infrastructure and we know there's a ridiculous amount of oil off Southern California. But the politics are what they are. It's not happening. I'm not advocating to be off Southern California today, but the point being is, we, you know, as policymakers, we have this. We have this fundamental misunderstanding maybe intentionally in some cases of where the resource is versus how we actually make that happen and the laws we use to. And so, you know, that would be a point of contention where, boy, it would be great if we lived in a world where this is where the resource is. So why don't we have that discussion?
Speaker 3:We can sharpen that discussion.
Speaker 2:Absolutely that's it.
Speaker 3:John, you were mentioning potentially going and shooting seismic to understand the geological resource. That actually is something that could be done in the period of an administration, right, and seismic could be done in a way and with time and with experience that we've learned, in a way that helps minimize potential environmental impact. Right, we all know that sound and marine mammals are always of concern and need to be well studied, and that's a real topic that's been well studied in the oil and gas industry and now also the offshore wind industry with a different type of sound. So that could be done and I think think that could be done successfully to update our current understanding of geology. I do want to give a shout out to DOE, to USGS, because there is an awful lot of, and, of course, to BOEM, for the offshore part.
Speaker 3:There is an awful lot of information that we do have on the natural resource assessments of the united states related to fossil fuels and also renewables. Right, I don't want to forget that part of the discussion too, because they're they're good databases out there. There are great maps out there. They don't always have, um, the particular commercially sensitive geological layers in them. That's more confidential and the agencies get to understand that and the private sectors collected them do. But I think we do have a pretty good understanding of where we would want to look and prioritize looking for additional oil and gas resources.
Speaker 2:I think the basic point there, john, is very solid and that's about better information, and it applies both to conventional energy, in the example that you've given there, but of course it also applies to renewables, and I think we're facing the same issue as far as sharing information is concerned, so that we make better, more well-informed decisions.
Speaker 1:But let's Jim on that point. I'm sorry, go ahead If you don't mind. Ian brought up marine mammals and that issue, as we know, is only getting more significant. In the Gulf, you've got rice as well and everything that goes on with that. In the Northeast, you've got North Atlantic right whale, and while those species are very serious and the conservation efforts matter and I certainly want to see those take place you also do see, this is where the unfortunate, you know, one side has one view, one has another. One side really seems to care about rice as well and North Atlantic right whale. Things happen and they, you know, everyone says it's not that big of a deal and vice versa. And that would be another point, I think, in terms of frustration of we've got these two whale species, we've got other things going on and yet how the interaction with the federal government and how the industries push various things are different and you wish we had a little bit more uniformity there.
Speaker 2:Sure.
Speaker 2:Sure dude, I think everybody is in favor of that, but let's dig a little deeper into the economics and the collection of that information that you're talking about.
Speaker 2:The economics of conventional energy and the economics of renewable energy are really, really important in terms of I'm going to use the S word here subsidies in terms of grants, in terms of research and the like, and what moves forward in terms of collecting the information that is needed. I want to ask, because I feel like, just like a lot of information is hidden for proprietary reasons, there's a lot of information just about who's getting what. So who's getting what in terms of subsidies, grants, et cetera, to move either industry forward or other industries, nuclear, et cetera. It just seems to me that, despite the fact that it is all embedded in law, somehow we don't know a lot about where the subsidies are going, how much is really being, and whether those assistances to industry, whatever the industry is, are appropriate for where they fit in the energy mix. Any thoughts on that in terms of the costs that are associated with developing an industry and what the government is contributing?
Speaker 1:Yeah, I should start with the caveat that, guys, I've spent the majority of my career working with the committees of jurisdiction and the agencies that do the authorizing of the activities, which means that I'm not a tax expert, and so, as I'm going to opine here, I fully recognize that I certainly do not have all the information, but that, jim, I think what we have learned over time and seen probably to really brought a magnifying glass on the matter was the Inflation Reduction Act and the tax version of what that meant, and seeing these reconciliation bills and I think we're about to see this again in. Whatever the Republicans end up doing or not doing and that's where Congress really obviously has decided to influence the outcomes is not just we're going to give you a lease because we're going to leave that to the agencies. We're going to give you an area to develop Maybe there's private area on shore that people are doing but instead what we're going to do is we're going to incentivize and say that you have, if you invest into project. We're going to give you the ability to write off taxes for certain activities. You're going to get what they call fully refundable tax credits, meaning you literally get cash back from the government for certain activities and so clearly trying to create a market in a world where you know, for offshore wind we know that was done intentionally of these projects are huge, they're expensive, they require long lead times and, as we know, the profit margins on offshore wind are not great and instead they're just long right.
