WEBVTT - Chevron Chairman & CEO Mike Wirth Talks Trump's Energy Policy

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>We're beginning SAUNT with a look at the energy sector,

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<v Speaker 2>President Donald Trump pledging to expand production and lower prices,

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<v Speaker 2>with the thread of tariffs hanging overhead for the next

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<v Speaker 2>thirty minutes. Some places said it. Joining us now is

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<v Speaker 2>the chefron CEO, Mike Worth. Mike, good morning, It's good

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<v Speaker 2>to see you. I promised the first question earlier on

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<v Speaker 2>this morning. I mentioned it on air. I wanted to

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<v Speaker 2>know whether you've watched Landman on Paramount. Have you seen

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<v Speaker 2>the program?

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<v Speaker 3>I have?

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<v Speaker 2>Okay, how accurate is it? You have to deal with

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<v Speaker 2>cartowns on a daily basis.

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<v Speaker 3>It is. It is wonderful entertainment.

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<v Speaker 4>Billy Bob Thornton is an amazing actor, and it's drama, right,

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<v Speaker 4>and you need a little bit of a storyline, and

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<v Speaker 4>so you know, there are certain aspects of it that

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<v Speaker 4>are accurate, in others that are probably just a touch exaggerated.

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<v Speaker 2>It sets up this conversation quite well. I think for

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<v Speaker 2>one specific reason, I think there's been a vibe shift

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<v Speaker 2>in this country captured by the election in only November,

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<v Speaker 2>and also based and the content that people are consuming

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<v Speaker 2>right now, including Landmark and in Landman, you see a

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<v Speaker 2>much more pragmatic approach to things like fossil fuels, oil

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<v Speaker 2>and energy and the kind of work that your company does.

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<v Speaker 2>Do you think we are seeing that more pragmatic approach

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<v Speaker 2>the energy story now?

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<v Speaker 4>I think there's no question we're seeing that. I mean, you,

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<v Speaker 4>you know, take a look at this administration that has

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<v Speaker 4>come in and rather than criticizing and almost in some

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<v Speaker 4>ways ostracizing oil and gas, it's an It's an administration

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<v Speaker 4>that has talked about American energy abundance and using that

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<v Speaker 4>to the benefit of the American economy, the competitiveness of

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<v Speaker 4>American business and and but but not just oil and gas.

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<v Speaker 4>It's you know, the grid is a big thing for

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<v Speaker 4>the administration, and power generation. And so I think we

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<v Speaker 4>we're seeing a more balanced conversation. Something I've been calling

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<v Speaker 4>for for years is uh in energy, there are three

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<v Speaker 4>things that manage on affordability because that underpins economic prosperity,

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<v Speaker 4>reliable supplying because that relates to security in national security,

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<v Speaker 4>and then environmental impact. And we have to balance those

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<v Speaker 4>three things as we talk about energy. The conversation has

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<v Speaker 4>become very unbalanced and focused on one of the three

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<v Speaker 4>and not the other two. And I think we're seeing

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<v Speaker 4>a move back towards a more balanced and you use

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<v Speaker 4>the word pragmatic, I think that's a very good word

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<v Speaker 4>for the shift that we are seeing.

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<v Speaker 1>We definitely are hearing the shift in the conversation. We

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<v Speaker 1>heard that at Davos, even though you weren't there, we

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<v Speaker 1>missed you. I am curious about how much that translates

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<v Speaker 1>into actual changes that you're making on the ground, with

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<v Speaker 1>how much you're investing, how much you're planning to expand

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<v Speaker 1>your footprint in the United States and elsewhere.

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<v Speaker 4>Yeah, we grew production last year seven percent globally, almost

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<v Speaker 4>twenty percent here in the US, the largest production we've

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<v Speaker 4>ever had in our history, largest cash distribution to our shareholders.

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<v Speaker 3>So we are growing.

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<v Speaker 4>We're also doing it in a more capital efficient way.

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<v Speaker 4>So we've been focused on getting more bang for dollar

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<v Speaker 4>of capital.

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<v Speaker 3>You guys are talking a lot about capital.

