Transcript: From the Permian Basin to AI: How Oil and Natural Gas Fuel the Future

Geopolitics, Record Demand, and AI: A Deep Dive into Global Oil & Natural Gas Markets

Executive Summary

This episode of The Road to Autonomy podcast explores the complex dynamics of the global oil and natural gas markets, from geopolitical tensions impacting prices to record-breaking demand forecasts for 2025 and 2026. Discover the Permian Basin’s critical role in US energy production and learn how natural gas is becoming the essential power source for the growing demands of AI data centers.

Key Topics & Timestamps

[00:00] Geopolitical Tensions & Oil Market Stability

Despite geopolitical tensions in the Middle East and uncertainty on the macro front, oil prices have come back down to the range they were in before the turmoil escalated.

[01:10] The Impact of the Depreciating US Dollar on Oil Prices

The US dollar has seen a historic depreciation of about 10% this year, which traditionally has an inverse relationship with oil prices, adding a potential tailwind.

[01:45] The Strategic Importance of the Strait of Hormuz

Iran’s longstanding threat to close the Strait of Hormuz could impact 15% to 20% of the world’s total liquid oil and gas supplies that pass through the critical chokepoint.

[02:45] US Energy Independence and Strategic Petroleum Reserves

The US has become more energy independent since the shale revolution, recently weathering a major geopolitical event with minimal price shock despite Strategic Petroleum Reserves being at 1984 levels.

[03:50] Permian Basin: A Deep Dive into Production and Investment

Texas produces nearly 6 million barrels of oil per day, with the Permian Basin accounting for almost 4 million of that, and it remains a hotspot for capital investment and M&A activity.

[06:10] Global Oil Demand Projected to Reach New Record Highs

Despite a slowing GDP, global oil demand is projected to hit record highs of 103.7 million barrels per day in 2025, driven largely by growth in China, India, and developing Asia.

[08:15] How Clean Energy Credits Could Impact Future Oil Demand

Removing federal tax credits for electric vehicles could slow their adoption, as a $7,500 price increase may deter many consumers, though the overall impact on oil demand has been marginal so far.

[11:05] The Explosive Growth in Global Natural Gas Demand

Global natural gas demand is hitting record highs, with 75% of the projected growth coming from emerging markets and developing economies that use it for cleaner power generation and heat.

[13:50] How Natural Gas Powers AI Data Centers and Industry

Natural gas is the most enduring and quickly deployable energy source for facilities needing steady, 24/7 power, making it the main nexus for getting new AI data centers operational.

[22:30] The US as the World’s Leading Exporter of LNG

The vast majority of excess natural gas production in the United States is exported, making the US the world’s largest exporter of liquified natural gas (LNG).

[28:10] The Unique Geology of the Permian Basin

The Permian Basin is uniquely prolific due to its depth and quality, featuring many layers of shale resources that can be hydraulically fractured and recovered over time.

[30:30] What to Watch in the Oil Markets Next Quarter

Key factors to monitor include ongoing geopolitics, rig productivity trends in the Permian Basin, and whether demand from China and developing Asia remains strong.

Watch the Full Episode of The Road to Autonomy

Full Episode Transcript

Grayson Brulte: Dean, we turn on the news. We open a newspaper. Yes, I do like to read physical newspapers, and we’re reading about the turmoil in the Middle East, the Iran conflict. And then we sit there and if you go on X or truth, you see the post between the president and the Federal Reserve over high interest rates. It’s a long winded saying there’s a lot of ingredients going into this pie. How is this impacting the oil markets? 

Dean Foreman: Well, so far, I mean, we’ve seen what goes up must come down. Oil went up with the geopolitical tensions, it’s come back down quietly. Some of the impact about increasing deficits, everything that’s been happening. You know, on the macro front has added uncertainty that adds to inflation tensions. Sometimes good news is bad news in the sense that if we see economic slowing, that that increases the financial markets expectations of rate cuts. So, net, net, you kind of have these, these tensions and we’re back in this range for oil of where we started effectively before the geopolitical tensions escalated earlier this month. So. Mid $60 per barrel range for West Texas intermediate crude. But we have to watch because if the US dollar continues to depreciate and we’re down, you know, broadly about 10% so far this year, that’s remarkable. It’s historic. We’ve never seen the dollar drop that much in a short, short period of time to start a presidential term. That also historically is this inverse relationship that then adds a tailwind to oil prices and other commodities too. So net net. It’s, it’s in that range and we just weathered a pretty historic geopolitical event without seeing a massive spike in oil prices. 

