« Verdict with Ted Cruz

Ep. 22 - Running On Empty

2020-04-10

Senator Cruz and Michael sit down with energy expert Wil VanLoh to discuss the collapse of America’s oil and gas industry and what we can do about it.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
A global pandemic over sixteen thousand Americans dead and over seventeen million Americans have lost their job and gloves energy markets crushed by collapsing oil prices. These are extraordinary times in which we live. This is verdict, with TAT Group. Welcome back to verdict with TED Crew I'm Michael nor Senator you're, starting us off on a little bit of it, honor. They are, but I guess we're living in fairly down times. I want to focus on something you said there about the energy markets, because last I checked oil was trading at something like twenty two dollars a barrel and is very, very low, and I think for most people the interaction we have with the oil industry is one. We fill up our gas tanks, so low oil prices are not necessarily a bad thing. When we look
What are we missing here? While I think right now we're facing three different crises all at the same time, we ve got a global pandemic, the corona vice virus crisis. We are all familiar with the cases, the deaths and then we're taking extraordinary steps to try to stop the spread of the virus Then there is an economic crisis, say a disaster. Seventeen million people and last three weeks have filed for unemployment. We ve seen entire industries decimated and then that's producing enormous damage, but at the same time you ve got you: ve got energy markets and in particular the global price of oil has dropped more than in half and the consequence of that is, is it potentially risk bankrupting most, if not every american energy producer, and in particular my home state of Texas, that's devastating? But but if you
up, saying: american Energy producers driven out of business. That also has massive implications in terms of you and me pay higher prices at the pump in years to come and also geopolitically making us dependent on foreign countries in a way that we just now me needs to get free and independent from so what you're saying is we shouldn't be celebrating maybe a little dip in the gas prices right now, because in the long term, financially that could really hurt us, and also it has these national security implications that look pretty bad down. The road I just want to go some of you said centre. You said you flew and met with the president. You met with the president, specifically because of this energy crisis. That's how bad it's gotten now, that's exactly right! On Friday, I got on a plane on on a united commercial flight that was practically empty there. There, only maybe ten fifteen of us on it flew up to d C, went went to the it has had a two hour meeting and we're all from states that are big energy producers.
And in and we started by writing a letter to the saudi ambassador. Then, a couple weeks ago we did a conference call with saudi ambassador. Nine of us. I gotta tell you: it was the most bear, knock old candid, Conversation really I've ever had with a foreign leader in eight years in the Senate you get a landline earlier. I can so we're on a conference call with the ambassador. Here's what I said I said: listen no state in the union does more business with Saudi Arabia than and right now, you're, taking advantage of a global health pandemic to try to screw and bankrupt people across Texas and it is devastating and Anna and the thirteen of us who said under the letter as a matter of national security, have him consists They been allies of the saudi Saudi as an important counterpart to ran, ran in the ayatollah, really dangerous for national security, but, I said: listen, you know we ve been with you, but you are now trying to bank
people in my state, and that is not going to stand now. Here's the saudi ambassadors, defence, but Russia, but Russia, there was any lowering media for the last three years. What will they do? They made the and I said, listen. Russia's our enemy, we that they behave like our enemy. We treat him as our enemy you're supposed to be our friend. You want us to treat you like Russia, You ought to be our enemy. How about we pull up all our soldiers out of Saudi Arabia? We pool our patriot missiles out there because every time someone screws within the Middle EAST, you pick up the phone call them american military and say save our asses. Will then don't bankrupt people in my state, and I was pissed yeah and I'm sorry, it was interesting that call I didn't get got the fact. I know it got there. Tension. So you and I we ve, invited aghast it's it's a long time friend of mine will ban low will. The sea of Quantum energy partners now that as an eighteen,
billion dollar, private equity, Energy fund, Quantum is the third largest drill or in North America tat you will as someone who knows the energy markets as well, if not better than anyone. I know, and so in the last couple of weeks, as I went up to me, president major Energy C o last week will was when we literally spent probably six seven hours on the phone trying to understand, what's happening here and the real threat to jobs and an end to end They secured era, country and so well welcome. The verdict will pursue many years. We complained about how we're depended on the Middle EAST for energy. We we are totally trapped for energy, and yet this technology helped to lead us away from that and get us to what I guess. We call energy independence until maybe five minutes ago. That's right and I think as a huge when you think about the United States. Has had more wells build in it than the rest of the world combined. That's a pretty amazing statistic to think about it. When
