MARIA: WELCOME BACK.
MIDDLE EAST TENSIONS IN FOCUS
THIS MORNING.
THE CROWN PRINCE OF SAUDI ARABIA
TELLING 60 MINUTES LAST NIGHT
WHAT THAT TENSIONS WITH IRAN
COULD LEAD TO MASSIVE
INSTABILITY FOR GLOBAL OIL
MARKETS FOLLOWING THE ATTACKS ON
SAUDI OIL FACILITIES.
WATCH.
>> IF THE WORLD DOES NOT TAKE A
STRONG AND FIRM ACTION TO DETER
IRAN, WE WILL SEE FURTHER
ESCALATIONS THAT WILL THREATEN
WORLD INTERESTS.
OIL SUPPLIES WILL BE DISRUPTED
AND OIL PRICES WILL JUMP TO HIGH
NUMBERS THAT WE HAVEN'T SEEN IN
OUR LIFETIMES.
MARIA: JOINING US RIGHT NOW IS
IHS MARKET VICE CHAIRMAN, DANIEL
JERGE.
THANK YOU FOR JOINING US.
YOU'VE BEEN A STUDENT OF OIL AND
THIS BUSINESS FOR A LONG TIME
AND YOU'VE STUDIED IT SO MUCH.
DO YOU AGREE WITH THAT?
>> THE RISKS ARE CERTAINLY
THERE.
THE ATTACK THAT OCCURRED
RECENTLY IN SAUDI ARABIA WAS
UNPRECEDENTED ON A SCALE NEVER
SEEN BEFORE.
IT WAS LIKE A SCENARIO HAD
BECOME REALITY.
WHAT'S SO STRIKING IS THE CALM
IN THE MARKET.
THE IRANIANS DID THIS.
THEY DENIED IT BUT THEY DID IT.
BUT WHAT'S TO PREVENT SOMETHING
LIKE THIS FROM HAPPENING AGAIN?
MARIA: DAGEN MENTIONED A NUMBER
OF TIMES THAT THE U.S. IS SUCH A
STRONGER POSITION TODAY IN TERMS
OF ITS OIL AND PRODUCTION ON THE
GLOBAL STAGE, RIGHT, DAGEN?
DAGEN: I TALKED ABOUT IT BEFORE
WE EVEN GOT TO THIS POINT, THAT
OUR NATIONAL SECURITY IS IN OUR
ENERGY SECTOR, GIVES US THE
ABILITY TO FIGHT BACK AGAINST
NATIONSES THAT HATE US THAT ARE
OIL PRODUCERS.
>> YOU WON'T BE ABLE TO DO
SANCTIONS ON IRAN IF IT WEREN'T
FOR THE GROWTH.
THE SHALE DEVELOPMENT HAS
CHANGED THE STRATEGIC POSITION
OF THE UNITED STATES.
IT'S RECONFIGURED THE OIL MARKET
AND RECONFIGURED THE PSYCHOLOGY
OF THE OIL MARKET WHICH IS WHY
WE'VE SEEN A RELAXED REACTION.
IF THIS HAD HAPPENED FIVE YEARS
AGO, WE WOULD HAVE BEEN IN PANIC
TERRITORY.
MARIA: WHAT ABOUT THE TOP STORY
IN THE JOURNAL, U.S. SHALE BOOM
SLOWS DOWN AMID WORRIES OVER THE
OIL SUPPLY.
YOU WERE REFERRING TO THAT
EARLIER.
>> I THINK -- IT GOT STYMIED AT
THE BEGINNING OF THE YEAR
BECAUSE THERE WASN'T ENOUGH
PIPELINE CAPACITY TO MOVE OIL OF
THE PERMIAN.
BY THE BEGINNING OF NEXT YEAR,
THE U.S. WILL BE UP TO
13 MILLION BARRELS A DAY.
I DON'T THINK -- I THINK IT WILL
BE A SLOWER GROWTH BUT THE U.S.
WILL CONTINUE TO GROW AND THE
REST OF TWORLD KNOWS THAT.
DAGEN: DO YOU WORRY ABOUT A
CHANGE POLITICALLY IF YOU HAVE
SOMEBODY ELSE IN THE WHITE HOUSE
THAT THEY CHANGE THE POSITION ON
OIL, ON NATURAL GAS, ON THE
ABILITY FOR -- IN THE SHALE
FORMATIONS TO EXTRACT OIL?
MARIA: IT'S A REALLY IMPORTANT
QUESTION.
