1 00:00:10,800 --> 00:00:13,960 Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast. 2 00:00:14,040 --> 00:00:15,440 Speaker 1: I'm Tracy Alloway. 3 00:00:15,080 --> 00:00:16,240 Speaker 2: And I'm Joe Wisenthal. 4 00:00:16,560 --> 00:00:18,840 Speaker 1: Joe, do you remember that time I bought a barrel 5 00:00:18,880 --> 00:00:19,239 Speaker 1: of oil? 6 00:00:19,960 --> 00:00:24,720 Speaker 2: That was a classic, classic moment in a well, yeah, that. 7 00:00:24,760 --> 00:00:27,840 Speaker 1: Was class I can say it in all of financial journals, all. 8 00:00:27,720 --> 00:00:32,159 Speaker 2: Of financial journalism were you Actually it wasn't a barrel though, No, 9 00:00:32,320 --> 00:00:33,479 Speaker 2: it was honest, Let's be. 10 00:00:33,479 --> 00:00:36,680 Speaker 1: Honest, it wasn't. I tried to buy an actual barrel. 11 00:00:36,760 --> 00:00:38,960 Speaker 1: It was like a gallon, right, It was basically a 12 00:00:39,080 --> 00:00:43,160 Speaker 1: jar of crude oil. I'm really happy I didn't buy 13 00:00:43,200 --> 00:00:46,000 Speaker 1: an entire barrel in the end, because part of the 14 00:00:46,080 --> 00:00:49,839 Speaker 1: experience of doing this was I realized how difficult it 15 00:00:50,000 --> 00:00:53,640 Speaker 1: is to actually move and store oil. Oil is a 16 00:00:53,720 --> 00:00:54,480 Speaker 1: dangerous thing. 17 00:00:55,240 --> 00:00:57,279 Speaker 2: Yeah, you had it on the desk next to us, 18 00:00:57,320 --> 00:00:59,000 Speaker 2: and then you left, right like you left for Hong 19 00:00:59,080 --> 00:01:01,520 Speaker 2: Kong or you left, Yeah, delby and left the oil 20 00:01:01,720 --> 00:01:03,560 Speaker 2: and like a bunch of vaporated I'm. 21 00:01:03,360 --> 00:01:05,840 Speaker 1: Not sure I should tell this story, but I couldn't 22 00:01:05,840 --> 00:01:09,000 Speaker 1: figure out how to dispose of my jar of crude oil. 23 00:01:09,200 --> 00:01:12,240 Speaker 1: So I just procrastinated and left it on the desk 24 00:01:12,319 --> 00:01:14,759 Speaker 1: and it slowly evaporated and poisoned my. 25 00:01:14,720 --> 00:01:17,959 Speaker 2: Car and now the oil fumes for months and months. 26 00:01:18,040 --> 00:01:21,080 Speaker 1: Yes, sorry about that too, right, I survived? All right? Well, 27 00:01:21,280 --> 00:01:24,319 Speaker 1: I bring it up because I'm very, very curious about 28 00:01:24,360 --> 00:01:28,000 Speaker 1: the business of storing and transporting oil right now. And 29 00:01:28,120 --> 00:01:30,920 Speaker 1: part of the reason is because, as we've been discussing 30 00:01:31,000 --> 00:01:33,520 Speaker 1: on this podcast, we had a really great episode with 31 00:01:33,600 --> 00:01:37,840 Speaker 1: our colleague caper Bloss. For instance, US oil production is 32 00:01:38,080 --> 00:01:40,679 Speaker 1: at a record I think it's like more than thirteen 33 00:01:40,680 --> 00:01:42,280 Speaker 1: million barrels per day now. 34 00:01:42,720 --> 00:01:46,680 Speaker 2: Yeah, it's really extraordinary. Obviously, the US just production booming 35 00:01:46,760 --> 00:01:49,639 Speaker 2: like crazy. And you know you mentioned that episode with Javier. 36 00:01:49,720 --> 00:01:52,560 Speaker 2: When we talk about oil, most of the time, right 37 00:01:52,600 --> 00:01:55,000 Speaker 2: we're talking sort of like macro, like who are the 38 00:01:55,040 --> 00:01:58,400 Speaker 2: big producers, how much global demand is there, what is 39 00:01:58,440 --> 00:02:01,360 Speaker 2: the trajectory, what's happening in shit, what is happening in Saudi, 40 00:02:01,440 --> 00:02:04,000 Speaker 2: et cetera. But as we like to do from time 41 00:02:04,040 --> 00:02:06,440 Speaker 2: to time, like these aren't just numbers on a screen, right, 42 00:02:06,560 --> 00:02:09,480 Speaker 2: Oil is definitely not just a number on a screen. 43 00:02:09,520 --> 00:02:11,520 Speaker 2: And if you want to go long oil, if you 44 00:02:11,560 --> 00:02:14,359 Speaker 2: want to, if you're bullish on oil, like you might 45 00:02:14,400 --> 00:02:15,960 Speaker 2: be able to do that with a few clicks, but 46 00:02:16,040 --> 00:02:17,280 Speaker 2: someone somewhere. 47 00:02:16,919 --> 00:02:18,600 Speaker 1: We don't want to take physical delivery. 48 00:02:18,840 --> 00:02:21,120 Speaker 2: You probably don't want to, but someone somewhere has to 49 00:02:21,160 --> 00:02:24,560 Speaker 2: have the physical I don't know if it's counterpart or 50 00:02:24,600 --> 00:02:28,160 Speaker 2: the physical exposure to meet your financial obligation. So if 51 00:02:28,160 --> 00:02:31,840 Speaker 2: your trade oil futures, someone there, like I assume, takes 52 00:02:31,880 --> 00:02:34,720 Speaker 2: the other side on some level by having exposure to 53 00:02:34,720 --> 00:02:39,880 Speaker 2: the physical product, which means worrying about disposal, delivery, storage, tankers, 54 00:02:39,919 --> 00:02:41,760 Speaker 2: and so forth. It is so like the sort of 55 00:02:42,160 --> 00:02:44,560 Speaker 2: the side of the business that's not usually talked about 56 00:02:44,800 --> 00:02:45,880 Speaker 2: we should talk about. 57 00:02:45,760 --> 00:02:49,000 Speaker 1: Absolutely, And just going back to that episode with Havier, 58 00:02:49,120 --> 00:02:51,160 Speaker 1: I remember one of the themes from that was how 59 00:02:51,320 --> 00:02:54,840 Speaker 1: much oil production patterns have changed in the past few years, 60 00:02:55,000 --> 00:02:58,400 Speaker 1: and so I'm very curious if the storage and transportation 61 00:02:58,760 --> 00:03:02,480 Speaker 1: patterns are also changing. So I'm pleased to say we 62 00:03:02,560 --> 00:03:05,360 Speaker 1: really do have the perfect guests to dive into the 63 00:03:05,520 --> 00:03:08,160 Speaker 1: business of storing and moving oil. We're going to be 64 00:03:08,200 --> 00:03:12,160 Speaker 1: speaking with Stephen Barsamian. He is COO at The Tank 65 00:03:12,360 --> 00:03:16,320 Speaker 1: Tiger and also the co host of the tank Talk podcast, 66 00:03:16,360 --> 00:03:18,840 Speaker 1: so a fellow podcaster, Steve, thank you so much for 67 00:03:18,880 --> 00:03:19,760 Speaker 1: coming on. All thoughts. 68 00:03:19,960 --> 00:03:21,880 Speaker 3: Thanks Tracy, thanks for having me. Thanks for having me. 69 00:03:21,960 --> 00:03:24,480 Speaker 1: Joe, maybe just to begin with talk to us about 70 00:03:24,520 --> 00:03:27,360 Speaker 1: what the tank Tiger actually does. I was looking at 71 00:03:27,360 --> 00:03:30,919 Speaker 1: the website. You describe yourself as a clearing house for 72 00:03:31,080 --> 00:03:34,079 Speaker 1: terminal storage, and if you go to the website, Joe, 73 00:03:34,120 --> 00:03:35,800 Speaker 1: I don't know if you've done this yet, I have, 74 00:03:36,120 --> 00:03:40,080 Speaker 1: but you can look at basically kind of want ads 75 00:03:40,160 --> 00:03:45,960 Speaker 1: for storage. It's like looking for you know, specialty chemical storage, 76 00:03:46,120 --> 00:03:50,320 Speaker 1: this amount or I have available this amount of storage 77 00:03:50,320 --> 00:03:51,960 Speaker 1: for a particular product. 