comes to shale, do we have a lot of it here? Yeah, oh for sure, probably ninety five percent of all shale product in the world is in United States part of that body, to our geology right, so they tried it example in Europe. They don't the same rocks over there now, there's other in a world where there is a lot of shale. But those are parts of the world, a typically have a lot of convention oil and gas as well, and if you don't need really: cost more money to drill wells unconditionally. The horizontal input, the big cracks autumn in places like in the Middle EAST, where they have a lot of conventional production, they don't need to drill horizontal wells. So last ten years we have this technological invent innovation. We discover how to access massive reserves that were there
we do know how to get to it. And suddenly America passes everybody. We pass audio rabies, we pass Russia, we become the top producer in the world. Who is it that drove that it and it is the energy industry? Look, I think, a lot of people think of energy. They think a big oil they think of a couple of you know: giant companies, Exxon and Shell, and you know these companies. It is. Is that who did this innovation? No? And I see no, that's the interesting thing because so much the dialogue right now Washington is about involving the Exxon. Michel rounds of the world and their certainly big airs and shale today, but they didn't drive innovation, it was actually the independence that drove that innovation in United States. What's in it, Well and independent, is basically an old gas company. That's not a major so that the majors are typically integrated companies there, the law just companies in the world and in terms of a pro publicly or privately
and outside a government owned or companies, and these majors I mean they're their massive and some of them, they have JD that rival company so well. They do like an excellent, for example, lay produce over four million barrels a day right, there's only a cup there's only a handful of countries in the world that produce over four million barrels a day, but the shale revolution was started in DR driven by independence and independent cheer talking you and I both spend a lot of time out Meddle in Texas, you're talkin tat, sometimes five, ten twenty guys and in a little office who are raising some money and go out and drilling old and innovating, that's what drove this entire revolution and change the entire geopolitics did in and to be fair that the technology was probably driven more by the larger public independence companies like Chesapeake companies like pioneer those types, they drove a technology, but the These smaller independence were very quick to get here.
And really take that They are much more nimble than the public companies, so they take the big that the big tonight Gee revolutions in, and they do lot of evolutionary changes in that technology and they get it out there very quick in there and are able to access large amounts of land and so the independents, both the public, the larger look independence, as well as the thousands of small kind of mom and pop independence. There really there on made this this independence of energy. Possible now twelve, I don't want to reign on your parade here, but this sounds too good. This sounds too good to be true right now, because you you ve, got it great energy revolution here, you're empowering so many people in american ingenuity and then the prices all plummet. So I understand how it worked out so well. What went wrong? Well, let's blessed back up a little bit. You think about
prices. Plummeting prices plummeted from about sixty dollars a barrel, the beginning of the year, down twenty dollars a barrel a few weeks ago, another up in the mid high twenties now, but, let's not forget before the Shell revolution started: in two thousand. Eight was a hundred seven dollars a barrel, ok, while so all our second two hundred and forty seven dollars a barrel and that it came down to fifty six dollars a barrel, and now it's plummeted to the twenties right through american innovation and ingenuity we were able to get the lost. Initially, these show wells were very expensive and you didn't. Cover a lotta hydrocarbon, and through a lot of science through a lot of just innovation and trial and error, we were able to meaningfully perfect if you will the way we drilled and completed these wells, and we got to the cause. Down to a level where it fifty to sixty dollars. The? U S, gas. Companies can make a respectable profit
The industry for the last for five years has been shrugging long and fifty to sixty dollars, like most of us, don't buy a barrel of oil so that so that number doesn't mean anything to us. What what mean fifty sixty dollar oil. What does that mean in terms of a gallon gas gasp? understanding a lot of the cost of gas is actually tax is right in those don't change. Is so three Rita four dollars depending on the state and city live in is what fifty to sixty dollars. Michael pay, a lot more in California. They we pay more other for that you need to fill your electric scooter Michael's! That's the thing we actually just run on moonbeams out here, so we don't need anything. The energy so wait? What I'm hearing, though, is you? You don't want the price of oil to be so expensive that it's gonna kill us all at the pump, but you also done want the price of oil to be so low that you put all of these companies at a business. You want there to be some. Medium in there. What are the odds?