Grayson Brulte: Iran, they’ve been very publicly out there threatening to shut down the Straight of Hormuz They haven’t done it. If they were to do that, what would the impact be on the global oil markets? 

Dean Foreman: That is the longstanding historical threat to global oil supplies and 15 to 20% of total liquids. Crude in products run through the strad of four moves, so that’s the eastern province of Saudi Arabia. Its natural gas exports coming from the United Emirates. Its oil and products coming out of Iran and Iraq as well. So you add it all together and it’s consequential and a lot of that goes directly to China. It has a reverberation effect for global markets. 

Grayson Brulte: So with that, if you want to call a, a, a choke point of 20% of the, of the oil that’s coming onto the market, you have a lot of millions of barrels there. Why was there never been a, a global effort to fortify this rate? Just because of the potential impact that it could have on the global economies and, and most importantly, the global oil markets. 

Dean Foreman: Well, if you went back before the shale revolution, you saw a lot of focus on Middle East, uh, military capabilities, defense capabilities. Since the shale revolution where the US has become much more energy independent, there really hasn’t been as much urgency around that. And we just saw actually, without a fiscal disruption, a lot of uncertainty threatening, again, 15 to 20% of the global oil supplies that. With historically low strategic petroleum reserves, we’re sitting, you know, 400 million barrels, roughly 1984 levels. We got through that with minimal shock to price. 

Grayson Brulte: Wow. So we’re at 1984 levels. Is there. A political desire to increase the levels of petroleum reserve, or is the Permian Basin continuing to give us enough oil where we don’t really have to do that at that time? 

Dean Foreman: Well, this is interesting because under the last administration in 2022, the SPR was sold off almost in half, and this administration has announced a plan to restock the SPR and I think relative to 400 million barrels, they’d like to have five or six sitting in there. It’s up about 5% year to date, but just based on budget constraints and market conditions that hasn’t, you know, added to the urgency to increase it faster, who knows? They may revisit it given the fact that we just weathered such a storm geopolitically without having that price shock with inventory sitting right where they are. And that’s confidence, by the way, in the ability starting with Texas to produce more and bring it quickly if needed. 

Grayson Brulte: How much oil is the Permian Basin producing today? 

Dean Foreman: Well, Texas as a whole is just under 6 million barrels per day. So 5.8 million barrels per day. You know, really to the month. If, if we’re looking at our estimate for June production by EIA estimates for April, it’s been at or near that level. So 5.77 million barrels per day is starting in April. The Permian Basin is a little over 70% of the state’s oil production. So, you know. Almost 4 million barrels per day. Basically coming out of that, out of the, the Texas side of the Permian Basin, if you add New Mexico in, you’re adding basically another 2 million barrels per day on that. So it is the most prolific basin. It’s divided between Texas and New Mexico, and it’s continued to grow. It really is the hotspot in terms of activity and experimentation with new technology. It is the basin that we’ll continue to lead, most likely here. 

Grayson Brulte: We’re in a high interest rate environment and building energy sites. Is capital intensive? Are we continuing to see the capital flow into the Permian Basin from an investment standpoint to build new energy sites or enhance or automate? 

Dean Foreman: for sure in terms of electrification investment through the value chain. The grid in Texas, the Ercot grid is being expanded to serve West Texas, you know, even more so, and the ability to enhance production in an environmentally responsible way through electrification. That’s continuing. From an m and a standpoint, it really is the hotbed of activity, of seeing mergers and acquisitions, the growth, and it’s because of the layer geology in the Permian Basin and its long-term potential as a. Source of growth with premium acreage that continues well into the future here. Now, that’s not to discount other basins, mature ones, you know, from a natural gas standpoint. You could talk about the Barnett Shale, you could talk about the Haynesville that continues to serve LNG exports as they’re growing. The Eagleford Basin, you know, in the San Antonio region has really been a continued source of growth. But it’s. It’s less dynamic than what we’ve seen in the Permian historically. So it does grow. It’s growing on both the Texas and New Mexico side. The federal land issue that we sometimes talk about is more important on the New Mexico side of it, but the infrastructure to provide it, the investment, the question really from an industry standpoint is with the macro uncertainties we’ve seen with higher capital costs going in it does it enable the smaller independent producers to invest at the same pace that they have historically? 