78 00:03:52,200 --> 00:03:54,120 Speaker 3: Yeah, I mean, Tracy, you kind of nailed it there. 79 00:03:54,160 --> 00:03:56,119 Speaker 3: That's kind of what we do. I like to say 80 00:03:56,120 --> 00:03:57,480 Speaker 3: we're Airbnb for tanks. 81 00:03:57,760 --> 00:04:00,720 Speaker 2: I was going to say Tinder probably works too. 82 00:04:01,080 --> 00:04:04,880 Speaker 3: My dad has used maatch dot com before, so yeah, no, 83 00:04:05,080 --> 00:04:07,480 Speaker 3: that's kind of high level what we do. Essentially, we 84 00:04:07,560 --> 00:04:13,560 Speaker 3: have customers that are terminals that store you know, petroleum products, chemicals, bioproducts, 85 00:04:13,560 --> 00:04:15,760 Speaker 3: and they're all pretty much liquids and they go into 86 00:04:15,880 --> 00:04:18,520 Speaker 3: a you know, a giant tank. I'm sure people have 87 00:04:18,560 --> 00:04:21,440 Speaker 3: seen the Sopranos, the intro to the Sopranos, those ginormous 88 00:04:21,520 --> 00:04:24,800 Speaker 3: tanks and the intro that typically holds you know, gasoline 89 00:04:24,880 --> 00:04:27,560 Speaker 3: or diesel, and essentially you can lease them out like 90 00:04:27,560 --> 00:04:31,000 Speaker 3: an apartment, and people pay for a term on that 91 00:04:31,120 --> 00:04:33,400 Speaker 3: tank like you would pay for a term on an apartment. 92 00:04:33,920 --> 00:04:37,880 Speaker 3: And essentially oil traders, oil majors, they usually are the 93 00:04:37,880 --> 00:04:41,239 Speaker 3: customers that least those tanks. And there's terminal storage companies 94 00:04:41,240 --> 00:04:43,760 Speaker 3: that are public companies that kind of lease them out 95 00:04:43,800 --> 00:04:46,440 Speaker 3: third party, So that's kind of how it works. And 96 00:04:46,640 --> 00:04:48,640 Speaker 3: essentially we kind of get in the middle of that 97 00:04:48,680 --> 00:04:51,600 Speaker 3: and we try to facilitate the transactions of people that 98 00:04:51,640 --> 00:04:53,960 Speaker 3: need storage and the people that have storage, and like 99 00:04:54,040 --> 00:04:55,520 Speaker 3: you said, is kind of like one ads, you know, 100 00:04:55,640 --> 00:04:58,400 Speaker 3: trying to find the perfect match. And really that's what 101 00:04:58,400 --> 00:05:00,360 Speaker 3: we've done for the past nine years, and so far 102 00:05:00,279 --> 00:05:02,559 Speaker 3: we're still in business and still paying the bills. 103 00:05:02,600 --> 00:05:07,440 Speaker 1: So wanted storage unit with sensitivity and I don't know, 104 00:05:07,760 --> 00:05:11,839 Speaker 1: affinity for poetry slightly round them. 105 00:05:11,880 --> 00:05:14,800 Speaker 2: How much of the business, if you look overall, is 106 00:05:14,920 --> 00:05:20,320 Speaker 2: sort of like big sort of long term relationships between 107 00:05:20,520 --> 00:05:24,280 Speaker 2: some oil producer and some storage company, and then how 108 00:05:24,360 --> 00:05:27,080 Speaker 2: much maybe we have the tank tiger's business or anyone 109 00:05:27,160 --> 00:05:29,840 Speaker 2: else's business is perhaps like sort of like I don't know, 110 00:05:29,880 --> 00:05:33,000 Speaker 2: maybe the term is odd. Lots of oil storage where 111 00:05:33,480 --> 00:05:36,359 Speaker 2: some storage company has a little bit of extra space 112 00:05:36,480 --> 00:05:39,560 Speaker 2: beyond what their contract is. I mean, I assume there 113 00:05:39,560 --> 00:05:41,800 Speaker 2: are like long term contracts, but why do you like 114 00:05:41,839 --> 00:05:44,880 Speaker 2: talk about the breakdown there of how these deals usually 115 00:05:44,920 --> 00:05:45,359 Speaker 2: come together. 116 00:05:45,800 --> 00:05:46,000 Speaker 1: You know. 117 00:05:46,200 --> 00:05:48,640 Speaker 3: So my dad who started the company, he worked at 118 00:05:48,680 --> 00:05:51,520 Speaker 3: HESS for over thirty years and he kind of started 119 00:05:51,800 --> 00:05:55,839 Speaker 3: the third party leasing of terminal storage at HESS. Those 120 00:05:55,920 --> 00:05:58,920 Speaker 3: terminals are now not obviously owned by HESS anymore, and 121 00:05:59,000 --> 00:06:00,919 Speaker 3: he kind of saw the need in the market to 122 00:06:00,960 --> 00:06:03,640 Speaker 3: create this company. And you know, when he was doing 123 00:06:03,640 --> 00:06:06,159 Speaker 3: deals a hes it was you know, largely long term 124 00:06:06,160 --> 00:06:09,000 Speaker 3: deals or spot deals and essentially you know, trying to 125 00:06:09,040 --> 00:06:12,279 Speaker 3: find the best fit for their excess capacity and assets. 126 00:06:12,839 --> 00:06:15,240 Speaker 3: So I would say, you know, typically today, you know, 127 00:06:15,279 --> 00:06:17,400 Speaker 3: with us being in the market, we've kind of added 128 00:06:17,400 --> 00:06:20,719 Speaker 3: some liquidity and transparency a lot of the big players. 129 00:06:20,800 --> 00:06:23,479 Speaker 3: You know, there's big and small terminals, and a lot 130 00:06:23,480 --> 00:06:25,360 Speaker 3: of them have you know, like you said, long term 131 00:06:25,400 --> 00:06:28,159 Speaker 3: customers that have been there for years and years. And 132 00:06:28,200 --> 00:06:31,960 Speaker 3: then there's swings in the market where there's contango, which 133 00:06:32,000 --> 00:06:34,880 Speaker 3: I hope your folks know what that is. It's basically 134 00:06:35,279 --> 00:06:38,160 Speaker 3: in the future's market when the price is more than 135 00:06:38,200 --> 00:06:41,400 Speaker 3: the today's price. So essentially you can put oil away 136 00:06:41,440 --> 00:06:44,240 Speaker 3: and make money by storing it, and then baquidation is 137 00:06:44,279 --> 00:06:47,800 Speaker 3: the opposite, so that's de incentivized as storage. So that 138 00:06:47,920 --> 00:06:50,280 Speaker 3: kind of fluctuates, and you know, people leave and enter 139 00:06:50,320 --> 00:06:52,520 Speaker 3: markets all the time. Companies change all the time, so 140 00:06:52,800 --> 00:06:55,479 Speaker 3: leases run off, so that kind of leaves that excess 141 00:06:55,480 --> 00:06:58,800 Speaker 3: and incremental storage capacity that's you know, up for a 142 00:06:58,920 --> 00:07:00,240 Speaker 3: spot or long term. 143 00:07:00,400 --> 00:07:02,599 Speaker 2: I was just gonna ask one quick question. This comes 144 00:07:02,680 --> 00:07:04,240 Speaker 2: up in a lot of the episodes we do on 145 00:07:04,400 --> 00:07:07,159 Speaker 2: trucking where we look at the rates and they say, okay, 146 00:07:07,160 --> 00:07:09,920 Speaker 2: there's a spot rate and a contract rate for trucking. 