Speaker 1:Like you make up oil and gas your profit margin, if it hits you're going to do really well and you have a lot less certainty you might drill a dry hole. Some other factor might happen Offshore wind generally better known in terms of the resources that are out there, right, people know the wind speeds generally, but that margin is small in terms of profit. But your project might operate for 30 years and so that's the trade. And so Congress made a determination to try to accelerate getting Jim and I think this is one that you know the Trump uncertainty in terms of what might happen with offshore wind. We're going to see about individual projects, but if Congress takes away some of those tax benefits from the Inflation Reduction Act for the offshore wind industry, it's going to have, in all likelihood, as significant an effect as some of the authorizations and approvals that they're going to be looking at as part of this future review.
Speaker 3:And John, I wanted to get your thoughts because this is now interesting space for me not working close to DC, so to speak, anymore. It seems like politically, rising costs of energy are bad. Let me keep it super simple, right, rising costs of energy are bad no matter where we get it from, and there's also different levels of kind of inherent cost of different types of energy production, and some renewables are cheaper to produce right now for an equivalent amount of energy as hydrocarbon resources. All of that gets more expensive, no matter what type of energy it is, as you move it offshore, and so our tax policy, you know is, is often used to help grow also the economic benefits you know. So we have this complicated arrangement here where we generally want energy to be at a point where it's not too expensive, but expensive enough to allow domestic production right, because that also has additional economic benefits. And it seems like the way that we set those for oil and gas, for other kinds of fossil-based fuels and for renewables is awfully politically fraught, right, but at least we can agree the principles. We need to find that sweet spot of range that allows people not to suffer in the amount of money any of us as individuals pay but still supports a robust economy to help US with domestic socioeconomic benefit of that.
Speaker 3:These are really complicated issues that seem like they work their ways through markets over a lot of time, with a lot of other factors involved, of course with oil and gas, and then it's a. There's a lot of geopolitical pressure on costs, as we all know we can talk about too, and with renewables it's also the development of an industry that hasn't yet matured. You know, the cost of oil and gas development offshore in the Gulf of Mexico were very high a few decades ago, and there were similar tax policies to help incentivize development, because we wanted a national resource and we wanted a thriving industry that employed lots of people and created wealth for America. I can also see that I personally bought into that vision for offshore wind too. But clearly there's a very fine political line to play there that our elected politicians have to dance with all the time. How do we get it back to fundamentals so we're back all in the same playing field and not just picking a side right? We need all energy to be in that sweet spot, not one type or the other.
Speaker 1:All great points, ian. I wholly agree. Deep Water Royalty Relief Act yeah, I think of 1995. You know what I'm talking about Exactly. Yeah, absolutely Regardless. You know, one can look at whatever the revenues ended up being during that time. But I think a lot of us would say, regardless of if it was a net positive or negative, the long term implications of having a robust Gulf has benefited all of us and, you know, has led to great jobs, but also energy security and enhance that. And so I think that's where you do look and say to yourself, financially, what's the right answer? Even if there may be a short term that it's not the most beneficial financially, does the long-term benefits outweigh that, that it's not the most beneficial financially? Does the long-term benefits outweigh that? And that's something that's hard getting people to discuss when you get people running to their corners, which is where it feels like we are right now, where I wish some of this discussion.