Grayson Brulte: And then, and then we have the GDP that that’s slowing. But even though GDP is slowing global oil demands projected to reach. New record highs of 103.7 million barrels per day in 2025 and 104.7 million barrels per day in 2026. What’s driving this demand? And I asked that with the backdrop, and we have data from the New York Federal Reserve. The consumers getting shaky with the debt levels that they’re now reaching. 

Dean Foreman: Yeah, we have to separate out financial markets and I do think the debt levels, especially us consumers and we’re seeing signs of, you know, some cracks in the ability to continue to grow consumption at the same level that we’ve seen in recent years, but. There’s no question that oil demand, both domestically and internationally has held up despite these macro uncertainties. Part of that shows you just how transportation works. Some of it is materials and the fact that. Plastics and petrochemicals are most ubiquitous. But to be clear, China, India, developing Asia is still your largest source of growth, both economically and in terms of oil demand. That’s the market that most companies wanna make sure they serve in the long term and the developed economies, the US has held up pretty well here in terms of demand. We’re actually up year on year, and when we look at deliveries of petroleum through the first half of the year, estimated compared with last year. It’s a good story in terms of demand and it does, if it’s a leading indicator of growth, so that say that at least physically things will continue to expand. 

Grayson Brulte: There’s a hot button issue here in the United States. The big beautiful bill you have against it for it, and then everybody in between. But in if the big beautiful bill, which recently passed the Senate now on its way to the house and it passes the house, it’s gonna go, the president says, for signature. If the clean energy credits are removed as part of the bill, could we potentially see an increase in oil demand in the United States with those credits going away? 

Dean Foreman: Well, the effects of electrification on oil demand have been marginal at best, up to this point. It’s not as if electric vehicles had massively penetrated. So that trend that could continue and the technology, you know, appears increasingly ible from a consumer standpoint. If it’s cost-effective, it’ll continue to grow. So what we can probably say here out of the big bid of a bill is that if you have. The elimination of federal tax credits for electric vehicles that many consumers will probably not. Be able to adopt or buy them or be willing to buy them when the price is $7,500 higher. So other things being equal that could slow penetration of electric vehicles. We need to see, I mean, electric vehicles, especially led by China become more functional, more capable. They they lower in price over time. You can’t say that just a tax credit elimination is necessarily gonna change the outcome of the entire industry. But on the margin, for sure, you would see directional slowing here. 

Grayson Brulte: China’s interesting. We have a chow meat card. Those interest today, they’re calling it a model y peter sub sub $30,000. It gets really interesting with China’s building. Around electric cars, China aside the data clearly states. This goes the IEA, that global oil demand is growing. Now the curiosity hack on, so it’s, it’s growing this year, continue to grow in 2026. Is there enough global refining capacity to keep up with that demand? 

Dean Foreman: It is been pretty tight for sure in most of the new capacity and refining in the investments occurred in AsiaPac Pacific and the Middle East because of the shale revolution. You’ve seen more expansion across the US Gulf Coast in the ability to process the light suite crude that that we have, and in fact, to the month and the latest official data from EIA, we’ve processed, we’ve had more. Texas refinery processing of crude oil inputs than ever before. So it continues to grow. It grows partly because the domestic demand is there as well as the exportability and export demand, but it’s a strong global sign that not only is that relationship with the economy intact, but the market for its continuing to grow. 

Grayson Brulte: Are we seeing CapEx going to building new refineries to keep up with this growing global demand? 

Dean Foreman: Well, we have, and especially again from Middle East and Asian Asia Pacific perspectives, they’ve continued to expand whether or not. It’s overbuilt at any point. Most of that has been premised on the fact that electrification would even eventually supplant global oil demand. But we’re behind the curve on this, right? I mean, in terms of seeing how the global trends have played out, IEA has projected this rollover in global oil demand led by transportation and substitution for electrification. They’ve predicted that for many years, and they continue to double down on it. Now they’re saying before 2030 they see a plateau and then. A leveling off in a peak in global oil demand that has yet to see. We haven’t actually seen a leveling off in it yet, and if emerging markets, which remain oil intensive, they continue to grow in terms of consumerism. So it’s both transportation and the industrial complex that goes with that. The demands continue to grow. That’s the evidence so far. 