147 00:07:10,200 --> 00:07:13,040 Speaker 2: Is there basically an equivalent where you could sort of 148 00:07:13,040 --> 00:07:15,840 Speaker 2: plot over time what sort of contracted rates there are 149 00:07:15,880 --> 00:07:18,440 Speaker 2: for long term relationships and then like a spot rate 150 00:07:18,480 --> 00:07:21,400 Speaker 2: that fluctuates both up and down relative to the contract. 151 00:07:21,480 --> 00:07:23,280 Speaker 3: Yeah, definitely, I mean that's you kind of hit the 152 00:07:23,360 --> 00:07:25,120 Speaker 3: nail on the head there. You know, you know, long 153 00:07:25,200 --> 00:07:27,800 Speaker 3: term rates they're kind of steady at a certain threshold 154 00:07:27,840 --> 00:07:30,440 Speaker 3: and it has to make sense for both sides, and 155 00:07:30,680 --> 00:07:32,640 Speaker 3: there's spot rates and that kind of moves kind of 156 00:07:32,680 --> 00:07:35,280 Speaker 3: with the markets, and that's yeah, exactly. 157 00:07:35,320 --> 00:07:39,760 Speaker 1: It so I know, some oil majors obviously have their 158 00:07:39,800 --> 00:07:43,120 Speaker 1: own storage, but a lot of people are clearly leasing 159 00:07:43,160 --> 00:07:45,560 Speaker 1: it from third parties. Why is that? Like, why not 160 00:07:45,720 --> 00:07:47,600 Speaker 1: just build out your own capacity? 161 00:07:48,200 --> 00:07:50,160 Speaker 3: Some do, but it's kind of like, do you know 162 00:07:50,240 --> 00:07:54,680 Speaker 3: the old economics model that I remember from an episode 163 00:07:54,720 --> 00:07:58,400 Speaker 3: of the Office. Usually, you know, you don't want the 164 00:07:58,440 --> 00:08:01,720 Speaker 3: liability and you have to essentially use that tank all 165 00:08:01,760 --> 00:08:04,480 Speaker 3: the time if you're going to be building it. That's 166 00:08:04,640 --> 00:08:07,800 Speaker 3: really what leasing comes in is you don't have that 167 00:08:07,920 --> 00:08:10,960 Speaker 3: general liability of operating a terminal, so you just can 168 00:08:10,960 --> 00:08:12,840 Speaker 3: come in and go as you please when you need 169 00:08:12,840 --> 00:08:15,120 Speaker 3: it and when you don't need it. Most oil majors 170 00:08:15,160 --> 00:08:18,800 Speaker 3: do own their own storage for their own operational use. 171 00:08:18,880 --> 00:08:21,520 Speaker 3: I would say a lot of you know, oil majors 172 00:08:21,520 --> 00:08:25,360 Speaker 3: now these days are trading physical trading, and they will 173 00:08:25,360 --> 00:08:30,040 Speaker 3: take advantage of arbitrage opportunities by leasing storage in certain markets, 174 00:08:30,080 --> 00:08:33,360 Speaker 3: whether that's for blending or moving product from A to 175 00:08:33,400 --> 00:08:36,840 Speaker 3: B or you know, taking advantage of contango as I mentioned. 176 00:08:37,160 --> 00:08:39,920 Speaker 3: So they kind of do both. And there's oil trading 177 00:08:39,960 --> 00:08:43,840 Speaker 3: companies that exist that are just you know, these companies 178 00:08:43,880 --> 00:08:46,920 Speaker 3: that trade commodities from all different parts of the globe, 179 00:08:46,920 --> 00:08:49,920 Speaker 3: and basically they operate with long term and short term 180 00:08:50,000 --> 00:08:53,120 Speaker 3: leases to take advantage of the same trading opportunities. As 181 00:08:53,160 --> 00:08:54,120 Speaker 3: I kind of just mentioned. 182 00:08:54,720 --> 00:08:58,760 Speaker 2: You mentioned those tanks in the opening scenes of The Sopranos. 183 00:08:59,320 --> 00:09:04,120 Speaker 2: Mayas so would be that in suburban New Jersey or 184 00:09:04,160 --> 00:09:06,840 Speaker 2: suburban New York or wherever they are, there is probably 185 00:09:06,920 --> 00:09:09,440 Speaker 2: not a lot of appetite to build. More that there 186 00:09:09,480 --> 00:09:12,320 Speaker 2: are neighbors who probably do not want those big fields 187 00:09:12,400 --> 00:09:15,880 Speaker 2: or those big terminals or the big storage facilities to 188 00:09:15,960 --> 00:09:17,960 Speaker 2: continue to expand. I imagine people don't want to live 189 00:09:18,040 --> 00:09:22,080 Speaker 2: next to them. Whereas on the production side, I imagine, 190 00:09:22,120 --> 00:09:25,280 Speaker 2: you know, in sort of depopulated parts of like North 191 00:09:25,360 --> 00:09:28,400 Speaker 2: Dakota or Texas or wherever there's explosion, there's probably not 192 00:09:28,480 --> 00:09:31,199 Speaker 2: much of a less of a constraint. So is there 193 00:09:31,240 --> 00:09:35,440 Speaker 2: a mismatch in the country's ability to produce oil, which 194 00:09:35,480 --> 00:09:38,280 Speaker 2: seems like it can ramp up like crazy, versus the 195 00:09:38,320 --> 00:09:41,800 Speaker 2: country's ability to store oil, which I imagine, especially in 196 00:09:41,840 --> 00:09:45,840 Speaker 2: strategic locations near ports, near where people live, is going 197 00:09:45,880 --> 00:09:47,599 Speaker 2: to be somewhat constrained. 198 00:09:47,480 --> 00:09:50,320 Speaker 3: For sure, Joe, I mean, we live, or I live, 199 00:09:50,600 --> 00:09:52,120 Speaker 3: all of us live kind of in the New York 200 00:09:52,160 --> 00:09:56,240 Speaker 3: area and near carb is the nymex hub for gasoline 201 00:09:56,280 --> 00:09:58,920 Speaker 3: and diesel, and we have a I don't know if 202 00:09:58,960 --> 00:10:01,080 Speaker 3: people have noticed, but there's a a bunch of tanks 203 00:10:01,120 --> 00:10:04,480 Speaker 3: farms in the area and really that kind of has 204 00:10:04,520 --> 00:10:07,320 Speaker 3: actually constrained over the years. A lot of terminals have 205 00:10:07,400 --> 00:10:11,160 Speaker 3: been sold and turned into warehouses, and like you mentioned Nimby, 206 00:10:11,280 --> 00:10:13,640 Speaker 3: you know, nobody wants to see, you know, an oil 207 00:10:13,679 --> 00:10:16,160 Speaker 3: tank pop up in their backyard. So a lot of 208 00:10:16,160 --> 00:10:19,000 Speaker 3: that is actually kind of constraining here in this geography, 209 00:10:19,280 --> 00:10:21,680 Speaker 3: whereas you mentioned other parts of the US and the globe, 210 00:10:21,760 --> 00:10:24,160 Speaker 3: they probably more willing and there's nothing around them to 211 00:10:24,160 --> 00:10:26,880 Speaker 3: build more tanks building tanks. I mean, it kind of 212 00:10:26,880 --> 00:10:29,520 Speaker 3: fluctuates with the market. As I said before. You know, 213 00:10:29,559 --> 00:10:32,839 Speaker 3: we started the podcast with production growth. That was a 214 00:10:32,840 --> 00:10:34,840 Speaker 3: big boom in midstream in the early parts of the 215 00:10:34,840 --> 00:10:38,240 Speaker 3: twenty tens with the fracking, and kind of midstream followed 216 00:10:38,280 --> 00:10:41,959 Speaker 3: along with that to facilitate the movement of that production. 217 00:10:42,480 --> 00:10:44,760 Speaker 3: And that was kind of the big midstream boom there. 