Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's talk about the rise of AI fueling energy demand.
Speaker 2: Golment Sax estimating US data centers will use eight percent
Speaker 2: of total power in a country by twenty thirty, or
Speaker 2: three times the level from twenty twenty two. Will Van
Speaker 2: Low is the CEO of Quantum Capital Group, one of
Speaker 2: the largest private capital providers to the global energy industry,
Speaker 2: and will join us now.
Speaker 1: Well, good morning, good morning.
Speaker 2: It's good to see you, sir. The incoming president wants
Speaker 2: to unlock energy in America. Drill Baby, drill is something
Speaker 2: we heard from him repeatedly on the campaign trail. How
Speaker 2: difficult is that actually going to be?
Speaker 3: Well, first of all, thank you for having me on
Speaker 3: this morning. It's going to be very difficult. In terms
Speaker 3: of oil and gas production. Oil in particular, we have
Speaker 3: really developed most of the resource, the shell resource plays
Speaker 3: and other than the Permian, they're all either peaking and
Speaker 3: rolling into decline or they will soon. And I think
Speaker 3: the Permian maybe we can get another million or two
Speaker 3: million barrels a day out of it. So we produce
Speaker 3: about thirteen and a half million barrels a day right now,
Speaker 3: so maybe gets up to fourteen and a half or
Speaker 3: fifteen and a half, But that would really be the
Speaker 3: physical limitations of the permit.
Speaker 1: Given the fact that there seems to be a long
Speaker 1: runway for anything in terms of infrastructure in the energy space,
Speaker 1: what could changes in the Trump policies next year actually
Speaker 1: do fundamentally to shift the investing landscape, to shift sort
Speaker 1: of the energy landscape from your perspective.
Speaker 3: Right, Well, I think the biggest thing is lifting this
Speaker 3: LNG pause they've got to put on last year. You know,
Speaker 3: there were tens of billions of dollars of investment that
Speaker 3: were slated to go into the next phase of LNG
Speaker 3: build out. That's critical for our allies, that's critical for
Speaker 3: America projecting its power throughout the world to be able
Speaker 3: to export that energy. So I think that's the biggest
Speaker 3: thing that he could do immediately, and he said, you know,
Speaker 3: first day in office that something very likely may do.
Speaker 3: But I think other than that, permitting reform is the
Speaker 3: biggest thing that we really need. And that's not only
Speaker 3: for oil and gas, but that's also forransmission. I mean,
Speaker 3: that's the big is the wind and solar build out continues.
Speaker 3: The biggest bottle Nike is transmission. So I think having
Speaker 3: having regulatory kind of relief in terms of how long
Speaker 3: it takes to get these power lines permitted, permitting midstream
Speaker 3: pipelines so we can get that gas. America has a
Speaker 3: lot of natural gas. We have a lot more natural
Speaker 3: gas than we do oil, and so we've got to
Speaker 3: be able to build the critical infrastructure to get that
Speaker 3: power and that gas around the country.
Speaker 1: What's been fascinating to so many people is that there
Speaker 1: is a dissonance right now to all the discussions around
Speaker 1: artificial intelligence and the energy that's required to power that,
Speaker 1: and then just how long the process is to build
Speaker 1: it out from an infrastructure process, and then the fact
Speaker 1: that policies tend to ping pong and they change change
Speaker 1: quite considerably. How do you get around that when you're
Speaker 1: investing to try to cater to what seems like a
Speaker 1: really big opportunity but has these major pitfalls.
Speaker 3: Yeah, I mean, look, it's it's AI. A typical AI query,
Speaker 3: generative AI query takes ten times the amount of power
Speaker 3: that are regular Google search takes. Right, and so when
Speaker 3: you look at you mentioned that that power demand will
Speaker 3: literally triple for a data centers over the next kind
Speaker 3: of five to six years, that's a massive amount of power.