we're gonna be able to get back to that before the american energy industry is just destroyed in all right now. It's not looking good is not looking good for reasons one was saudi in Russia have decided arrogant, basic law, a market share war on the! U S and senator crews set a minute ago. Now, the? U S, went from being a huge energy importer. You know we imported more than twelve million barrels a day, a less a decade ago, to literally over the last six months. So we given given week. We will export or import a few hundred We must all be a net exporter net importer, maybe a hundred or two hundred thousand barrels right, and so that, if you think about that anything about the impact on our economy, that's depends the price of oil but say fifty dollar oil. That's about two hundred and fifty billion dollars a year. That stays here in the? U S, but U s Gas industry has created additional revenue, the taxes it come off or that the million
a jobs were created? Out of that? Does that mean for jobs? How does that? Whose jobs are we talking about here? Well, we're talking about very high pay, middle and upper middle class jobs. We're talking about engineers, geology a physicist. Production engineers we're talking about a lot of jobs out in the field, so for both lots of of of blue our job, but also a lot of white collar jobs? So if we lose american energy production. If these companies go bankrupt, we're still gonna need energy when, when they commonly comes back, we're still gonna drive our cars, we're gonna fly airplanes, and so is if the american companies are bankrupt, where we can
Yet our energy we're gonna, get it where we used to get it and had from foreign sources like the Middle EAST, like Russia and naturally to may senator that the key question the? U S has to ask itself is: do we want to be energy independence or not in the end, that question all policy will flow from whether the answer is yes or no sort interrupt will act as most people, I think, want that energy and depend instead, what we always Europe politicians talking about, certainly what I want for us, but what you're describing as the problem here, I just assumed it was all the corona virus, that's upsetting or the global markets, you're saying, there's something else in play, which is this price war between Russia and Saudi Arabia going after the United States. What? What does that mean? I mean? Is that related to the virus? Was that a totally separate issue totally separate and it'll be fair. The demand traction. That's associated with corona virus is a much bigger issued today in the near term, be if I understand
globally. The demand for oil in normal times four months ago was between ninety five and two hundred million barrels a day, but a hundred members as a result of the accounts may slowing down and grinding to a halt in the? U S and then globally its drop to about what amounts Many million barrels a day there's a lot of different estimates out there, but I'd say they range anywhere from a twenty two as much as probably thirty five main beryl. They demand destruction, so that would say somewhere between sixty five and eighty million barrels a day is currently what the globe is using today, so that had a big negative impact, don't prize when, when one third or more of the demand disappears right that We therefore never happened it that that's it beyond without precedent, that is that Everybody's car sittin in their driveways and everyone's airplane stay in part at the hangar and nobody. Nobody flying and and very few people draw in put that in the context during the great financial crisis, total glue
will demand drop by about two and a half to three main barrels a day while soda we're lookin at ten times reduction in demand. Now, as as during the financial meltdown, that's exactly right! So, but then you get a second component which, as you have the Saudis and the Russians right as krona via says breaking this deciding. This is a great opportunity to screw the Americans to bankrupt the american energy business and listen what you're doing drill drilling in West Texas Shale gas, reason Russians have hated it because you pass them up with America's the top producer and so they're sitting there. If I understand this right there taken, this is an opportunity are right. We ve got a crisis, let's put these guys at a businesslike, grab them so that, when all is said and done, where the only players left in the game, Senator, if you think back to when the oil shale revolution started, and you look at TAT,
global supply growth. Since about eight or nine years ago, eighty percent of total global supply growth has company United States of America. Ok, that's a country that today produces about thirteen, fourteen percent, maybe fifteen, if you Eddie, and all the Ngos and other liquids, what's in India or natural gas liquids, but let's see the today produces about fifteen percent of global liquid supply. Yet we ve accounted for. Eighty percent of total will liquids growth over the last decade. That's extraordinary in that challenged pack supremacy in a challenge Russia supremacy and it also helped. If I understand right, DR drive the price down quite a bit two thirds drove prices. If had the? U S, Lucian not happened, think about we hundred forty seven dollars a barrel, and that was pre oil shales prices, probably would have done a lot higher from her and so that that huge drop