218 00:10:45,120 --> 00:10:48,360 Speaker 3: And then you know recently with the opening of the 219 00:10:48,559 --> 00:10:51,640 Speaker 3: Mexican border, there was a big boom for midstream needs 220 00:10:51,640 --> 00:10:54,720 Speaker 3: to move product to Mexico, whether it was by rail. 221 00:10:54,760 --> 00:10:57,959 Speaker 2: So sorry, the tanks are midstream midstream tanks, no, just 222 00:10:58,000 --> 00:11:00,040 Speaker 2: making sure, but that tanks are considered me. 223 00:11:00,280 --> 00:11:04,240 Speaker 3: Midstream, yes, yeah, midstream terminals, yes, kind of all midstream 224 00:11:04,240 --> 00:11:08,680 Speaker 3: includes you know, pipelines, tanks, et cetera. So yeah, there's downstream, midstream, 225 00:11:08,679 --> 00:11:11,160 Speaker 3: and upstream. So you had, you know, the big boom 226 00:11:11,200 --> 00:11:13,560 Speaker 3: for Mexico. There was a lot of tanks built for 227 00:11:13,600 --> 00:11:16,559 Speaker 3: that movement of product to Mexico that all these companies 228 00:11:16,559 --> 00:11:19,319 Speaker 3: were able to do business in Mexico. So that provided 229 00:11:19,320 --> 00:11:22,640 Speaker 3: the opportunity to expand and build more tanks for that. 230 00:11:22,720 --> 00:11:25,920 Speaker 3: And then recently we've seen on the chemical side and 231 00:11:26,080 --> 00:11:30,520 Speaker 3: on the agricultural side, which kind of leads into renewable fuels, 232 00:11:30,720 --> 00:11:34,480 Speaker 3: we've seen quite a large movement to build more tanks 233 00:11:34,559 --> 00:11:39,080 Speaker 3: for housing renewable fuels. And you know, that's not a coincidence. 234 00:11:39,080 --> 00:11:42,160 Speaker 3: There's been you know, global push to get into renewables. 235 00:11:42,559 --> 00:11:46,400 Speaker 3: When I say renewable fuels, that's you know, biodiesel, that's ethanol, 236 00:11:46,559 --> 00:11:50,920 Speaker 3: that's renewable diesel. This product called staff that's meant for airlines. 237 00:11:51,600 --> 00:11:54,480 Speaker 3: It's a replacement fuel for jet fuel. And then you know, 238 00:11:54,559 --> 00:11:58,400 Speaker 3: there's the feedstocks that are used to produce these products, 239 00:11:58,400 --> 00:12:02,760 Speaker 3: and those are typically like palm oils, veg oils, use 240 00:12:02,840 --> 00:12:06,479 Speaker 3: cooking oil. All this product does need to be imported 241 00:12:06,640 --> 00:12:09,959 Speaker 3: and then moved to the production facility. So that's kind 242 00:12:10,000 --> 00:12:13,760 Speaker 3: of facilitated this kind of new boom in midstream and 243 00:12:13,880 --> 00:12:17,440 Speaker 3: terminal infrastructure of building more tanks for that and that's 244 00:12:17,800 --> 00:12:20,480 Speaker 3: largely I mean, we've seen it largely across the US, 245 00:12:20,800 --> 00:12:24,679 Speaker 3: and it's predominantly happened in the Gulf Coast too, where 246 00:12:24,800 --> 00:12:26,920 Speaker 3: I would say the Gulf Coast is one of the 247 00:12:27,000 --> 00:12:30,960 Speaker 3: largest holders of tanks inventory in probably the US, and 248 00:12:31,120 --> 00:12:34,839 Speaker 3: just sheared total capacity. It's definitely the most active in 249 00:12:34,920 --> 00:12:35,880 Speaker 3: the largest. 250 00:12:51,120 --> 00:12:53,840 Speaker 1: There used to be headlines about the US running out 251 00:12:53,840 --> 00:12:56,560 Speaker 1: of oil storage. I think during the depths of the 252 00:12:56,600 --> 00:12:59,960 Speaker 1: pandemic in twenty twenty we started to see those crop up. 253 00:13:00,040 --> 00:13:03,080 Speaker 1: But even before then, I think during the shale boom, 254 00:13:03,320 --> 00:13:07,040 Speaker 1: there was storage concerns and like the pipelines were getting 255 00:13:07,040 --> 00:13:10,959 Speaker 1: clogged up and things like that. Do those concerns still 256 00:13:11,200 --> 00:13:14,480 Speaker 1: exist today? If US oil production is at more than 257 00:13:14,520 --> 00:13:17,679 Speaker 1: thirteen million barrels per day, we've seen this massive surge. 258 00:13:18,040 --> 00:13:21,520 Speaker 1: Is the infrastructure to handle the movement and storage of 259 00:13:21,559 --> 00:13:22,800 Speaker 1: that where it needs to be. 260 00:13:23,480 --> 00:13:27,120 Speaker 3: Yeah, actually, we kind of overbuilt our pipeline capacity a 261 00:13:27,120 --> 00:13:31,240 Speaker 3: little bit in anticipation of all this production and needing 262 00:13:31,240 --> 00:13:33,880 Speaker 3: it to pretty much any incremental barrel we produced is 263 00:13:33,920 --> 00:13:36,800 Speaker 3: exported because you know, we've kind of satiated our need 264 00:13:36,840 --> 00:13:39,840 Speaker 3: with the refining capacity here in the US for like cruids. 265 00:13:40,360 --> 00:13:42,640 Speaker 3: So yeah, we kind of overbuilt it a little bit, 266 00:13:42,720 --> 00:13:45,560 Speaker 3: and the productions trying to keep up to get to 267 00:13:45,600 --> 00:13:50,200 Speaker 3: that point where levels are paying for that infrastructure that 268 00:13:50,320 --> 00:13:52,920 Speaker 3: was built. Yeah, kind of the things you mentioned, you know, 269 00:13:53,320 --> 00:13:56,320 Speaker 3: for your prior point with the it was around like 270 00:13:56,320 --> 00:13:59,880 Speaker 3: twenty fifteen when oil kind of cratered, and you know 271 00:14:00,000 --> 00:14:03,440 Speaker 3: oil typically does booming bus cycles, as everybody says, and 272 00:14:03,480 --> 00:14:06,800 Speaker 3: that was a bus cycle in twenty fifteen with all 273 00:14:06,840 --> 00:14:10,160 Speaker 3: that production, and yeah, pretty much everybody that had a 274 00:14:10,200 --> 00:14:13,520 Speaker 3: tank was filled during that time period. And then we 275 00:14:13,600 --> 00:14:15,800 Speaker 3: have you know, the pandemic, which was more on the 276 00:14:15,840 --> 00:14:18,440 Speaker 3: demand side where there was no demand for oil, so 277 00:14:18,520 --> 00:14:21,360 Speaker 3: people had to park it every nook and cranny. I mean, 278 00:14:21,480 --> 00:14:23,800 Speaker 3: that might have been the craziest two months of my life. 279 00:14:23,880 --> 00:14:24,920 Speaker 3: During that What did you. 280 00:14:24,840 --> 00:14:28,080 Speaker 1: See did you see creative storage solutions. 