Speaker 3: You know, a data center, say a one gigawatt gas
Speaker 3: turbine that fires a data center could power eight hundred
Speaker 3: thousand homes. So you think about that a data center
Speaker 3: demand for power is going to grow about fifty about
Speaker 3: fifty gigawatts over the next six years. That's enough power
Speaker 3: we're going to have to install, enough power to power
Speaker 3: forty million homes. That's a lot of power. Well.
Speaker 4: Absolutely, when John sort off the conversation, they're talking about drill, baby, drill,
Speaker 4: I can't help but think that President Trump was elected,
Speaker 4: and then a few weeks later, Chevron is saying, actually,
Speaker 4: we're going to pull back on the Permian. Do you
Speaker 4: see more US oil producers pulling back on drilling because
Speaker 4: actually the oil right now price point is just not adventageous,
Speaker 4: that's correct.
Speaker 3: So you look at where prices are today, the inventory
Speaker 3: that's left, it's economic at these levels. And that's why
Speaker 3: I say that you've got to be very careful projecting
Speaker 3: how much production US can actually grow. And so at
Speaker 3: these prices, no, I don't see anybody drilling more.
Speaker 4: Do you think then the Trump administration would be more
Speaker 4: willing to either accept what the buy An administration might
Speaker 4: do on their way out, or do it themselves, which
Speaker 4: is to maybe start to hold back on Russian oil,
Speaker 4: saying instead of this price cap, we're actually going to
Speaker 4: sanction oil outright, really hurt putin. At the same time,
Speaker 4: if the prices go up, that actually might be better
Speaker 4: for US drillers.
Speaker 3: Yeah, I mean it's difficult. I mean we had there
Speaker 3: has been sanctions in place, arguably not very good ones,
Speaker 3: and so I do think that's clearly it's been rumored
Speaker 3: to be talked about. How effect will be, I don't know,
Speaker 3: but I will say I do think that President Trump
Speaker 3: is very focused on keeping energy prices low for the
Speaker 3: American consumer, and sanctioning Russian oil would would have just
Speaker 3: the opposite effect of that.
Speaker 4: The other thing you mentioned, of course, is gas and
Speaker 4: how the US has so much natural gas And do
Speaker 4: you think we're going to see executive orders when it
Speaker 4: comes to these LNG permits. Do you see deals growing,
Speaker 4: say for the United States and Europe because they're looking
Speaker 4: for some sort of bipartisan wedge into acquiescing themselves to
Speaker 4: the Trump administration.
Speaker 3: Well, Europe is still buying a lot of gas from Russia.
Speaker 3: It's not talked about very much, but they have to, okay,
Speaker 3: And so that's absolutely why we need American LNG to
Speaker 3: be expanded significantly. We have the gas to supply to
Speaker 3: our allies in Europe, and so you know, I think
Speaker 3: that's going to be a very critical part of Trump's
Speaker 3: energy policy, and it's something that really needs to happen.
Speaker 1: In the meantime, given that all these policies are sort
Speaker 1: of question marks right now, how much are you going
Speaker 1: to the share thing, which is tech companies themselves and
Speaker 1: working directly with them in order to build out energy
Speaker 1: because they need it and they need some certainty and
Speaker 1: you can probably provide that with the pool of capital
Speaker 1: that you have.
Speaker 3: Yes, So I think a couple of things are going
Speaker 3: to happen. The problem with all the growth an AI
Speaker 3: demand for electricity is it takes still takes four to
Speaker 3: five years to go get a new gas fired power
Speaker 3: plant built, and so we have to look at the
Speaker 3: existing asset base in the US today. If you look
Speaker 3: at the roughly two hundred gas turbines that are installed
Speaker 3: generating power that are greater than five hundred megawats, those
Speaker 3: run at about a fifty five to fifty six percent
Speaker 3: capacity factor. Okay, so there's a lot of capacity left
Speaker 3: in existing assets. It's just are the regulators going to
Speaker 3: allow the tech companies to take that excess power because
Speaker 3: that excess power is needed whenever it gets really cold
Speaker 3: or it gets really hot and demand surges, And that's
Speaker 3: going to be the real kind of tug and pull
Speaker 3: is we have it. It's going to take a lot
Speaker 3: longer to build out the new power plants. But what's
Speaker 3: going to how is that going to play out between
Speaker 3: the consumer on one hand and the tech companies on
Speaker 3: the other hand in five to ten years.