Speaker 1:As you probably know, in the Inflation Reduction Act there was a mandate on some of the US territories and, as we know, you know, as you probably know, in the middle of the Pacific you're having to ship diesel, you're having, you know, everything's expensive. I get offshore wind is expensive compared to other sources of energy today. Maybe there's some places where you could find a shift to something that's cheaper. I acknowledge that could occur. Some of the territories. That's not possible. Does offshore wind make a ton of sense off Guam or some other areas that you can't get conventional resources and are unlikely to in the future? You know, to me I wish we were having more of those discussions of okay, so we're. You know, not everything makes sense everywhere, but in all likelihood it makes sense somewhere. Wish we were having more of the somewhere discussion on all types of energy.
Speaker 3:And I'd just like to say as a former employee of an international energy company, those companies of that size and scale and global reach have those discussions around particular countries for investment too, and I just wanted to kind of circle back to that initial point. The US has long been a focus of investment for many companies because of its stability. We have lots of natural resource potential, we have a strong rule of law, we have a relatively, I would say, predictable political system, which doesn't exist in all parts of the world, and so the US has often been favored as a place for investment as opposed to some other nation in the world that may be less stable. We've got to get there, we've got to keep that in mind and make sure that we retain that favored investment status, and I don't think we're necessarily going to lose that right away.
Speaker 1:But these kinds of fluxes for long-term investments flexes every four years, everyone does recognize think that at companies that have large capital are going to ask themselves if I invested in an energy project in the United States and a different political party comes in, am I going to still be in a position where we get to move forward? You talked about four years. Isn't enough. You know, president Trump is obviously term limited. So we're going to get a new regime in 2028, election 2029 starting, no matter what, and you know whether that's Republican or Democrat, that's going to be got to be a question that all of these companies are saying do I invest in the U S now? Do I invest in the U S then?
Speaker 1:But even you know, even for offshore wind, if you say president Trump's an anomaly and you know I've heard a lot of companies talk about, look, we're just going to wait four years and we'll see what happens, okay, so, so maybe you get the regime in place that's more favorable to you. What happens four years from then? And I think that's the reality and I don't envy anyone having to make those economic decisions, because I think that goes back to our original point on certainty, right.
Speaker 3:I fully agree, John. Those are the discussions that occur in major international corporations.
Speaker 2:Getting back to our discussion of where government puts its resources to move forward in the diverse energy all of the above strategy, I think we need to be very mindful of where we're putting our money, and I think one of the areas that makes sense to me is in technology, as we've talked about several times now, and this cuts across energy sources. I think we have demonstrated multiple times where government puts some seed money into an industry, it's a very positive thing for the long run. I guess the problem there is where that gets either beyond what's reasonable or in terms of what the technologies are, or beyond just exploring for new technology. So I think that's one area where an energy industry, and in particular the wind energy industry, is in a good position for justified subsidies, if you will, or assistance from the government. Any thoughts on that, john?
Speaker 1:Yeah, I think this question on technology in general is you know, you think about small modular, nuclear, and are we going to see something on that front? Again, I think all of it ends up being additive, but and so how do we, how do we make sure that that we can continue to power our lifestyle that we're all going to want and are accustomed to? And that really, ultimately, is the question. I think, Jim, Congress is going to be dealing with the inflation. They're going to amend the Inflation Reduction Act. They may get rid of it and we may see a completely different mix. Again, from an investment standpoint, that uncertainty creates a lot of issues and we're going to see where that goes. I think, long-term it really, you know, I don't know how this ends up unfolding.
Speaker 3:We'll see sets up unfolding. We'll see. You know, Jim, one of the challenges I've seen is that demonstration scale projects have all of the complexity of regulatory and permitting, as well as, of course, engineering and siting and commercial agreements as larger scale projects in the US, and I do feel like there's an opportunity somehow to focus additional government support on demonstration scale. I'm saying this also from a very proud perspective as a US citizen who hopes that the US continues to develop the technologies that change the face of energy around the world. Okay, so I'm going to say that very plainly.
Speaker 3:First, I would love to see us help facilitate demonstration scale projects of a number of different types. You know again, not necessarily picking and choosing which type, but that's a clear gap between smaller things that often can receive private and or venture funding, larger things which require much commercial project finance. Somewhere in between is a sweet spot that I think is often referred to as the valley of death in venture capital. But making that connection more clear and giving government support in that space might produce really tangible benefits. You know, generations down the line.