281 00:14:28,160 --> 00:14:29,400 Speaker 2: Yeah, talk about that time. 282 00:14:29,560 --> 00:14:32,640 Speaker 3: Yeah, No, it really was pretty wild. I'm not gonna lie. 283 00:14:32,760 --> 00:14:35,720 Speaker 3: It was unprecedented for so many reasons, for so many people, 284 00:14:36,080 --> 00:14:39,120 Speaker 3: and yeah, we did see so many unusual things which 285 00:14:39,280 --> 00:14:43,000 Speaker 3: probably won't be replicated. We had people parking frack tanks, 286 00:14:43,000 --> 00:14:46,600 Speaker 3: which are these small like portable tanks and filling them 287 00:14:46,680 --> 00:14:49,680 Speaker 3: with oil next to you know, Cushing, which is you know, 288 00:14:50,120 --> 00:14:54,120 Speaker 3: the Nimax hub for WTI and for futures contract that's 289 00:14:54,120 --> 00:14:57,560 Speaker 3: the easiest plate to trade oil. So yeah, we were 290 00:14:57,560 --> 00:15:00,880 Speaker 3: seeing that kind of weird level of detail of you know, 291 00:15:00,920 --> 00:15:04,040 Speaker 3: filling up and moving fractanks to Cushing. You know, people 292 00:15:04,200 --> 00:15:07,120 Speaker 3: filling up pipelines and not even moving the oil. It 293 00:15:07,160 --> 00:15:09,880 Speaker 3: was a very very strange time. And you know, typically 294 00:15:10,200 --> 00:15:13,960 Speaker 3: it's more of a flatter market than that. And we 295 00:15:13,960 --> 00:15:17,120 Speaker 3: were seeing another weird thing, you know, people booking vessels 296 00:15:17,120 --> 00:15:20,520 Speaker 3: and just parking oil on large vessels and parking at 297 00:15:20,560 --> 00:15:23,640 Speaker 3: sea or near ports. I'm trying to think, Oh, oil 298 00:15:23,680 --> 00:15:26,280 Speaker 3: on rail cars. That was another thing. People were parking 299 00:15:26,320 --> 00:15:29,880 Speaker 3: on rail cars and parking in rail yards. So yeah, 300 00:15:29,880 --> 00:15:32,080 Speaker 3: that was an interesting time, not gonna lie. I was 301 00:15:32,120 --> 00:15:34,120 Speaker 3: doing a lot of work in a very short period 302 00:15:34,160 --> 00:15:36,880 Speaker 3: of time, and also being in the lockdown was making 303 00:15:36,880 --> 00:15:37,400 Speaker 3: it weirder. 304 00:15:37,440 --> 00:15:42,120 Speaker 2: But what is the economic sweet spot for owners of 305 00:15:42,240 --> 00:15:45,360 Speaker 2: midstream assets because obviously, you know, you know, we could 306 00:15:45,360 --> 00:15:47,280 Speaker 2: talk about oil in terms of volume, or we could 307 00:15:47,280 --> 00:15:49,320 Speaker 2: talk about oil in terms of price, and sometimes they 308 00:15:49,320 --> 00:15:51,400 Speaker 2: move in the same direction. Sometimes not often they move 309 00:15:51,840 --> 00:15:55,680 Speaker 2: I guess intuitively, often they move in opposite directions. What 310 00:15:55,920 --> 00:15:58,920 Speaker 2: is the sort of like the dream business environment if 311 00:15:58,960 --> 00:16:00,200 Speaker 2: you're in the midstream. 312 00:15:59,800 --> 00:16:04,720 Speaker 3: Spance, Probably the dream is high oil prices and high contango. 313 00:16:05,360 --> 00:16:07,600 Speaker 3: That's that's pretty much you know the dream. 314 00:16:07,440 --> 00:16:09,600 Speaker 2: So high oil prices but even higher in the future. 315 00:16:09,680 --> 00:16:12,640 Speaker 3: Yeah, exactly, I would say that's probably the dream scenario. 316 00:16:12,760 --> 00:16:15,160 Speaker 3: Typically that doesn't happen, but yeah, that would be the 317 00:16:15,200 --> 00:16:17,680 Speaker 3: dream scenario. I mean, then you have you know, producers 318 00:16:17,680 --> 00:16:20,480 Speaker 3: still producing moving the oil, which you know they're paying 319 00:16:20,520 --> 00:16:23,480 Speaker 3: tariffs for the pipeline and then you know they're paying 320 00:16:23,480 --> 00:16:26,600 Speaker 3: it for the export of moving it from the pipeline 321 00:16:26,600 --> 00:16:29,360 Speaker 3: to the tanks, to the dock and onto a ship, 322 00:16:29,440 --> 00:16:31,920 Speaker 3: so that that's making money for the terminal all the 323 00:16:31,960 --> 00:16:34,680 Speaker 3: way through. And then they're making money on the storage costs, 324 00:16:34,720 --> 00:16:36,520 Speaker 3: which you know, people are just gonna park oil in 325 00:16:36,520 --> 00:16:38,960 Speaker 3: the storage and yeah, pay for it. So I would 326 00:16:39,000 --> 00:16:40,880 Speaker 3: say that's a good dream scenario. 327 00:16:42,040 --> 00:16:45,400 Speaker 1: What makes for a good storage facility? And obviously I 328 00:16:45,480 --> 00:16:47,840 Speaker 1: get that the requirements are going to depend on the 329 00:16:48,120 --> 00:16:52,080 Speaker 1: exact product, but in general, what are the things people 330 00:16:52,120 --> 00:16:55,480 Speaker 1: are looking for when they're looking for storage capacity? Is 331 00:16:55,520 --> 00:16:59,359 Speaker 1: it just price or is it maybe safety or convenience 332 00:16:59,480 --> 00:17:00,120 Speaker 1: things like that. 333 00:17:00,400 --> 00:17:03,600 Speaker 3: So when we started the Tank Tiger, storage prices was 334 00:17:03,760 --> 00:17:06,480 Speaker 3: very very opaque, and we tried to bring a little 335 00:17:06,480 --> 00:17:09,080 Speaker 3: bit of light and transparency. Like I said, we've been 336 00:17:09,080 --> 00:17:10,840 Speaker 3: doing this for eight years and now, so people kind 337 00:17:10,840 --> 00:17:13,280 Speaker 3: of trust this, I think. So we've been able to 338 00:17:13,560 --> 00:17:16,080 Speaker 3: kind of shed some light on storage pricing. And it 339 00:17:16,119 --> 00:17:18,000 Speaker 3: was a black box day, you know, somebody could have 340 00:17:18,040 --> 00:17:21,000 Speaker 3: been paying like two dollars more than the other person 341 00:17:21,040 --> 00:17:23,840 Speaker 3: in that same terminal, or you know, vice versa. So 342 00:17:25,080 --> 00:17:29,640 Speaker 3: we've been able to actually create kind of more transparency 343 00:17:29,640 --> 00:17:33,240 Speaker 3: and liquidity in what we do. But to answer your question, yeah, 344 00:17:33,240 --> 00:17:37,040 Speaker 3: I would say it's a combination of all. So typically 345 00:17:37,080 --> 00:17:39,960 Speaker 3: in a you know, a flatter, more backuidated market or 346 00:17:40,040 --> 00:17:43,840 Speaker 3: small contango market, the more what I call well connected 347 00:17:43,840 --> 00:17:48,119 Speaker 3: facilities or desirable locations are going to be you know, 348 00:17:48,160 --> 00:17:51,040 Speaker 3: the first to you know, get leased out, and typically 349 00:17:51,480 --> 00:17:54,439 Speaker 3: those are you know, terminals in Houston, those are terminals 350 00:17:54,840 --> 00:17:58,280 Speaker 3: in near carb like I mentioned in Cushing and along 351 00:17:58,280 --> 00:18:00,960 Speaker 3: the river in New Orleans. You know, these are pretty 352 00:18:01,000 --> 00:18:05,359 Speaker 3: much major trading hubs and logistical hubs. And for at 353 00:18:05,400 --> 00:18:09,000 Speaker 3: least oil terminals, the better the connected, which means, you know, 354 00:18:09,400 --> 00:18:13,040 Speaker 3: the best pipeline connected facilities tend to do better than 355 00:18:13,040 --> 00:18:15,720 Speaker 3: the other the ones that are not as well connected pipeline, 356 00:18:15,760 --> 00:18:18,520 Speaker 3: and that kind of means is like they're bringing in 357 00:18:18,600 --> 00:18:21,720 Speaker 3: oil