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<v Speaker 4>This morning, and in a capital intensive industry, we have

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<v Speaker 4>to always look for ways to be as capital efficient

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<v Speaker 4>as we can be, in as disciplined as we can be,

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<v Speaker 4>and so we're able to bring new energy supplies to

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<v Speaker 4>the market at a lower capital investment rate than ever before.

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<v Speaker 4>We'll go again this year in the United States another

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<v Speaker 4>ten percent or so in the Permian. So demand for

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<v Speaker 4>energy is at an all time high and it's only

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<v Speaker 4>going up.

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<v Speaker 1>Last year, you had a record production, even under an

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<v Speaker 1>administration that had a very different tone toward the oil

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<v Speaker 1>and gas administration, the oil and grass industry. I just

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<v Speaker 1>wonder how the vibe shift will change what your outlook

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<v Speaker 1>is at a time when the rhetoric has shifted to

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<v Speaker 1>the positive. But some of the proposals like tariffs might

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<v Speaker 1>be headwinds in certain places.

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<v Speaker 4>Yeah, so I think your point's a good one, Lisa.

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<v Speaker 4>The rhetoric kind of sets the mood music. But you

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<v Speaker 4>actually have to see policy right, and some of that's

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<v Speaker 4>done through executive order these days. A lot of it

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<v Speaker 4>would be best done through legislation. And we would like

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<v Speaker 4>to work with both sides of the aisle to implement durable, balanced,

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<v Speaker 4>and pragmatic energy policy, things like permitting reform, which you've

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<v Speaker 4>gotten a lot of conversation, but we really haven't seen

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<v Speaker 4>action yet on that. And it's difficult to build anything

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<v Speaker 4>in this country, not just pipelines and infrastructure for our industry,

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<v Speaker 4>but new power generation and grid modernization and other types

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<v Speaker 4>of infrastructure. So we hope and are certainly willing to

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<v Speaker 4>work with parties from across the spectrum to try to

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<v Speaker 4>turn some of this vibe shift or more balanced conversation

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<v Speaker 4>into what we think is good, durable policy.

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<v Speaker 2>Can you talk to us more about the permitting These

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<v Speaker 2>are things we hear about all the time. You're running

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<v Speaker 2>a business. Could you help us understand how much that

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<v Speaker 2>has held back your business?

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<v Speaker 3>Oh, it slows things down. It's very difficult.

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<v Speaker 4>I mean, you know, the Keystone Pipeline is a good

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<v Speaker 4>example that was well documented where a multi billion dollar

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<v Speaker 4>investment that would have been good for Canada, would have

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<v Speaker 4>been good for the United States, ultimately didn't happen because

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<v Speaker 4>the permiting process can be hijacked by interests that are

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<v Speaker 4>opposed to seeing investment in our economy. And so, look,

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<v Speaker 4>everybody wants to see good protection of the environment and

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<v Speaker 4>engagement of communities are impacted by projects. But we need

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<v Speaker 4>lead agencies that can take responsibility for these processes. We

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<v Speaker 4>need timelines that are reasonable timelines to do the work,

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<v Speaker 4>and then we need reasonable boundaries around the way these

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<v Speaker 4>things can be litigated in the quirks and that needs

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<v Speaker 4>to you know, that needs to be done to enable

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<v Speaker 4>more investment in this country.

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<v Speaker 2>This president clearly wants to change that. Users phrases like drill, baby, drill.

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<v Speaker 2>We're certainly drilling, not for thirteen million barwers of all

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<v Speaker 2>the day in this country, which is phenomenal. I often

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<v Speaker 2>sit here Lis it does too, and we'll say things

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<v Speaker 2>like and we'll hear it from Amara as well once

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<v Speaker 2>she's here. How realistic is it to get that number

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<v Speaker 2>much higher than the thirteen million barwers we're out right now,

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<v Speaker 2>you'd know it better than we do. How realistic is it?

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<v Speaker 3>Well?

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<v Speaker 4>I think production in the US is going to grow

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<v Speaker 4>again this year. We certainly see in our business. I said,

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<v Speaker 4>our permaning production will be up ten percent. In the

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<v Speaker 4>deep water Gulf of America, We're going to go from

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<v Speaker 4>two hundred thousand barrels a day to three hundred thousand

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<v Speaker 4>barrels a day by the end of twenty twenty six.