Speaker 1:I really like that point and I think that's that's excellent and it you know the you know if. If I look at offshore wind policy in general, as you know, if I look at offshore wind policy in general as you know, if one's going to look back and say, you know, obviously there's always mistakes everyone you know. That's not criticism, but was there too fast of a ramping up and too much and not demonstration early and dealing with some of the issues? And that always happens. But I think that had we had more of that and scaling probably would have led to maybe a different political climate than we're in today.
Speaker 2:Yeah, that's very, very possible. I think that's a great point, ian, in that whether that specifically is the criteria or the way to go is not the point. It's that we identify some kind of criteria. That is the basis for justifying the kind of expenditures that the government should be making on things. No-transcript and the reason I say that is not because it doesn't exist. It certainly does, although our new energy secretary has pointed out that it's probably fifth or sixth on the list of major public policy issues that needs to be addressed.
Speaker 2:I think maybe some adjustment of our thinking with regard to climate change as an existential threat to justify anything and everything that goes into anything renewable needs to be quite. We need to take a look at whether that's really a really good justification, and I think we're facing a situation, basically, where the really inconvenient truth, if I can use Al Gore's phrase, is that as a society, both domestically and globally, we are not embracing what needs to be done. If the objective is to get back to carbon levels that are pre-1970s, and in the face of the fact that that simply is the case, we need to be making decisions based on what's going to happen in that environment. I think it's just something that we need to open up our minds to a little bit in making decisions about the way resources need to be deployed to make sure that our energy future is sound.
Speaker 1:Jim, that's an awesome point, and I agree climate change is real, it's happening, we're seeing it, we see the effects. You know, from a geologic standpoint, I just read the other day that in the history of the planet, only 13% of the time has ice existed, and so you know there's been massive changes over time, obviously from a geologic scale. But I think the bigger deal is what we talked about earlier, and I'm as guilty as anyone from the standpoint of I too don't want to give up my phone, I too like driving my car, I too like heating my home. We, as Americans, want the conveniences that have been created and want more that we don't even know about today, and that's going to keep happening. And so you know the question.
Speaker 1:That and this is where it's really uncomfortable, when we have a lot of other countries in the world that aren't going to take some of the same steps, there's a lot of policymakers that I would tend to agree with that say to themselves why are Americans going to hamstring ourselves if carbon is going to continue to go at a higher level because other countries are going to do it?
Speaker 1:You know, as you probably know, carbon levels don't change locally. Like you measure carbon throughout the world. It's at about the same number, no matter where you are, and so you know if we choose here to limit our carbon. But other countries continue the Chinese in particular, the Indians continue to push way more carbon out. You know you have to ask yourself why are we harming ourselves economically? And instead, I think you know my own view is adaptation is where we're going to have to be, and whether that's awesome or not, you know, I don't think anyone wants to deal with more severe storms and some of the effects that might be coming, but I think that's life and I think economically, that's where the Americans are going to end up, taking us from a elective standpoint, and you're going to see that over and over in elections. My belief.
Speaker 2:I think that's a practical issue that we have to be realistic about for future decision-making.
Speaker 3:Well, that was an interesting turn, you guys. As a former ocean scientist, I'm glad you guys both still understand that there is a challenge with a lot of CO2 in the atmosphere. I agree with some of the points. I'm not sure I wholly agree with some of the points too. Jim, I wasn't quite sure what you were saying there.
Speaker 2:I'm just saying we need to be practical and realistic about what decisions we can make and what changes we can effect.
Speaker 3:I mean, I certainly agree with that. That's nothing to disagree with. I do think one of the things, john, that I've also experienced in my own personal thinking is that we also have to understand the deployment of government resource, and does it make sense to battle it on the front end or the hind end? You know, I come from the Gulf Coast. I spent a lot of years there, and hurricanes, flooding, coastal change are all real issues. Not all of them are wholly related to climate, but some of them are, you know, and there's some fraction of them are, and those are big disruptive issues that affect everybody and can really have catastrophic effect on people. So, you know, I also feel like there's.