and in what Russia, Saudi. I actually think that they, they not have chosen to launch this price war. Had it not been for krona virus, because both countries, if you look at them, thirty to. How long can I go in and with lower prices you know, saudi today is much worse equipped for all on price war. Then they were back in two thousand fourteen during the last big collapse in prices right because I've they depleted allowed sovereign wealth funds and their there there break. Even cost today is probably, eighty dollars a barrel and what I mean, but that is, they fund their entire government out of their all remedies, whereas Russia's is only about forty two forty five dollars a barrel, so what they're doing in any use to me what we would call an anti trust law, predatory pricing, Ryan, in that their.
When they flooded the market with oil and they announced they were going to do that and drove the prices way down. They were taken a big hit themselves, what they were doing it to bankrupt their competitors and then sweep in an end dominate the mark. Measuring, let me let me pause for a second contemplate. Devils advocate you mention to technological innovations that helped us act. All these massive shale reserves. One was horizontal drilling, but it was combining that with hydraulic fracturing fracturing, look, cracking I've heard a lot Gary things on the internet, about that. I have heard it messes with with the water table, you can light the water on fire, that's what they say so so is that is that for real should I be worried that that fracturing makes it dangers to drink the water. No, you know, there's probably not a bigger set of environmentalist in terms of people that, like the doors that, like the water that are really love the earth than people, the good people, you'll find anyone, guess business right and
there is that we have to remember where we frack a well these wells or anywhere between eight and fifteen thousand feet below the surface. The surface water that people drink is anywhere from fifty feet. To maybe Three or four hundred feet, but let us make sure I understand that you get the surface fifty two three hundred feet down: it's not that far down. The water table, that's where the water is that we get our drinking water, that's correct! So that's not where you're frank it now: you're, racking ten thousand feet below that in ten thousand fate. If my math is right, that's too much about two miles to mine. Of rock download so where you're doing this is two miles away from the walk right, I let me ask a different question, so my daughter- Caroline, you know, Caroline she's alive, she actually said to me last night. She said you know every everything, that's that's happened in this crisis have been really good for the environment. The environment is, is
cleaning up the throne and relentless, and it is true it if we have no production if, if all human activities stops, that would be good for the environment, just not very good for people turn. Let me ask you something: what happens if all these independent energy producers go out of business the economy gets going again after the crisis and where dependent once again on on the Middle EAST, for oil. Is that good or bad for the environment in all agreed question, because I think so many people think you know hey, let's, let's put the: U S. Oil gas producer out of business and because on gas is bad for the environment, but that doesn't mean people going to stop driving their cars. It doesn't mean people gonna, stop flying in aeroplanes. It doesn't People are gonna, stop buying iphones, which, by the way, take hydrocarbon energy and the plastics alot of the parts everything we have in our modern life. Senator is revolves around hydrocarbons,
some former fashion? So not the need form is not going to go away. We will just shift the source where we secure those from and we'll go. We were a decade ago, which is so, hundreds of billions of dollars overseas to people that, quite frankly, dont like us very much we will lose significant GEO, political and environmental right. An awful lot of the nine eleven terrorist who attacked us, we're from Saudi Arabia, had their funding stores from there. And fuelling the Middle EAST with billions of american dollars is, is it is not good for keeping America say it's not, and it also who caused loss if you think about the biggest growth engine in U S jobs coming out. The great financial crisis was the energy industry and the if not hundreds of billions of dollars in taxes that the energy repays every year to school districts to other municipalities, hospitals, building roads, bridges, infrastructure right there. A success is just Texas right,
They were only talking taxes, jobs are not none anywhere else in the gathers there's a number of other places throughout the United States, both where well you ve got. Back in its North Dakota, you ve got the dj it's in Colorado, the power that's an wyoming, you ve got the Permian, which is Mexico, you ve got who plays in the scoop stack in Oklahoma. That on your side, heads inane, wasn't say on the gas side, the largest gas field in the United States. Really one of the large maybe the largest in the world since under Albania West Virginia, Ohio in New York, cylinder. California, California, is a huge produced right. They are huge producer in May ways I can speak to California to come and completely lost cause, but of course we don't want the industry to go out here. I just I see, will your point that this is all over the United States that we're too a lot of jobs and a lot of industry all over the place. So what