from multiple locations, so it gives a person optionality 358 00:18:22,000 --> 00:18:26,639 Speaker 3: and they're bringing it to their outbound connectivities to are 359 00:18:26,920 --> 00:18:30,240 Speaker 3: vast and broad, so that kind of lends itself to 360 00:18:30,240 --> 00:18:33,480 Speaker 3: be a favorable facility. And then you know, obviously price 361 00:18:33,600 --> 00:18:37,640 Speaker 3: matters a lot as well. And then for logistically, it's 362 00:18:37,760 --> 00:18:40,760 Speaker 3: you know, location, So customers that least storage want to 363 00:18:40,760 --> 00:18:43,399 Speaker 3: be around other people that least storage, so they're able 364 00:18:43,440 --> 00:18:45,760 Speaker 3: to move barrels from point A to B, and you know, 365 00:18:45,800 --> 00:18:48,400 Speaker 3: that provides some liquidity and trading activity, so they don't 366 00:18:48,400 --> 00:18:50,359 Speaker 3: want to be stuck in the middle of nowhere and 367 00:18:50,480 --> 00:18:53,119 Speaker 3: nowhere to sell their barrels. And that kind of hurts 368 00:18:53,160 --> 00:18:55,200 Speaker 3: a lot if they can't sell and the market's bad. 369 00:18:55,560 --> 00:18:57,879 Speaker 3: So that's kind of what I would say lends to 370 00:18:57,920 --> 00:19:02,520 Speaker 3: a favorable facility and crude in products, what clean products 371 00:19:02,600 --> 00:19:05,119 Speaker 3: is like gesline and diesel jet and crude oil. You know, 372 00:19:05,160 --> 00:19:08,080 Speaker 3: obviously it's crude oil, so they're kind of segregated in 373 00:19:08,160 --> 00:19:12,920 Speaker 3: different terminals. Typically their different facilities handle both, so there's 374 00:19:13,040 --> 00:19:14,840 Speaker 3: differentiators between those two. 375 00:19:15,520 --> 00:19:18,880 Speaker 1: I have a really basic question since you mentioned the pipelines, 376 00:19:18,920 --> 00:19:22,400 Speaker 1: but how does the oil or the product get from 377 00:19:22,680 --> 00:19:27,080 Speaker 1: the pipelines into the actual storage facilities? Like what is 378 00:19:27,119 --> 00:19:27,800 Speaker 1: the mechanism? 379 00:19:28,320 --> 00:19:31,680 Speaker 3: Are we talking from crude oil or clean products standpoint? 380 00:19:31,920 --> 00:19:34,000 Speaker 1: I guess we could do both. I'd be curious to 381 00:19:34,040 --> 00:19:37,600 Speaker 1: hear the sort of like life cycle of both those 382 00:19:37,680 --> 00:19:41,080 Speaker 1: things from like stuff comes out of the ground and 383 00:19:41,119 --> 00:19:43,080 Speaker 1: then gets moved or stuff comes out of the ground 384 00:19:43,240 --> 00:19:45,720 Speaker 1: and gets refined and then put into storage, because I 385 00:19:45,720 --> 00:19:49,400 Speaker 1: don't really understand the physical process, yeah, the sequencing of it. 386 00:19:49,600 --> 00:19:53,680 Speaker 1: And do the pipelines like plug in directly into storage tanks. 387 00:19:53,680 --> 00:19:56,040 Speaker 1: I can't imagine that's the case, But go ahead. 388 00:19:55,760 --> 00:19:57,719 Speaker 3: Sure, Yeah, of course I'll start with crude because that's 389 00:19:57,760 --> 00:20:00,600 Speaker 3: where it all starts. So typically the you know, they 390 00:20:00,680 --> 00:20:02,920 Speaker 3: drill it out of the ground, and the way it's 391 00:20:03,000 --> 00:20:06,240 Speaker 3: moved is into kind of like an aggregation site. Either 392 00:20:06,280 --> 00:20:09,800 Speaker 3: they move it via a truck or a pipeline that's 393 00:20:09,840 --> 00:20:13,800 Speaker 3: connected kind of close to the well, and that's moved 394 00:20:13,840 --> 00:20:17,600 Speaker 3: into like an aggregation terminal, and from that aggregation terminal 395 00:20:17,920 --> 00:20:21,159 Speaker 3: a terminal that has tanks, so it's literally taken. If 396 00:20:21,200 --> 00:20:24,440 Speaker 3: it's a truck that's driving it to the terminal, they'll 397 00:20:24,480 --> 00:20:26,560 Speaker 3: stick a hose into the truck. It'll pump it into 398 00:20:26,600 --> 00:20:29,879 Speaker 3: a tank, and then at that tank, there's multiple tanks 399 00:20:29,960 --> 00:20:34,439 Speaker 3: in that little small terminal that'll pump into a bigger 400 00:20:34,520 --> 00:20:39,320 Speaker 3: terminal and that bigger facility will then inject it into 401 00:20:39,640 --> 00:20:43,320 Speaker 3: a long haul pipeline. Some of the long haul pipelines 402 00:20:43,760 --> 00:20:47,919 Speaker 3: from the Permian go to Houston or Corpus Christie for 403 00:20:48,040 --> 00:20:51,280 Speaker 3: crude Corpus for their refining complex and to export out 404 00:20:51,280 --> 00:20:53,639 Speaker 3: of there, and then Houston, you know, for the refining 405 00:20:53,680 --> 00:20:56,240 Speaker 3: complex into export out of there. So when it goes 406 00:20:56,280 --> 00:20:59,639 Speaker 3: to the long haul pipeline, typically the midstream company that 407 00:20:59,680 --> 00:21:03,520 Speaker 3: owns long hole pipeline also owns the terminal at Point 408 00:21:03,520 --> 00:21:05,960 Speaker 3: A and point B, so when it's coming in and 409 00:21:06,000 --> 00:21:09,760 Speaker 3: when it's going out, and then from that pipeline, it'll 410 00:21:09,800 --> 00:21:14,440 Speaker 3: go into various tanks in that tank field depending on 411 00:21:14,680 --> 00:21:19,320 Speaker 3: manifolds and connections in that terminal, and that's kind of 412 00:21:19,400 --> 00:21:22,280 Speaker 3: how it moves. And then you know, in that terminal, 413 00:21:22,280 --> 00:21:25,840 Speaker 3: it can there's multiple pipes that are connecting each individual tank, 414 00:21:25,920 --> 00:21:28,520 Speaker 3: so it can move from one point to another and 415 00:21:28,560 --> 00:21:33,000 Speaker 3: one tank field to another. Certain terminals have interconnected tanks, 416 00:21:33,160 --> 00:21:36,040 Speaker 3: and it's just like kind of a web inside the 417 00:21:36,160 --> 00:21:39,560 Speaker 3: terminal how the oils moved to each location. And then 418 00:21:39,600 --> 00:21:44,400 Speaker 3: from that tank, it's either transported onto a dock, so 419 00:21:44,600 --> 00:21:47,320 Speaker 3: the dock is located at the terminal, it's piped into 420 00:21:47,359 --> 00:21:49,720 Speaker 3: the dock and a ship comes up and the ship 421 00:21:49,760 --> 00:21:52,960 Speaker 3: is loaded and it goes off to some form port, 422 00:21:53,520 --> 00:21:58,000 Speaker 3: or it's moved into another pipeline that is connected generally 423 00:21:58,080 --> 00:22:01,720 Speaker 3: to a refinery, and then the refinery has their own 424 00:22:01,760 --> 00:22:05,600 Speaker 3: tanks at their own plant, and that they'll take from 425 00:22:05,640 --> 00:22:10,040 Speaker 3: that tank into a distillation tower and start producing clean products. 426 00:22:10,640 --> 00:22:12,920 Speaker 3: And then that kind of leads me to the clean products. 