BECAUSE THE JOURNAL IN THE
ARTICLE WRITES U.S. OIL
PRODUCTION INCREASED BY LESS
THAN 1% IN THE FIRST HALF OF
2019, UP NEARLY 7% GROWTH OVER
THE SAME PERIOD LAST YEAR
ACCORDING TO THE ENERGY
DEPARTMENT SO IT'S CLEARLY
SLOWING.
>> THE ENERGY DEPARTMENT DOES
HAVE IT AT 13 MILLION BARRELS A
DAY BY THE END OF THE YEAR.
I THINK YOU'VE ASKED A HE
I THINK YOU'VE ASKED A VERY GOOD
QUESTION.
YOU JUST HAVE TO LOOK AT THE
WORDS.
LEADING CANDIDATES SAID THEY
WOULD STOP FRACKING.
THEY MAY NOT HAVE THE POWER TO
STOP FRACKING BUT THEY CAN DO A
LOT OF THINGS LIKE REGULATION
AND MAKE IT MORE DIFFICULT.
THEY'VE BEEN QUITE HOSTILE AND I
THINK HAVE FAILED TO APPRECIATE
THE STRATEGIC VALUE THE UNITED
STATES HAS GOTTEN OUT OF THIS.
TWO-THIRDS OF U.S. BUSINESS
INVESTMENT SINCE 2008 HAS BEEN
ASSOCIATED WITH THE SHALE BOOM.
MARIA: AND I'M
MARIA: AND ITM
MARIA: AND IT IMPACTS MARKETS
AS WELL.
>> HOW DO YOU FEEL ABOUT WHERE
THE E & P COMPANIES ARE RIGHT
NOW?
THE RIGHT AMOUNT OF LEVERAGE AND
THE RIGHT AMOUNT OF DEBT?
IN THE 2015 TIME FRAME A LOT OF
PEOPLE LOST A LOT OF MONEY IN
THE ENERGY COMPLEX.
>> I THINK WE'VE SEEN A DIVORCE
BETWEEN INVESTORS AND THE SHALE
COMPANIES.
IT USED TO BE GROWTH AT ANY
COST, NOW IT'S GROWTH AT WHAT
COST.
THE SHALE PRODUCERS HAVE TO
PROVE THEY CAN RETURN MONEY, NOT
JUST INCREASE PRODUCTION.
THAT'S REFLECTED IN HOW THE
MARKET'S REACTING TO THEM.
THERE'S NOT THE ENTHUSIASM THAT
WAS THERE A COUPLE YEARS AGO.
>> IS THE SLOWDOWN IN THE
PRODUCTION RATES JUST A FACTOR
OF THE LOWER PRICE PER BARREL OF
OIL, NOT HAVING AS MUCH CAP EX
GOING OUT THERE?
AS 40 TO $50, DO YOU PUT OUT
LESS MONEY IN NEW EXPLORATION?
>> I THINK THEY'VE TAKEN A
PLEDGOR MOST HAVE TAKEN A
PLEDGE, WE'RE GOING TO RETURN
MONEY TO SHAREHOLDERS AND THAT
MEANS THE INVESTMENT LEVELS ARE
GOING TO STAY WITHIN THEIR
BUDGET RATHER THAN JUMPING UP
WHEN THE PRICE GOES UP.
THAT ALSO MEANS ACTIVITY IS
SOMEWHAT LOWER LEVEL THAN IT
WOULD HAVE BEEN IN THE
ENVIRONMENT A COUPLE OF YEARS
AGO.
>> WHAT'S THE TIMING ON GETTING
THE TAKE-AWAY LOGISTICS FIXED
IN.
>> BY THE END OF THE YEAR, WE
HAVE THREE PIPELINES THAT ARE
ALL IN OPERATION AND THAT'S WHY
WE'RE GOING TO SEE A JUMP IN
U.S. PRODUCTION.
>> THAT TAKES US FROM 12 TO 13
A DAY AND WHERE DO YOU THINK WE
CAN PEAK IN THE NEXT COUPLE
YEARS.
>> THAT'S SUBJECT TO GREAT
DEBATE BUT OUR VIEW IS PROBABLY
THE U.S., WE CAN ASSUME AROUND
16, 17 MILLION BARRELS A DAY
WHICH IS INCREDIBLE WHEN YOU
THINK IN 2008 THE U.S. WAS AT
5 MILLION BARRELS.
MARIA: WOW, 2008.
>> WOULD THAT CHANGE IF THERE'S
A CHANGE IN LEADERSHIP, IF WE
END UP WITH A DEMOCRAT IN THE
WHITE HOUSE?
>> THAT GOES BACK TO DAGEN'S
QUESTION.