Speaker 1: How different is the backdrop going to look for big
Speaker 1: energy in the United States at a time where big
Speaker 1: oil has been sort of self constraint in a number
Speaker 1: of different ways from their investing programs, and you have
Speaker 1: upstarts like not only yourself, but a whole host of
Speaker 1: private investors who are trying to really get in alongside
Speaker 1: a big tech Yeah.
Speaker 3: So I think there's a lot of capital that's been formed.
Speaker 3: You've heard about these huge partnerships over the last couple
Speaker 3: of months that are all kind of around data centers
Speaker 3: and supplying that power for data centers. If you think
Speaker 3: about it. If you spend a billion dollars on power
Speaker 3: for a data center, you're going to spend about ten
Speaker 3: billion dollars on a data center itself, another twenty billion
Speaker 3: dollars on chips. So the power component's only about three
Speaker 3: little over three percent of the total cost of a
Speaker 3: data center. So I think there's going to be clearly
Speaker 3: the big tech companies are going to have to partner
Speaker 3: with both private and public companies to get that power.
Speaker 3: But the truth is is most of the power is
Speaker 3: controlled by big utilities, regulated utilities, and so I do
Speaker 3: think you'll see a lot more private companies coming into
Speaker 3: that space to partner with the big tech companies.
Speaker 2: Americans doll not want European nay crisis, that's for sure.
Speaker 2: I'm wondering how much pressure that we'll be on and
Speaker 2: provide us to make coal great again. How pragmatic do
Speaker 2: you think politicians leaders in America are going to be
Speaker 2: on that issue.
Speaker 3: Well, you know, if you look at it, the United States,
Speaker 3: we have retired a lot of our coal plants over
Speaker 3: the last couple of decades. Europe's retired even more. Just
Speaker 3: a few months ago, the UK retired their last remaining
Speaker 3: coal plant, which is an extraordinary statistic. I've had over
Speaker 3: one hundred and fifty years.
Speaker 2: It's amazing, and I see the government leaders celebrate it
Speaker 2: all the time, and then my mum calls mad. It
Speaker 2: tells me what an electricity bill was. That's right, what
Speaker 2: a field bill was. And it's astronomical.
Speaker 3: And what you appreciate is in every other part of
Speaker 3: the world, China uses more coal than ever. We use
Speaker 3: more coal today in the world we've ever used before,
Speaker 3: despite all the drum beat about how we massively reduced
Speaker 3: the reliance on it we have in the West, the
Speaker 3: rest of the world, India, China, you know, it's it's exploding,
Speaker 3: and so that's it's not really doesn't matter where it's
Speaker 3: burned one atmosphere, right, And that's the other thing we
Speaker 3: have to appreciate. So coal use is going to continue
Speaker 3: to go up. I don't think it will necessarily in
Speaker 3: the US. It will in Europe whenever they get really
Speaker 3: cold or really hot and that's the only fuel they have.
Speaker 3: But in Asia in particular, you're going to continue to
Speaker 3: see massive use of coal. Why because that's the fuel
Speaker 3: that they actually have. It's about energy security, and that
Speaker 3: China uses evs, not because they love the environment, but
Speaker 3: because they can burn coal to power those evs and
Speaker 3: not have to import gasoline.
Speaker 2: Amazing. Well it's going to see you always will. Van Low,
Speaker 2: have quant some capital, Grape and Mason of coled so
Speaker 2: oh the wrong reasons