Grayson Brulte: The evidence is there ever since you’ve been very generous to come on once a quarter and discuss the oil markets with me. We’ve never had one discussion about a slowing market or reaching a plateau. Every quarter releases wonderful reports and it’s the market’s growing and growing. And to me it’s fascinating ’cause oil plays a major role in the global economy, and it’s not just oil that plays a, a major role. And you turned, you turned me onto this and it really inside of me and now I’ve gone down research rabbit hole is the, the, the natural gas markets. Those markets are growing as well. I’ll read some numbers here to you. The global natural gas demand hit a record 148.7 trillion cubic feet in 2024, and it is projected to increase by 1.8% in 2025 and 1.5% in 2026. Now, getting to the interesting part, Dean, you’re right on this, 75% of that growth is stemming from emerging markets and developing economies. Wow. 

Dean Foreman: Natural gas is quietly the most interesting story. And it’s also like oil is geopolitical, right? ’cause Russia’s war in Ukraine really physically affected the Nord Stream one and two pipelines that otherwise were serving Europe, Europe’s both trying to get off of Russian gas and to minimize its reliance on gas, but emerging markets for clean. Burning energy for the fact that they can get it with increasing diversity of supply, thanks to growing and more liquid LNG market, it just continues to grow. So we’ve seen relatively modest prices for natural gas and an abundance of it. Up until this winter, the previous two had been relatively warm, so the prices were historically low. That stimulated a lot of demand and we’re seeing. Huge appetite. Despite all of the trade policy uncertainty, we have a huge appetite for us. LNG exports now, the world’s largest exporter of it, so I think it’s pretty bullish and we need to see where that can go in terms of market growth. 

Grayson Brulte: How are these emerging economies, dev developing nations using natural gas? Are they using it to grow their economies? Using it to build, how are they using it? 

Dean Foreman: Well, it’s primarily for power generation and heat. It’s really those two things, and again, clean burning compared with using coal. If you have AI based demand that’s growing, and especially in developed economies and natural gas is the power that you can deploy relatively quickly and bring and. For anything from a petrochemical facility or refinery to large factories that need steady supplies of electricity and or heat, natural gas is really your most enduring source there. So again, that relationship to the economy, we talk about, you know, the arc of that with oil and how there’s diminishing returns that go, but it’s still a strong relationship. The relationship with natural gas to global economic growth is even stronger. Historically, it’s been closer to one to one, not quite one to one, but closer than it is with oil. And that reflects the fact that emerging markets have a pretty strong demand for natural gas that’s going with their economic growth here. 

Grayson Brulte: How is the natural gas shipped, stored and delivered in these, in, in these emerging markets? ’cause I ask because some of these emerging markets, their infrastructure is not top shelf. It, it needs some work. So how is it, how is that work? 

Dean Foreman: Well, you really are talking utility to utility or business consumer to business consumer. And these major, major industrial utilities will then build the ability of Regasification facility to accept natural gas. And again, it’s. Produced in One Nation, let’s say, you know the United States, it’s brought to the Gulf Coast, it’s transported. You remove any natural gas liquids out of that, so you’re cryogenically freezing and bringing into a liquid form, dry, natural gas, so pure methane or as pure as you can. Then that liquid is transported in LNG ship shipper, excuse me, ships or tanks, tankers across the world. The Regasification facility takes the liquified gas and reifies it, and that plug and play goes directly into pipeline systems in emerging markets. 

Grayson Brulte: Are, are pipelines the key, once you get to that market for, for transporting, distributing the natural gas. 

Dean Foreman: It really is. And interestingly, countries such as China have massively, you know, China has really built out its domestic pipeline. Network to facilitate using more of that in industry and in homes. So the ability to take that in Europe as the hub liquidity has also grown the different import points in recent years post Russia’s war in Ukraine, the ability to take LNG and use it domestically has continued to expand. 

Grayson Brulte: So the demand’s expanding. We’re seeing, I can’t tell you how many analyst reports I’m, I’m reading on a weekly basis around natural gas data centers, natural gas data centers. That’s an analyst report, but you get the real reports ’cause you’re working in the, in the, in the oil and natural gas industry. Are you seeing this demand for natural gas to power AI data centers that I’m seeing here in the Wall Street analyst reports. 