we do now I mean looking down at this crisis. You got the the markets collapsing. Rather, how do we fix it? What are our options before it's too late? Well in, I think we have we have to start with, we gotta decide. We want to fix it because that is part of part of the issue is obviously the sounding Russian, what they ve done and try to flood the market with additional barrels to drive down prices, but the but the much bigger issue in the short term is obviously the man distrust associate with corona virus, and so you know it at these prices. The? U S, independent, cannot make money. Ok, they just flat can't make money so there there is there is that fact: they're just revenues will not exceed their their expenses but the other day we have to also look at as an industry is an that's just simple method that then, that it costs a? U S producer. What about forty dollars barrel to produce and sell twenty dollars a barrel. It doesn't work if it costs twice as much as the price to produce here
best at these prices are not probably in less than five percent of all locations in other states are economic at these prices. Ok, that's why Michael get one of the things I mean you asked. What do we do about it? There is there is both pointed out. We get our economy going again, but there is also a component of the foreign policy, The component I'll tell you and anyone. I've talked about this- that something I've been really active in is taking on the Saudis. In my office I brought my she'll security team- and I said our at- I want a list of steps we can take to ratchet up heat on the Saudis to make it more and more painful. We looked at things like sanctions on individual officials in in the saudi government that a directly targeted american businesses, instead of yearning to wage economic warfare on us well well, well,
the game and anyone you better be prepared for the consequences. Rwanda last week, Friday in the oval office meeting with the President, the president had spoken in the preceding weak, both to Putin and then be ass. The head is the Saudis he had leaned in hard and essentially the president and start out that way. I talked to press couple weeks ago and his instinct is actually where you started, the show Michael use like well, you know: aren't lope low oil prices good thirdly least, thinking of he's a real estate guy from consumers, perspective, until I and other started explaining, listen we're lookin at millions of jobs that go away and if we destroy America's producing capability it may the bad guys who hate us more powerful vehemence and it makes America weaker. That's a bad outcome. Well, what the president's
is it? Is it Andy ACID Putin and agreed to try to stop flooding the market to reduce their production? He tweeted out two weeks ago there were reducing their production, ten million barrels a day that resulted in oil just that announcement going from twenty bucks a barrel to twenty seven in the wider, meaning what he told us? As you said, it's actually going to be more than more than ten. It's gotta be more like fifteen million, and just today the news broke that they're talking about twenty million. Now the proof is in the pudding and we'll see if they actually do it, but if they stop flooding the market, if they pull back that will help. It won't solved the problem we won't get solved until the economy comes back and people are able to drive their cars and fly airplanes, but but but if Russia and end the Saudis follow through and and and stop flooding the market stopped, the advantage in the meantime before the economy comes back. If they are talking about cutting,
they production by by twenty million barrels. Ok, that's great how much do we need to actually see an impact on the american Energy Sector right, so Goin again, I think they're somewhere between twenty five and forty in barrels of demand, destruction right now and- and so look is tenor. Fifteen or twenty million barrels a lot. It is it's no close to what we need to really balance. Supply and demand- and the fact is, is prices were creating long before this? You know it became apparent of how bad, because most of the price drop happened. People were thinking demand, destruction was three to five million barrels a day. Historically, if a producer like if OPEC or to fly the market, even with a couple million barrels a day of excess supply, meaning only a million or two million barrels difference in supply and demand prices would drop in half okay, so laugh We're talking about here is it's it's enough That's really irrelevant number one number two: there
conditionality on everything sound in Russia, Saudi in Russia, both have said in order to enact these cuts. Open the econ walks out there, there's that that there's high propriety, lesters there's a very high price elasticity and and if you in sounding Russia, both said if, if we're going to do these cuts. We want contributions from all the major. Exporting countries in the world, including the less, including Norway, including Mexico, so there's all other countries that they want to participate in this- and I think the presence been very clear- the you this is not going to deliver a production cut. Now he has talked about there's gonna be natural. Shutting in declines in that is going to be the case. The question is: is that going to be good enough for me, Our reason for the Russians, the other thing or to keep Finally, as every time OPEC or OPEC plus has said, we're, gonna make a cut. There's, generally speaking, not great adherence to those cuts, so they may say they're going to make a cut, but the actual