Speaker 3:We do have to have a practical assessment of which side do we want to spend money on the side that creates opportunity, employment for the US, or the side that has to recover from disaster?
Speaker 3:And I do think that you know. Hey, we've seen China move very quickly into renewables, for example. Right, china produces solar powers cheaper than anywhere else in the world because they've gone full tilt into producing solar panels for the world. That's the reason why solar production is the cheapest cost of energy production in the world. They've also moved very strongly into offshore wind, and I think and I just want to tease apart I'm not sure they're necessarily doing it because of a belief in climate change. I believe they're doing it as we ought to as well, because there's an opportunity to lead the world in the technologies of the near future, and that's just one of the things. I do think climate change and the challenges of addressing all of these issues are the economic opportunities of the next few decades, and I sure want the US to be front and center and have very strong economies built around those that we can export as well too, not just here in the States.
Speaker 1:Yeah, I think, ian, on that front, just on the China front, I also think that there's a national security angle they care about, and while they're moving forward I mean, china is the all of the above, and they are building more coal-fired power plants than anywhere in the world as well, and, to your point, I don't believe any of it has to do with climate.
Speaker 1:I believe it's about trying to create sustainability for them in the event that there gets into either economic or other hostilities, where they're not reliant on Middle East oil or anyone else's oil, and so they want to have resources that they have in place in country. And so, with that said, I don't disagree, the US should be a leader. You know, we have these wonderful national labs where a lot of great work occurs, and I'm very pro them. But you know, I think on the climate front to your point, and hurricanes and other damages are very serious, very real, I agree. Clearly, the strength intensity is something that we all need to worry about. The strength intensity is something that we all need to worry about, but, you know, I think the obviously there's a lot of trade-offs with the Chinese model, and so, but it's a good discussion.
Speaker 3:I think there's fair points on a lot of sides on that. That'll be a great one for another time, yeah.
Speaker 1:Yeah, that's right.
Speaker 2:Yeah, you got several podcasts. Great one for another time. Yeah, yeah, that's right. Yeah, you got several podcasts right there, for sure, john. I want to ask you one last question, if we could, before we wrap up, and that's that I'd like you to just take the opportunity to let us know what you're thinking is the most important thing or the most consequential thing that is going to be happening and will have long-term effects, but it will occur in the short to midterm or something like that, but just what you think is the most critical issue for the near term.
Speaker 1:I think we talked about this a little bit earlier. But we may find out that artificial intelligence is not as difficult to supply from an energy standpoint. That's certainly possible. New technologies may come out where the consumption is not as great as we think it's going to be. But if the folks who seem to know this stuff certainly a lot better than I do are anywhere close to accurate, we have an energy problem in this country and we need more of it. And I really fret about, you know, the crowds of individuals. Well, I don't want it here and I don't want to see this thing and I don't want to. I don't want to worry about this. 150 miles off my beach, you know, there's a lot of this, that type of talk where you just think to yourself collectively like we have to have answers, because this is going to get built and none of us want to live in a world of blackouts, and I just think that there's less seriousness about what's coming and the need to be able to power it than we're having in this country.
Speaker 3:so that that's probably the top one today, jim ian, any uh, uh, wrap up thoughts that you want to. This is a really thought-provoking conversation. Uh, jim, john, you guys both brought up interesting points that I think were, uh was important to think through. You know we've talked about some of the challenges of the four year flips. We've talked about the need for increased energy in the country to continue and that we don't see that abating anytime soon. We've talked about the opportunities for national security through domestic production of energy and, john, you know you really hit that point home to me and we didn't even talk about what's happened in Balttic pipeline subsea. You know, over the last few years either, and, um, and, and yet that somehow seems incredibly pertinent to today's discussion. So, um, there's a really expensive, thoughtful discussion and I appreciate it really appreciate your guys time enjoyed it.
Speaker 3:Thank you it and jim, you know, one of the things we do every week, just off the topic, is any last drops in the ocean. For this week, john, it's where we share any other you know offshore energy related type of information that wasn't necessarily in our larger discussion. Do you have any last drops you'd like to share? This week? As our guest, you always get the opportunity to go first.