I THINK IT WOULD.
THERE WOULD BE -- BECAUSE THERE
WOULD BE A WAVE OF REGULAR LA
WOULD BE A WAVE OF REGULAT LA
WOULD BE A WAVE OF REGULATORA
WOULD BE A WAVE OF REGULATORY
INTERVENTIONS AND YOU JUST HAVE
TO LISTEN TO THEIR LANGUAGE.
DAGEN: THEY'RE PROMISING TO GET
RID OF THE USE OF FOSSIL FUELS
IN THIS COUNTRY IN A MATTER OF A
DECADE OR A LITTLE MORE THAN
THAT.
THINK ABOUT THAT.
AGAIN --
>> CAN I ANSWER IN ONE WORD?
UNREALISTIC.
DAGEN: THANK YOU.
IF YOU'RE PROMISING TO GO TO
CARS THAT USE RENEWABLE ENERGY,
THAT DON'T USE -- THAT ARE, SAY,
ELECTRIC, RATHER THAN GASOLINE
POWERED IN -- COMBUSTION
ENGINES, YOU'RE GOING TO GET RID
OF FRACKING SO YOU'RE GOING TO
GET RID OF BASICALLY NATURAL GAS
EXPLORATION.
SO HOW ARE YOU GOING TO PRODUCE
THE ELECTRICITY THAT THEN POWERS
OUR AUTOMOBILES?
>> THERE'S A COMPLETE NEED FOR
BALANCE AND WHAT WE NEED AND
THEN THE NEED FOR PEOPLE TO
FIGHT CLIMATE CHANGE.
MARIA: THESE PLANS DON'T MAKE
ANY SENSE.
>> WE NEED A MIX.
NATURAL GAS IS A REALLY
IMPORTANT ROLE.
IT'S OVERTAKEN COAL IN OUR
ELECTRIC GENERATION.
RENEWABLES WOULD BE PART OF THE
MIX.
I THINK WHAT WE'RE REALLY DOING
IS MOVING DOWN THE ROAD TO A
MORE MIXED SYSTEM.
YOU KNOW, EVs, THE AUTOMAKERS,
THERE'S A LOT OF ACTION ABOUT
THEM.
THE SALES ARE LESS THAN 2% AND
WE DID A ZIP CODE STUDY AND
FOUND THAT 25% OF THE EVs IN
THE UNITED STATES ARE IN JUST
THREE ZIP CODES.
DAGEN: AND ARE THEY ALL IN
CALIFORNIA.
>> YOU KNOW WHERE THEY ALL ARE.
DAGEN: THEY'RE ALL IN
CALIFORNIA.
>> EXACTLY.
MARIA: DO I HEAR YOU SAYING
THAT OIL PRICES WILL STAY
ELEVATE SNED WHAT DOES THIS --
ELEVATED?
WHAT DOES THIS MEAN FOR THE
PRICE OF OIL?
>> YOU HAD THIS DISRUPTION.
THE MOST IMPORTANT PIECE OF
HARDWARE IN THE OIL INDUSTRY WAS
DISRUPTED, PRODUCTION IS COMING
BACK IN SAUDI ARABIA NOW.
THE EQUIPMENT STILL NEEDS
REPAIRS FINISHED AND THE PRICE
IS BACK TO WHERE IT WAS.
SO I THINK THAT WHAT'S WEIGHING
ON THE OIL PRICE IS
INTERNATIONAL TRADE, TRADE WARS,
WEAKENING ECONOMIES, I THINK
THOSE ARE THE DOMINANT FACTORS.
MARIA: AND DOES IT KEEP
WEIGHING ON IT IS MY QUESTION,
DO YOU THINK OIL GOES UP OR
DOWN?
>> I THINK IN THIS ENVIRONMENT
-- WELL, IF SOMETHING ELSE
HAPPENS IN THE PERSIAN GULF --
REMEMBER, IRAN IS BOXED IN RIGHT
NOW AND THEY'RE EXPORTING ALMOST
NO OIL AND THIS HAS BEEN A VERY
LOW COST THING FOR THEM TO DO,
SO IF SOMETHING ELSE HAPPENS,
THEN WE WOULD SEE PRICES -- WE
COULD SEE PRICES AGAIN BE
ELEVATED.
BUT RIGHT NOW I THINK IT'S --
THERE'S KIND OF CONFIDENCE IN
SUPPLY.
I THINK THE SHALE PSYCHOLOGY IS
VERY IMPORTANT IN THE OIL
MARKET.
SO IT'S REALLY WHAT'S HAPPENING