usually are much less trust but verify, and maybe even don't trust. Let me at one other issue, condition important issue to try to understand and in this something you and I have talked a lot about and it was the one deliverable that came out of the White House meeting last week, so we spent two hours talking about energy. We talked about pressuring, the Saudis and Russians that seems to produce a result. But we also talked about access to capital and then- and this is a peace where, where I think a lot of people don't understand what's going on. But it's really important Wall Street. The last couple of years has been cutting off more and more capital to energy that the dead there's. There's a movement called the Estuary movement which putting pressure on Wall Street to say we're, not gonna fund american Energy producers and the consequence of that has, as has been really significant, and so so that well, I want us to understand it lets say: you're, a small, independent producers,
you're in West Texas, you're in New Mexico you're in Colorado and European Survey, Pennsylvania and the banks decide to cut off your capital. How does it happen? How does that work? Why? Why does capital matter and what was that? How is that impact so in anyone's guess, business companies obtain capital from banks and, what's called Arby's, Ellsworth Reserve based, and those are bales determined every six months. Okay, so think about public companies, like, I wish you'd, admit, seven hundred and ten one thousand five hundred and twenty or debt. They don't have to think about refinancing or having that that called for a very long time independent producers in this country. The vast majority of us and access that kind of public capital to term out their debt, and so they go to banks and the bank loans if they get the every six months, so historically, in a very symbiotic system, and the banks understand importance business- and I understand you know that they alone
raise money are not going to change it alot quickly in terms of the baloney. Or what happening now, because prices up so much in the banks have actually had sums significant losses on those army elles they. The decision are gonna significantly tightened the amount of credit to the sector, but they that decision really before this price drop. I made that to your point. They ve been getting a lot of pressure from e g centric groups so that the pressure is energies, bad, it's you know, kill in the current climate. And so don't invest in energy companies. Here's the fallacy that Senator is As we said earlier, unless people are gonna quit driving cars flying in aeroplanes and buying products. There they keep consuming the energy you're Talkin about reserve basis. I want to make an analogy to two to say home mortgage. Let's say you ve got a home that that's valued at four hundred thousand now
So you get a mortgage, let's say for three hundred fifty thousand dollars you're paying your mortgage and its based on the value of the home, now drawing that analogy to, if you get energy producer, they get alone based on the value of their reserves, the reserves that their they're producing and going to produce, You said in the energy business every six months they come Rita terminate, so what that would mean if you think about your home mortgage, you got friend or fifty thousand dollar mortgage on what you think is afforded without thousand dollar house. Suddenly the bank comes to you six months later says Michael you're, four hundred thousand dollar house. We now, I think, is a killer, thousand dollar house. You borrowed three hundred and fifty five. And so write me a check for a hundred fifty thousand now and that's what's happening. Senator that is literally were hearing stories. Now, every single day about banks going to companies and saying you need to put echo in and paid on this loan or we're gonna? Throw your loan over the work group an end. So, in terms
we're from the White House meeting what what I suggested to the president on Friday. I said. Mr President, there is a real problem with the banks cutting off capital to these american producers and ending american energy production and in winter, make sure that that energy is not discriminated against, and- and so I suggested to him as president, you should the Energy Secretary Danbury out. Who is a Texan and a good friend? Ask him to work with Stephen turn the Treasury secretary to work with the bank regulators to make sure that the banks are not discriminating in bank corrupting these energy companies in America and causing millions of people who lose their jobs and the president said I'll, do he directed day and then was sitting in the mating make it happened. I tell you: I've spoken with Dan, almost every single day since then in order to make sure that we just have the capital, so these gas can survive, will that's great news because it does see.