Dean Foreman: It’s the potential and logically a, again, if you’re deploying a data center and you need electricity and a grid doesn’t naturally have a lot of excess capacity sitting on the grid, you’ll need to co-locate some sort of power generation facility along with it. And wind and solar are useful there. I mean, in terms of low cost fuels. But they also bring intermittency that data centers tend to have more steady 24 7 flat out demand, both in terms of processing with generative AI or training of data centers. You have a continuous need. So latency where you put it, the amount of energy that goes into it, there are a lot of concerns, but natural gas really is the one thing you can deploy relatively quickly. It can be procured. You can put. The whole supply chain from production through processing, through transportation. You can get firm commitments for storage, for transportation and the gas commodity itself relatively quickly. In ways that would be much more complicated. If you’re trying to, you know, for example, build a nuclear facility as some of the hyperscalers are, that’s a more next decade solution. So at least in the short run. It’s pushing more of that. Now that said, in Texas we’re looking to the most current month. We have 4.2 billion cubic feet per day in the latest data as of April for power generation from natural gas. Last year it was 4.3, so it’s not dominated entirely by data centers. Part of this is just the fact that it’s seasonal and natural gas is always seasonal. That’s for industrial dam demand specifically. But you know, we need to see where that goes. 

Grayson Brulte: So historically it’s seasonal. You and I have talked on past episodes where it is gonna be a cold winter in Europe. Okay? Demand seems to go up versus. A warm winter. So do you see for the foreseeable future that it stays seasonal and then it, as these data centers are built in and you’re based in Texas and let’s use Oracle ’cause they’re very publicly building, very big data center in Texas. As the Oracle data center ramps up and other ones ramp up, does it move away from seasonal or is it just that the, the global demand for natural gas will always remain seasonal. 

Dean Foreman: Well, I would think of it as the seasonal element is still important, but the base load element of it is continuing to grow thanks to industry growth led by data centers coming in and. To be clear, the contracts that get in place to continue to develop that, once you put these plants in place, that becomes part of your supply mix, that that makes it all possible to locate data, data centers where you will. Right now, Texas competes with states like Virginia and Ohio. Primarily for data centers. You can put them elsewhere, but those are your top three states in terms of the backlog of construction of them, Virginia, Northern Virginia in particular has the most in the nation. Ohio is number two in Texas. In terms of that construction backlog is number three, so you’re talking on the upside of like 54 to 5 billion backlog in terms of construction of data centers in Virginia compared to 18 to $19 billion currently for Texas. That may continue to change, but it’s based on. Where you need it, what infrastructure you have to serve it, the workforce to serve it, but also power availability is one of the key ingredients in in those locational factors for data centers. 

Grayson Brulte: From an economic standpoint, the key common denominator across all this is job creation. Those sites are creating jobs, they’re, they’re employing people. That’s the key there. I’m curious, you said de colo the natural gas. How does that work? When Natural Gas is co-located at a location such as a data center, 

Dean Foreman: Well, you would apply so that you’re not necessarily having to become a utility, but you have a, the term is behind the meter, but you’re setting up your generation capacity on the same site or adjacent to where you have the need for it. So that can be a data center, it can become another or be another kind of industrial facility. But that’s the way that if, especially in West Texas, for example, where maybe your transmission. Constraints exist. You can’t necessarily build and connect a new large load facility instantaneously. The way to get around that is to bring your own power solution, and that’s what we’ve seen. We’ve seen a lot of proposals and it’s almost a real estate play of, you know, setting up a facility, trying to secure power arrangements to go with it, and then negotiating with hyperscalers like a Google and AWS and Amazon Web Services or others to. Take that facility or most of the capacity in it. But again, it’s, it’s the power solution together with the other infrastructure to make that happen. 

Grayson Brulte: The bottom line is natural gas will play a, a, a role, if you wanna call it in the mix of powering a data center going forward. Is that a fair statement? 

Dean Foreman: It’ll not only play a role for the near term, it is the main. nexus for getting a data center off and going. So unless you have a lot of excess power sitting on the grid and that’s being being sought out real time, anywhere that spare power exists, that capacity I. You’re seeing a lot of interest in the market in building data centers in places like if, if, whether it’s Dallas as a center for that or the Houston area to try to co-locate with where you have minimum latency, a good workforce, the ability to locate it with fiber connections, all the things that I. Together, make it feasible to expand the data center connections. I should put a plugin for the University of Texas Bureau of Economic Geology here. I’ve collaborated with their team and we came up with a research paper, um, I’m just contributing author to it, an editor of it. But that work looks at all the locational factors of data centers, including power, availability, and really maps it out.