Speaker 1:I'm an optimist about offshore energy in this country. I think there's still some really great opportunities and some it doesn't. You know. For me, just as and I don't have any economic interests, this is just me popping off marine hydrokinetic feels like something that I'd love to see more activity around. I think that you think about parts of the ocean and where currents are and Gulf Stream, etc. And where currents are and Gulfstream, et cetera. It feels like there's some opportunities to have renewable resources beyond just talking about offshore wind. As we talk about the OCS, obviously there's tidal, there's wave, there's other, but the hydrokinetic to me, I just think about, you know, obviously maybe the currents are going to run at different rates, but the there's certainly. It feels more like hydropower as it relates to having some consistency on that front and and um, you know, I'm sure we're decades away and somebody else will come up with an idea at some point, but that would be one that I would love to see more attention around, because I think it could solve a lot of problems again.
Speaker 3:Welcome to the club, john. There's definitely a passionate small community who continues to think very much the same way, so it's good to hear you're coming in. I'm going to get you your membership card soon, jim.
Speaker 2:Any last drops from you um, the last drops for me is that we talk a lot about the long-term uh things that are needed, like informed decision making, which I which I'm even more strongly uh feel about after this conversation, uh but the more immediate stuff is, uh, uh, what's going to happen to the projects that are right now on the cusp? And I think we need to pay a lot of attention to that, because all of the discussions about long-term information needs and everything else are going to be greatly hampered if some of the projects that we've approved do not move forward. And I think we need to pay very, very close attention to the opportunities to move the approved projects forward. We haven't heard anything from the administration specifically about that, even though there's the possibility. And if we don't and we do move forward, I think it opens up all of the issues that we've talked about today in a very constructive way.
Speaker 3:Thanks, jim, jim and other listeners. You may know that I'm also kind of dabbling in the blue economy right, which is a broad term to describe all kinds of ocean and marine innovations, including around renewables but also other sectors, and I went to a really interesting forum down in Newport, rhode Island, a few weeks ago which was focused largely on the blue economy with a very particular bent to it the blue economy around naval systems and, as many folks know, newport is home of the National Undersea Warfare Center. Many folks know Newport is home of the National Undersea Warfare Center All kinds of interesting technology being developed by the Navy. That includes all of the things we've talked about the opportunities for autonomy, remote systems, use of AI and other kinds of digital language to help improve activities, and my primary thought after experiencing a really fascinating series of presentations was the similarities between that world and energy, particularly offshore energy, are huge. The opportunities for collaboration and development of technology that might be dual use for both military and or government as well as private sector, is off the charts, and so I can't wait to spend more time exploring that space and finding opportunities to help make those connections.
Speaker 3:And my second point is one that is more uncertain and a reflection of the times. We recognize that the doge is busy at work and there are a lot of folks in federal employee who have recently lost roles, been downsized. I know folks at NOAA have been impacted, folks at Department of Energy and even recently I heard folks at the VA were impacted. I'm not going to go on a soapbox about this but I will say the VA was responsible for the last 10 years of my stepfather's life, his medical care and I met an awful lot of really compassionate folks at the VA who helped him through that tough time and I certainly think all of our veterans deserve that kind of support into the future. I really hope that's not impacted, but I'm fearful it will be. That's my last, last drop for this ocean.
Speaker 2:Okay, we appreciate that, ian, and we invite you, of course, as we always do, to send us topics and any special guests that you'd like to hear from, that you'd like to hear from, and especially with regard to the shaping, the reshaping of the ocean energy industry.
Speaker 3:And Jim, I think we actually do have a next episode that we can discuss. Yeah, you bet Alan Marks is going to join us. Many of you may know him from a really illustrious career in major energy project finance and structuring. He's joining us next time where we're going to dive into the complexities of finance for offshore projects. Jim, John, great to see you. Thank you so much.
Speaker 2:Thanks, John. Thank you so much, John, for joining us and the listeners for listening in Until we meet again on the next Offshore Energy Podcast.