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<v Speaker 4>So there is production growth coming, but it's really driven

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<v Speaker 4>by economics, a long term view on supply demand, technology,

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<v Speaker 4>and policy.

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<v Speaker 2>Just to jump in that last point, a long term

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<v Speaker 2>view on policy. How difficult is it to make these

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<v Speaker 2>investment decisions we talk about this five shift now could

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<v Speaker 2>change again.

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<v Speaker 4>It's very difficult, John, and so one of the things

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<v Speaker 4>our company was criticized for a few years ago is

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<v Speaker 4>we weren't jumping into some of the renewables as fast

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<v Speaker 4>as others because the policy was unclear, and so we

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<v Speaker 4>were doing basic research. We were investing in pilot plants.

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<v Speaker 4>But multi billion dollar investments that are very dependent upon

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<v Speaker 4>policy that could change quickly are something you have to

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<v Speaker 4>think about when you're looking to deliver strong returns to

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<v Speaker 4>your shareholders. And so we would like to see durable,

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<v Speaker 4>long term balance policy because that does make the investment

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<v Speaker 4>decision a little bit easier for companies to make.

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<v Speaker 1>Test case for this is liquefied natural gas. US is

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<v Speaker 1>a massive producer of it. You're one of the biggest

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<v Speaker 1>producers of it.

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<v Speaker 3>There was a ban on.

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<v Speaker 1>Exporting to Europe at a time when Europe is really

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<v Speaker 1>dependent on the US. That has been lifted. Now there's

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<v Speaker 1>the potential of tariffs being placed on some of those exports.

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<v Speaker 1>How much can you start to lean into exports versus

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<v Speaker 1>not due to some of this confusion.

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<v Speaker 4>Yeah, you know, the tariff environment is obviously evolving here

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<v Speaker 4>on a daily basis. Energy is a globally traded commodity,

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<v Speaker 4>and LNG oil petroleum products for the most part. Now

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<v Speaker 4>Canadian oil is a little bit different because it's really

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<v Speaker 4>dependent upon pipelines, but those products can go to different markets.

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<v Speaker 4>We've seen sanctions reorient trade flows. Tariffs are on other

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<v Speaker 4>instruments that can change the economics for producers and for consumers.

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<v Speaker 4>And what you'll typically see, whether it's LNG or oil

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<v Speaker 4>is flows will move to different markets as producers seek

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<v Speaker 4>the highest price for their production and as consumers seek

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<v Speaker 4>the lowest cost for what they're looking to buy. And

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<v Speaker 4>as long as supply remains in the market, you have

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<v Speaker 4>markets well supplied, you generally start to see costs go

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<v Speaker 4>up a little bit because there's increased transportation and some

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<v Speaker 4>kind of friction in the system, But export decisions aren't

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<v Speaker 4>heavily affected by those prospects.

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<v Speaker 2>I would say, speaking of sanctions, just briefly, you have

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<v Speaker 2>a waiver to operate in Venezuela. Is that the case

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<v Speaker 2>we do, Sender Rubio. Now, Secretary Rubio said maybe the

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<v Speaker 2>US should reconsider that waiver. You in contact with them

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<v Speaker 2>on that issue.

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<v Speaker 4>We're in contact with the current administration. We've been in

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<v Speaker 4>contact with the first Trump administration and the Biden administration

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<v Speaker 4>because the sanctions on Venezuela have been in place for

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<v Speaker 4>years and we work closely with the government, understand their objectives,

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<v Speaker 4>to understand the limitations that are being placed through these

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<v Speaker 4>licenses issued by OPHAK, and to stay in full compliance

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<v Speaker 4>with the laws.

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<v Speaker 2>Are you anticipate in any changes in the hill or

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<v Speaker 2>too early to say either.

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<v Speaker 4>Recently was a trip down to Venezuela by a special

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<v Speaker 4>envoy who brought back some Americans from Venezuela and arranged

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<v Speaker 4>terms for I think Venezuelan and immigrants to go back

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<v Speaker 4>to Venezuela that are that are here illegally, and that

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<v Speaker 4>seems to be you know, the latest the general license

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<v Speaker 4>that we operate was unchanged. It has been changed over

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<v Speaker 4>the years in different ways, and that still could happen.