Grayson Brulte: We’re gonna share that re report is report public now. 

Dean Foreman: It is. 

Grayson Brulte: All right, so we’re gonna share that here in the notes. And this and what Dean described with the data centers is, is why, one of the main reasons we have ’em on every quarter because the oil natural gas markets play a role. And automation because all the data centers we’re, we’re not getting the automation without the natural gas. We’re not getting the data centers without then that we’re not getting the automation. So it plays a, a really critical role there. Thank you for shedding that light there. Dean, I wanna dive into some of the numbers here on, on natural gas reproduction and consumption perspective here. The United States has produced 38.3 trillion cubic feet of natural gas in 2025, but yet it only consumed 33.3 trillion. Cubic feet of natural gas is a natural. Is the excess natural gas getting exported? Is it getting stored? What’s happening with the excess capacity? 

Dean Foreman: There’s always seasonal storage, but the vast majority of that is exports, and we have become thanks to LNG, the largest exporter of liquified natural gas in the world. I guess technically the only country that has a larger gap between supply and demand is Russia, but they rely a lot on pipelines to, to be able to export the volumes that they do. We have about 6 billion feet per day of pipeline capacity going south to Mexico. We also have pipelines that go back and forth and we’re, yeah, times a net importer from Canada for natural gas, but it’s the LNG exports rising to number one in the world continuing to grow, and there’s really been an enduring demand, especially from emerging markets, to have that source. 

Grayson Brulte: Where is the United States exporting the natural gas to? Is there a pattern there? 

Dean Foreman: Well, it’s fluctuated. Historically. It used to be Asia Pacific, again, India, China, Japan, Korea, Taiwan, taking this. And then since Russia’s war in Ukraine, we saw earlier this year as much as three quarters of Texas natural gas exports. And this generalizes to the US since it’s the majority of it going to Europe. So Europe taking a lot of it. Now in the latest data, if we’re going to the month and we’re looking at trade data through May, we do start to see that Asia Pacific’s coming back. It’s still secondary to Europe though, so Europe’s demand and what happens with the, the future of Russian gas and whether there’s re resolution of Russia’s war in Ukraine, those are key variables that will affect natural gas markets on a global scale. 

Grayson Brulte: Look at. Of from a global perspective globally, who’s the largest exporter of natural gas. 

Dean Foreman: Well, for total gas, it’s still Russia, but for LNG, the US is number one, and it’s thanks to liquified natural gas. 

Grayson Brulte: Wow. And does, and do you see that exports of L in chief of the United States, is that, is that a growth market for us from an export perspective? 

Dean Foreman: Absolutely. It’s continuing to grow. We would say by EIA, energy Information administration estimates and their short term energy outlook, we would be adding one to 2 billion feet per day of exports per year between now and 2026. And then beyond that, we need to look at the, the slate of projects that come to market, but this administration has. Pledge to increase the speed of permitting and infrastructure that would enable more of those exports over time. So that enables us to serve global markets more efficiently and more cost effectively. 

Grayson Brulte: Okay, well that’s healthy then at, at the end of the day. So now curiosity hack goes on, where is most of this natural gas in the United States. 

Dean Foreman: Well, Appalachia is a really important basin, so that’s Ohio, Pennsylvania, West Virginia. But more than all of the growth as that actually declined last year, we’ve seen the Permian Basin in Texas as the number one provider in terms of the growth of it. So Texas is your main source of, of natural gas. You’re seeing a lot increasingly come out. As associated gas from the Permian side, the New Mexico side of the Permian Basin as well, but. The market’s bet right now, and if we’re looking at futures prices between now and next winter, there, the term is in contango. So spot prices today are lower than futures prices going out to next winter, and that’s an expectation by the market of a tightening market. And also an assumption that if the conventional wisdom is that oil growth would. Especially if the Permian Basin would slow, that there would be less associated natural gas coming with it. Which would other things being equal mean that you have to have more dedicated drilling for dry natural gas in the United States. And the place that you would get that primarily to serve LNG exports would be the Hanesville formation, which crosses East Texas and Louisiana. So. In terms of rig activity, you know, we’ve seen kind of steady, uh, amounts of natural gas drilling. The market is expecting that tighter market to come, but that’s where it’s coming from. It really is the Permian Basin that’s leading the growth, although the other basins remain important. Permian Basin is really your source of like looking toward productivity trends, infrastructure trends. If we could just get more pipelines out of West Texas, if the market certainty is there to have that happen, the gas is available for export. 