From what I am hearing like it's one, damn thing after another that the American energy industry has to face- and this leads to my last tonight we're running out of time here, but I suspect we're running out of time to solve this problem will do you have any sense of the timeline here before we reach a point at which we can't turn this around anymore? Well, if you think about the amount of capital that took to basically get the shell revolution to where it is today about a trainer half dollars, ok and that capital, a lot of it, was not spent very efficiently. And public investors lost a lot of money over the last decade. Honour investments in energy space problem is today, is that magnitude capital will never come back to our sector again and so If we lose the momentum, the problem was share. Wells is they come on it prolific rates, but they declined very rapidly
and so what's gonna happen over the next twelve to eighteen months? Is: U S? Production will decline, probably two to two and a half million barrels a day. Ok, that's off a base of thirteen million barrels very significant and will never be able to recover that any future. In those wells we don't know if you can open up again well. You'll open them up, but there's a big chance. You ve damage the reservoirs. Ok, so they come back on less productive, but the bigger problem is yes. That in or shell is very expensive to develop its like. It's like a treadmill anymore. You produced After the treadmill goes, and you gotta keep reinvesting back up. Unless you put a lot of you break the cycle of reinvestment, you can never get up unless you put a lot of outside capital back into the system again, so Every dollar that came in the door Gee Industries, Perillus spending about a dollar. Fifty, ok, that's how we grew production. Some five million barrels a day in two thousand and ten to
two main beryl today this month and but but now that cycles bilaterally and thirteen million and in ten ten years, but now that cycles broken. So you asked a question: how much time do we have not much, and that's that really is the critical critical question in terms of this crisis that is hitting the energy sector and the american energy producers? I gotta tell you for me that this is very personal and real, but, as you know, I grew up and he is two years since my hometown. When I was a kid, my parents owned a small business and it was in the oil services world. It was a seismic data processing companies, so my parents, both mathematicians computer programmers and in nineteen eighty six oil collapse to do the seven dollars a bare Texas went into a full on depression? I was in high school at the time and I still remember my dad. It was one Monday now this his was a small small business. He had twenty five employees. I still remember.
The Monday where he had to lay off nineteen of the twenty five voicing came home at it. He d never seen Father look is unhappy. You look like you been beaten with a stick and he had employs arguing with I'm going Raphael not gonna? Leave? No. I'm gonna stay that this this this company is my home and he said, look I don't have the money to pay, you have a family, and so my parents went bankrupt. We law, the company we lost our home, the home. I grew up in an its look out. Dad lives through that. First, I will you know. Is it really shows you that in the price of oil, There is a whole lot more going on their allotted jobs. There are a lot of families. There is an entire sector of the american economy, that's being destroyed, it has implications for national security There is so much more to talk about. Unfortunately, we are at a time that thank you will thank you so much for giving your insight and senator I'd. Never that story
I mean really brings at home on a personal level and will see how a thank you, by the way for your leadership and going to the president trying to turn this around We will just have to wait to see in the coming days. Hopefully we turn it around before it's too late in the meantime on Michael knows, this is verdict. With TED crews.
Transcript generated on 2020-04-22.