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<v Speaker 4>We try to inform the government of the potential ramifications

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<v Speaker 4>of a change like that, so they're well informed before

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<v Speaker 4>they make changes of what would the ramifications be. Well,

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<v Speaker 4>under the initial Trump sanctions, Venezuelan oil was not allowed

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<v Speaker 4>to come to the US. The Biden administration changed that.

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<v Speaker 4>Gulf Coast refiners actually run a lot of the heavy

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<v Speaker 4>grades that come from Venezuela. If you see sanctions on

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<v Speaker 4>Canadian or tariffs on Canadian or Mexicano oil, that may

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<v Speaker 4>send some of that oil to other countries, and so

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<v Speaker 4>the Venezuelan.

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<v Speaker 3>Oil could be even more important.

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<v Speaker 4>So it's things like that, it's hot, how would this

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<v Speaker 4>work through the system that we really try to help

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<v Speaker 4>the policy makers.

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<v Speaker 2>Understand data center growth. There was a conversation only two

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<v Speaker 2>mondays ago about whether we've been overestimating the extent of

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<v Speaker 2>data center growth we'd see and alongside that the amount

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<v Speaker 2>of energy we might need. Did the Deep Seek story

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<v Speaker 2>if the last week or so change your routdlook at So.

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<v Speaker 3>It really didn't.

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<v Speaker 4>If you look at the incredible capital spending that you've

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<v Speaker 4>been talking about and the huge demand for increased compute

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<v Speaker 4>from all the big hyperscalers, I think they all assume

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<v Speaker 4>you're going to find more efficiency in the development of

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<v Speaker 4>these models, the training and inference techniques that are used,

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<v Speaker 4>and at the same time, we're going to need a

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<v Speaker 4>lot more computer capacity. So the two big constraints are

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<v Speaker 4>GPUs and interestingly electricity. We haven't seen real growth and

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<v Speaker 4>demand for electricity for the last couple of decades in

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<v Speaker 4>this country. We have taken a lot of reliable baseload

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<v Speaker 4>power off the grid. Coal plants have been shut down.

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<v Speaker 4>We've had a lot of wind and solar, which are

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<v Speaker 4>great and very low emissions, but they're also intermittent, and

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<v Speaker 4>so the grid hasn't been modernized. The power generating capacity

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<v Speaker 4>hasn't changed much, and we're poised to see demand from

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<v Speaker 4>data centers, from the electrification of the vehicle fleet and

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<v Speaker 4>other parts of our economy. And so there's a range

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<v Speaker 4>of estimates, but I think nobody would tell you the

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<v Speaker 4>demand for power isn't going to go up and probably

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<v Speaker 4>pretty significantly over the next few years.

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<v Speaker 1>That feels like a year ago by the way deep

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<v Speaker 1>seek what I mean, honestly, it's just sort of amazing

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<v Speaker 1>how quickly this goes. What is how do you sort

0:11:36.760 --> 0:11:39.720
<v Speaker 1>of gut check people's understanding of the energy use that

0:11:39.840 --> 0:11:42.320
<v Speaker 1>is required for this, and how are you planning to

0:11:42.360 --> 0:11:45.880
<v Speaker 1>build out your footprint, what type of energy you want

0:11:45.960 --> 0:11:48.560
<v Speaker 1>to invest in, and what your budget is like for that.

0:11:49.080 --> 0:11:51.000
<v Speaker 4>Yeah, So we talked to the people that are doing

0:11:51.000 --> 0:11:53.160
<v Speaker 4>the work right, and we're a customer of all the

0:11:53.200 --> 0:11:56.000
<v Speaker 4>big tech companies, right, they help us in many different

0:11:56.000 --> 0:11:58.600
<v Speaker 4>parts of our business. We've got relations with them, so

0:11:58.640 --> 0:12:02.240
<v Speaker 4>we're looking to use these tools to improve our business performance.