Grayson Brulte: Pipeline perspective is, is that just a permitting issue or is it a, a demand issue? What, what is that? 

Dean Foreman: That’s really the assurity of having more of the LNG export facilities, which is a permitting issue on a federal level put in place if that. The market is surety to go with it is there, then you’ll see more parties able to build intrastate pipelines from West Texas to serve the Gulf Coast. And again, the difference, we often look at Henry Hub prices, Henry Hub, Louisiana is your main benchmark. Right? But over of this year, when we’ve looked at the Waha hub. WAHA in West Texas, we’ve seen prices negative at times, and there’s routinely one, $2 per million BTU difference between Henry hub and that price in West Texas, where at times you’re literally paying people to take natural gas away. So you care about the oil growth, right? And you’re trying to find a market for natural gas, but it’s been pipeline constrained. That’s gas ready for export, ready for market if we just have the infrastructure to take it. 

Grayson Brulte: Well, I’m gonna sound like the president of the United States. Now, if the in, if the interest rates came down, perhaps you could have the pipelines. That’s not my statement. That’s the statement from the. President of the United States back to oil and gas markets here. What is it about the geology of the Permian Basin that has an abundance of oil and an abundance of natural gas? What’s it in the geology that enables that? 

Dean Foreman: Well, it’s the depth and the quality of the, the resource, the shale resources, and unlike some other shale plays around the world that you know, tend to be thinner, this has. Many, many layers, you know, of, of layered. The, the term in the industry is play, but different levels of geology that you can tap into, that you can hydraulically fracture, and that you can recover from. So it’s not just think of it as a layered sandwich with different. Things that you can bite into over time. And that’s been enduring and there’s been nothing else like it in the United States to that quality and depth that’s enabled the, you know, the continued discovery and rediscovery of how to develop this. And by the way, in the last legislative session, state of Texas passed new legislation for the restimulation of mature wells. So it is possible to have an incentive to go back to the Barnett Shale, for example, which was the very origin of dry natural gas. Almost completely dry, natural gas, uh, shale development and start to redevelop those wells economically. So if that technology takes off, if the cost to recomplete an existing, well using existing infrastructure, if those come down, that’s potentially another leg to the shale revolution. 

Grayson Brulte: It’s another leg that’s gonna be a positive leg. And from our world, from the autonomy world, the companies operating the Permian Basin are actively investing in automation autonomy. Atlas Energy is deployed fully driverless trucks with Kodiak Robotics. They have also an incredible autonomous sand belt that goes, I think it’s the largest in the world. So there, there’s a lot of investments being made in infrastructure, being made in automation, in technology, and because when the Perm Basin continues to shift oil of natural gas, it’s good for the US economy and it makes the United States energy independent. Dean, we love having you on every quarter. I love your insights into the oil markets. What do we need to look for in the oil markets over the next quarter till we have you back on in September? 

Dean Foreman: Thanks so much, Grayson, and I really enjoy being here in these conversations. Each quarter we always take a world tour, so I enjoy it more. Pol, geopolitics, we’ve gotta continue to watch that. Global refining margins are important, so we’re gonna watch that. For oil markets, the thing that I always look, look to, that’s. More inside base ball is productivity trends, so both rig productivity, especially in Texas and the Perian basin, the reactivity to go with it. But we’ve seen despite slippage of that, that the productivity is really the thing to watch. So that pace. How it continues. And then on the economic side, the demand side, we’ve had multiple threads here. We’ve discussed about China and developing Asia. So we need to see how the macro economy, these trade relationships affect continued economic growth, especially in emerging Asia. And if that continues on track or at least largely intact, then there’s a pretty good chance that we’re gonna see enduring oil and gas demand growth and Texas ability to supply it really is the key there. 

Grayson Brulte: Texas will continue to to supply. They have a, have a great governor. They have a very brilliant economy there in Texas. That’s, I wanna say for the record, is now diversifying, which is really good for the state. And every quarter, yes, we’re gonna continue our world tour, but who knows where we’re going in the world next quarter depends on. What? What happens until next quarter? The future is bright. The future autonomous. The future is natural gas powered ai, generative data centers. Dean, as always, thank you so much for coming on the road to autonomy. 

Dean Foreman: Thanks Grayson. Always enjoy it. 

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