427 00:22:13,280 --> 00:22:17,560 Speaker 3: So once the refinery produces clean products, typically we'll start 428 00:22:17,600 --> 00:22:20,119 Speaker 3: from Houston because that's where a lot of refining capacity is. 429 00:22:20,760 --> 00:22:24,680 Speaker 3: So though a lot of these refineries have connections into 430 00:22:25,160 --> 00:22:28,760 Speaker 3: some of these major terminal hubs in Houston where a 431 00:22:28,840 --> 00:22:33,880 Speaker 3: lot of gasoline blending and diesel activity happen, and they're 432 00:22:33,920 --> 00:22:38,080 Speaker 3: pumped into these terminals via pipeline, and it can go 433 00:22:38,200 --> 00:22:41,320 Speaker 3: trade hands from one person to another, and then it 434 00:22:41,359 --> 00:22:44,240 Speaker 3: can be exported, like I mentioned before, pumped onto a dock, 435 00:22:44,320 --> 00:22:47,679 Speaker 3: sent to South America or wherever, or it can be 436 00:22:47,760 --> 00:22:52,200 Speaker 3: shipped up Colonial Pipeline, which is the largest distribution pipeline 437 00:22:52,240 --> 00:22:56,359 Speaker 3: in the US, and that pipeline has injections at the 438 00:22:56,480 --> 00:22:59,480 Speaker 3: terminal site in Houston, and then there's various stops along 439 00:22:59,480 --> 00:23:01,760 Speaker 3: the way as goes up to New York Harbor. And 440 00:23:01,800 --> 00:23:05,080 Speaker 3: then once it's at its destination, let's say at a 441 00:23:05,160 --> 00:23:08,760 Speaker 3: terminal here in Linden or Bayonne or wherever in New Jersey, 442 00:23:09,160 --> 00:23:12,880 Speaker 3: it hits the tank and then typically it's consumed by 443 00:23:12,880 --> 00:23:15,560 Speaker 3: a customer. So you'll have a truck that comes up 444 00:23:15,600 --> 00:23:19,120 Speaker 3: to the terminal, it'll load the product at the truck rack, 445 00:23:19,280 --> 00:23:22,359 Speaker 3: and then it'll drive off to a gas station. So 446 00:23:22,440 --> 00:23:24,280 Speaker 3: it's kind of how it works. 447 00:23:24,520 --> 00:23:26,560 Speaker 2: That was great, Yeah, that was a really good overview, 448 00:23:27,040 --> 00:23:29,240 Speaker 2: and I have a very first I have a very quick, 449 00:23:29,320 --> 00:23:33,320 Speaker 2: simple question the basic pricing. I mean, are we basically 450 00:23:33,359 --> 00:23:36,239 Speaker 2: talking about as sort of barrel per day type of 451 00:23:36,320 --> 00:23:38,879 Speaker 2: pricing or how does storage pricing? Yeah, storage pricing. 452 00:23:38,960 --> 00:23:42,040 Speaker 3: Yeah, so it's essentially, like you said, it's in dollars 453 00:23:42,040 --> 00:23:46,400 Speaker 3: per barrel per month. Okay, so that's a typical storage. 454 00:23:46,600 --> 00:23:48,840 Speaker 2: What do we what's a typical price on an average 455 00:23:48,840 --> 00:23:50,480 Speaker 2: market historic barrel? 456 00:23:50,800 --> 00:23:53,720 Speaker 3: It varies quite it varies quite quite a bit. I mean, 457 00:23:54,040 --> 00:23:59,119 Speaker 3: petroleum products are probably slightly less expensive than chemical products 458 00:23:59,359 --> 00:24:02,040 Speaker 3: in terms of price, and so it just kind. 459 00:24:01,880 --> 00:24:04,120 Speaker 2: Of like at a dollar amount. If we want Tracy 460 00:24:04,200 --> 00:24:06,360 Speaker 2: suddenly had a barrel of oil, which maybe she will 461 00:24:06,600 --> 00:24:08,159 Speaker 2: what a cost or a stored for a month in 462 00:24:08,200 --> 00:24:09,119 Speaker 2: a typical market. 463 00:24:09,200 --> 00:24:13,200 Speaker 3: Okay, so yeah, I'll say let's start in Houston. You know, gasoline, 464 00:24:13,320 --> 00:24:17,280 Speaker 3: gasoline components, and Houston's around you know, ninety ninety cents 465 00:24:17,280 --> 00:24:20,000 Speaker 3: to a dollar barrel, diesels a little bit slightly less 466 00:24:20,040 --> 00:24:24,080 Speaker 3: than that, and essentially you're paying for one month minimum, 467 00:24:24,119 --> 00:24:25,880 Speaker 3: at least you have to pay for at least one month. 468 00:24:25,920 --> 00:24:29,800 Speaker 3: That's the minimum A terminal will do. More desirable terminals 469 00:24:29,800 --> 00:24:31,560 Speaker 3: won't even do that month. They like, you need to 470 00:24:31,600 --> 00:24:34,080 Speaker 3: take a year or so, so so you basically pay 471 00:24:34,080 --> 00:24:35,640 Speaker 3: for that year whether you use it or you don't 472 00:24:35,720 --> 00:24:38,640 Speaker 3: use it. And then there's actually secondary markets where people 473 00:24:38,680 --> 00:24:41,399 Speaker 3: are allowed to sublease their tanks, like I'll let you 474 00:24:41,440 --> 00:24:42,320 Speaker 3: sublet an apartment. 475 00:24:42,400 --> 00:24:44,040 Speaker 2: So I was going to this was going to be 476 00:24:44,080 --> 00:24:49,680 Speaker 2: kind of my next question. Is there an active speculative 477 00:24:49,880 --> 00:24:52,680 Speaker 2: market for storage capacity? In other words, could I say, 478 00:24:52,680 --> 00:24:55,479 Speaker 2: you know what, I want to go long the cost 479 00:24:55,680 --> 00:24:58,560 Speaker 2: of storing oil here, or I just want to buy 480 00:24:58,560 --> 00:25:00,280 Speaker 2: a bunch of capacity and I don't know if I'm 481 00:25:00,320 --> 00:25:02,159 Speaker 2: going to use it, but I think I can resell 482 00:25:02,200 --> 00:25:04,120 Speaker 2: it for more six months from now. Or I want 483 00:25:04,160 --> 00:25:06,639 Speaker 2: to buy a bunch of capacity here and sell a 484 00:25:06,640 --> 00:25:09,480 Speaker 2: bunch of capacity here because I think it's going to rerutted, 485 00:25:09,520 --> 00:25:11,679 Speaker 2: like how liquid? Like can you just sort of be 486 00:25:11,760 --> 00:25:15,080 Speaker 2: like a computer warrior and trade capacity in some way? 487 00:25:15,480 --> 00:25:18,720 Speaker 3: So yeah, that's kind of a multifaceted question. So yes, 488 00:25:18,840 --> 00:25:23,159 Speaker 3: trading companies will take speculative positions and lease tanks, but 489 00:25:23,240 --> 00:25:25,480 Speaker 3: typically they don't do it so they can sublet it. 490 00:25:25,480 --> 00:25:29,200 Speaker 3: It's typically they're anticipating some sort of market need and 491 00:25:29,280 --> 00:25:31,880 Speaker 3: you usually want it for your own use, whether it's 492 00:25:31,920 --> 00:25:34,640 Speaker 3: blending or storing the oil, and that will actually make 493 00:25:34,680 --> 00:25:38,160 Speaker 3: you more money than subleasing the tank because it could 494 00:25:38,160 --> 00:25:40,680 Speaker 3: be you know, exponential factor, how much more money you 495 00:25:40,720 --> 00:25:43,840 Speaker 3: can make having that tank. And yeah, there is a 496 00:25:43,840 --> 00:25:46,959 Speaker 3: secondary market. I wouldn't say it's that liquid, but with 497 00:25:47,080 --> 00:25:50,360 Speaker 3: us being around, it's maybe gotten more