0:12:02.679 --> 0:12:04.600
<v Speaker 4>And over the last couple of years the conversation has

0:12:04.640 --> 0:12:06.920
<v Speaker 4>flipped and they've said, how can you help us be

0:12:07.000 --> 0:12:09.800
<v Speaker 4>sure we've got enough power at scale in order to

0:12:09.800 --> 0:12:14.040
<v Speaker 4>deliver the products that you're looking for. And one of

0:12:14.040 --> 0:12:16.439
<v Speaker 4>the things that's very clear is the hyperscalers want to

0:12:16.440 --> 0:12:18.760
<v Speaker 4>move fast. There's a bit of a land grab and

0:12:18.800 --> 0:12:20.959
<v Speaker 4>you see it in the way the capital budgets are

0:12:21.000 --> 0:12:24.280
<v Speaker 4>going up, and so things that are at a scale

0:12:24.280 --> 0:12:26.480
<v Speaker 4>of one hundred megawats two hundred mega wants are different

0:12:26.520 --> 0:12:30.640
<v Speaker 4>than gigawants, which is really where their ambition is. What

0:12:30.720 --> 0:12:34.600
<v Speaker 4>we've done recently is announced a venture with GeV Veranova

0:12:34.840 --> 0:12:38.600
<v Speaker 4>and a company called Engine Number one to collaborate and

0:12:38.679 --> 0:12:42.200
<v Speaker 4>bring four giga wants of power to market beginning in

0:12:42.280 --> 0:12:45.560
<v Speaker 4>late twenty twenty seven, so relatively soon. Seven of g

0:12:45.679 --> 0:12:49.640
<v Speaker 4>e Vernova's biggest turbines that we've got delivery slots on,

0:12:50.080 --> 0:12:52.600
<v Speaker 4>and the intent is to cite those in places that

0:12:52.800 --> 0:12:56.960
<v Speaker 4>can meet the need of these hyperscalers reliable gas supply

0:12:57.080 --> 0:12:59.840
<v Speaker 4>so that they can have long term confidence in the

0:13:00.080 --> 0:13:02.720
<v Speaker 4>energy off the grid, so they're not going through the

0:13:02.760 --> 0:13:06.280
<v Speaker 4>grid and dealing with interconnect cues and the reliability issues,

0:13:06.640 --> 0:13:09.360
<v Speaker 4>and ultimately also a desire to try to integrate lower

0:13:09.400 --> 0:13:13.359
<v Speaker 4>carbon energy into this, whether it's through carbon capture, hydrogen, geothermal,

0:13:13.400 --> 0:13:14.359
<v Speaker 4>and other technologies.

0:13:14.679 --> 0:13:15.839
<v Speaker 3>Something we know a lot about.

0:13:15.920 --> 0:13:17.960
<v Speaker 1>You said turbines, and those are natural gas turbines.

0:13:18.040 --> 0:13:18.559
<v Speaker 3>That's right.

0:13:18.720 --> 0:13:20.880
<v Speaker 1>How much do you think that natural gas could potentially

0:13:21.000 --> 0:13:25.840
<v Speaker 1>overtake diesel and some of the gasoline that people use

0:13:26.040 --> 0:13:29.680
<v Speaker 1>to fuel a lot of what currently gets generated.

0:13:30.000 --> 0:13:33.400
<v Speaker 4>In electricity, You're going to see. We've seen historically good

0:13:33.480 --> 0:13:35.120
<v Speaker 4>demand for gas, and you're going to see more of it.

0:13:35.160 --> 0:13:38.199
<v Speaker 4>You're going to see demand gas for exports and lergy.

0:13:38.240 --> 0:13:39.520
<v Speaker 4>As we were discussing earlier.

0:13:40.000 --> 0:13:43.120
<v Speaker 3>In transportation, its use will be more limited.

0:13:43.960 --> 0:13:47.840
<v Speaker 4>It has certain advantages, but certain disadvantages when it comes

0:13:47.920 --> 0:13:50.640
<v Speaker 4>to vehicle transportation. And so I think you're going to

0:13:50.640 --> 0:13:55.360
<v Speaker 4>see conventional gasoline and diesel, along with electric vehicles, really

0:13:55.400 --> 0:13:58.000
<v Speaker 4>power the light duty vehicle fleet and the heavy duty

0:13:58.080 --> 0:14:00.679
<v Speaker 4>vehicle fleet for the foreseeable future. I think you're going

0:14:00.679 --> 0:14:03.760
<v Speaker 4>to see gas more in power generation in other parts

0:14:03.760 --> 0:14:04.480
<v Speaker 4>of the economy.

0:14:04.760 --> 0:14:07.000
<v Speaker 1>Before we let you go I know that the Hest

0:14:07.000 --> 0:14:09.440
<v Speaker 1>thing has been messy. It's going to potentially close later

0:14:09.480 --> 0:14:11.040
<v Speaker 1>this year. I know that there's a lot that it

0:14:11.080 --> 0:14:14.240
<v Speaker 1>needs to get worked through. Once that's gone through, how

0:14:14.280 --> 0:14:16.839
<v Speaker 1>in the market are you to potentially consolidate? So a

0:14:16.840 --> 0:14:18.680
<v Speaker 1>lot of people are saying this is a market in

0:14:18.679 --> 0:14:20.800
<v Speaker 1>the United States, it still has a lot of consolidating

0:14:20.840 --> 0:14:21.520
<v Speaker 1>to be done.

0:14:21.760 --> 0:14:24.960
<v Speaker 4>Well, we're first and foremost focused on the Hest transaction

0:14:25.040 --> 0:14:29.000
<v Speaker 4>and that will conclude later this year. We're always looking.

0:14:29.000 --> 0:14:31.040
<v Speaker 4>We're a resource business. You're always looking to acquire a

0:14:31.080 --> 0:14:34.640
<v Speaker 4>good quality resource that makes your portfolio stronger. We've got

0:14:34.640 --> 0:14:36.960
<v Speaker 4>a great position today, so we don't need to do anything.

0:14:37.040 --> 0:14:39.360
<v Speaker 4>We would only do something if it really fit for

0:14:39.400 --> 0:14:41.280
<v Speaker 4>our company, if the price we're right in it would

0:14:41.280 --> 0:14:42.520
<v Speaker 4>create value for shareholders.

0:14:42.680 --> 0:14:45.560
<v Speaker 1>What type of industry though, you've got natural gas, you've

0:14:45.560 --> 0:14:49.520
<v Speaker 1>got oil, you have other types of forms. What would

0:14:49.560 --> 0:14:51.240
<v Speaker 1>be the area you want to expand in.

0:14:51.640 --> 0:14:53.400
<v Speaker 4>Well, there's a couple of barriers that are always of

0:14:53.440 --> 0:14:55.800
<v Speaker 4>interest to us. One is oil and gas resources because

0:14:55.800 --> 0:14:57.960
<v Speaker 4>every day, as you produce it, you have less in

0:14:58.000 --> 0:14:59.320
<v Speaker 4>your portfolio.

0:14:58.800 --> 0:15:00.920
<v Speaker 3>And so you need to replace that.

0:15:00.960 --> 0:15:04.160
<v Speaker 4>We do it through exploration by finding new fields we

0:15:04.200 --> 0:15:06.280
<v Speaker 4>do it through technology to improve recoveries, and we do

0:15:06.320 --> 0:15:09.920
<v Speaker 4>it through acquisitions. The other sector that's got really robust

0:15:10.040 --> 0:15:13.200
<v Speaker 4>demand growth is petrochemicals, and as we have a larger

0:15:13.240 --> 0:15:16.600
<v Speaker 4>middle class in this world, as we move towards more

0:15:16.800 --> 0:15:22.760
<v Speaker 4>fuel efficient modes of transportation and lighter weight airplanes and vehicles,

0:15:23.320 --> 0:15:26.920
<v Speaker 4>much of that is in the materialty going to that

0:15:27.040 --> 0:15:30.600
<v Speaker 4>or derived from thermoplastic petrochemical products to light they have

0:15:30.720 --> 0:15:35.120
<v Speaker 4>light weight, they have good durability and other rigidity and

0:15:35.200 --> 0:15:38.680
<v Speaker 4>mechanical properties, so demand for petrochemicals will be strong that

0:15:38.680 --> 0:15:40.600
<v Speaker 4>it's another sector that we'd be interested in.

0:15:40.920 --> 0:15:44.040
<v Speaker 2>This was perfect. Appreciate your time, mine worth everybody from

0:15:44.120 --> 0:15:44.520
<v Speaker 2>Chevron