liquidity to it, 498 00:25:50,440 --> 00:25:53,800 Speaker 3: and in terms of future buying a storage So it's 499 00:25:53,840 --> 00:25:56,520 Speaker 3: interesting you say that there was a company that had 500 00:25:56,760 --> 00:26:01,520 Speaker 3: futures exchanged for storage on CME and you were able 501 00:26:01,600 --> 00:26:06,719 Speaker 3: to if you wanted to book June storage for you know, 502 00:26:06,800 --> 00:26:09,200 Speaker 3: a certain amount price and it would be a one 503 00:26:09,240 --> 00:26:12,480 Speaker 3: month contract. So that contract did exist. I'm not sure 504 00:26:12,520 --> 00:26:14,879 Speaker 3: if it's still on cum I'd have to check. I 505 00:26:14,920 --> 00:26:17,280 Speaker 3: don't remember offhand because they were kind of a competitor 506 00:26:17,359 --> 00:26:19,960 Speaker 3: of ours, but yeah, that did it, and it was 507 00:26:20,000 --> 00:26:23,440 Speaker 3: pretty innovative and that did exist, so yes, you could 508 00:26:23,600 --> 00:26:24,600 Speaker 3: you kind of do both. 509 00:26:40,440 --> 00:26:43,439 Speaker 1: How long can oil be stored? And the reason I 510 00:26:43,480 --> 00:26:46,359 Speaker 1: ask is going back to me keeping a jar of 511 00:26:46,400 --> 00:26:49,240 Speaker 1: oil on my desk and slowly poisoning my colleagues. I 512 00:26:49,280 --> 00:26:52,640 Speaker 1: really didn't mean to do that, Joe, I was, Yeah, 513 00:26:52,760 --> 00:26:56,640 Speaker 1: I was surprised by how quickly it actually evaporated from 514 00:26:56,680 --> 00:26:59,879 Speaker 1: this jar. And there was other weird stuff that happened, like, 515 00:27:00,080 --> 00:27:04,000 Speaker 1: for instance, the solid starts settling at the bottom right, 516 00:27:04,080 --> 00:27:06,159 Speaker 1: And so every once in a while, I remember I 517 00:27:06,160 --> 00:27:08,000 Speaker 1: would pick up this jar and just kind of shake 518 00:27:08,080 --> 00:27:11,000 Speaker 1: it to get it looking how it looked when I 519 00:27:11,040 --> 00:27:13,959 Speaker 1: first received it. But there are all these considerations that 520 00:27:14,040 --> 00:27:19,480 Speaker 1: go into actual physical storage. How long can you actually 521 00:27:19,480 --> 00:27:23,000 Speaker 1: do this? And again, thinking back to the Strategic Petroleum Reserve, 522 00:27:23,560 --> 00:27:25,800 Speaker 1: I always have this picture in my mind of a 523 00:27:25,880 --> 00:27:29,840 Speaker 1: mountain of oil barrels, like in storage somewhere, But I 524 00:27:29,840 --> 00:27:32,960 Speaker 1: don't know if that's actually the case. If we have 525 00:27:33,040 --> 00:27:35,919 Speaker 1: barrels of oil, they're just sitting around for decades or 526 00:27:35,920 --> 00:27:36,640 Speaker 1: something like that. 527 00:27:36,800 --> 00:27:39,560 Speaker 3: So yeah, I mean you just mentioned it. Crap can 528 00:27:39,600 --> 00:27:41,680 Speaker 3: go to the bottom of a tank, and that does 529 00:27:41,760 --> 00:27:44,960 Speaker 3: happen naturally in all tanks. You know, if you've ever 530 00:27:45,280 --> 00:27:48,520 Speaker 3: opened one of those large crude oil tanks, you'll see 531 00:27:48,560 --> 00:27:51,199 Speaker 3: some interesting things at the bottom of it, like what 532 00:27:51,680 --> 00:27:54,760 Speaker 3: like rocks. I mean, crude has like all types of metals, 533 00:27:54,800 --> 00:27:58,600 Speaker 3: and yeah, not rocks, but yeah, it's just a it's 534 00:27:58,640 --> 00:27:59,360 Speaker 3: a sludge and. 535 00:27:59,400 --> 00:28:03,520 Speaker 1: Solids and you can't shake it. 536 00:28:04,320 --> 00:28:07,480 Speaker 3: Yeah, they typically clean the bottoms every once in a while. 537 00:28:07,560 --> 00:28:09,760 Speaker 3: Terminals will have to clean the bottoms of a tank 538 00:28:09,800 --> 00:28:12,240 Speaker 3: to you know, get all that crud out of there. 539 00:28:12,400 --> 00:28:15,159 Speaker 3: But you can basically park crude oil in for a 540 00:28:15,200 --> 00:28:18,200 Speaker 3: tank forever. I mean, it's essentially the same as leaving 541 00:28:18,200 --> 00:28:22,320 Speaker 3: it in the ground. Typically products, once it's refined, they 542 00:28:22,320 --> 00:28:25,800 Speaker 3: need to be turned over and eventually consumed. Their shelf 543 00:28:25,800 --> 00:28:28,600 Speaker 3: life isn't as long as crude oil. Crude oil you 544 00:28:28,600 --> 00:28:31,800 Speaker 3: can just really leave there forever. And all terminals have 545 00:28:31,960 --> 00:28:34,199 Speaker 3: what I would call so for crude oil, they have 546 00:28:34,240 --> 00:28:36,400 Speaker 3: floating roofs that sit on top of the crude oil 547 00:28:36,480 --> 00:28:40,280 Speaker 3: to control the vapor pressure. And then there's the bottoms 548 00:28:40,280 --> 00:28:42,360 Speaker 3: of the tank. So there's actually like a little hole, 549 00:28:42,520 --> 00:28:45,440 Speaker 3: a circular hole and a tank, and that's where the 550 00:28:45,440 --> 00:28:48,920 Speaker 3: pipe is connected to. And actually beneath that hole there's 551 00:28:49,080 --> 00:28:51,000 Speaker 3: what called the bottoms of the tank or the heels 552 00:28:51,000 --> 00:28:53,440 Speaker 3: of the tank, and that's where all the crut is. 553 00:28:53,720 --> 00:28:55,920 Speaker 3: And then on top of that is where the oil 554 00:28:56,000 --> 00:28:59,120 Speaker 3: is able to pump out of the tank. So when 555 00:28:59,120 --> 00:29:02,080 Speaker 3: you're leasing a tank, you're actually leasing that full capacity, 556 00:29:02,400 --> 00:29:05,880 Speaker 3: even though technically that usable capacity is less than what 557 00:29:05,920 --> 00:29:09,120 Speaker 3: you're paying for. So that's just kind of an industry standard. 558 00:29:09,320 --> 00:29:10,960 Speaker 1: What happens to the vapor. 559 00:29:11,080 --> 00:29:13,640 Speaker 3: When you suck a oil out of the tank? Yeah, 560 00:29:13,640 --> 00:29:14,880 Speaker 3: that's a good question. I don't even know. 561 00:29:15,520 --> 00:29:18,400 Speaker 2: Yeah, we're gonna have to do episode on oil vapor, 562 00:29:18,560 --> 00:29:20,520 Speaker 2: but I was, I mean, that is sort of what 563 00:29:20,560 --> 00:29:25,360 Speaker 2: I was wondering. Next. Has the mid stream slash storage 564 00:29:25,400 --> 00:29:29,960 Speaker 2: industry been forced to do any changes as a result 565 00:29:30,200 --> 00:29:33,360 Speaker 2: of sort of climate and other questions? I mean, obviously 566 00:29:33,440 --> 00:29:35,560 Speaker 2: you hear about it in natural gas with methane leaks, 567 00:29:35,600 --> 00:29:39,760 Speaker 2: et cetera, and as a particularly potent contributor to climate change. 568 00:29:40,000 --> 00:29:42,560 Speaker 2: Has there been anything in your world that has to 569 00:29:42,560 --> 00:29:45,520 Speaker 2: be done different business practice wise in terms of like 570 00:29:45,560 --> 00:29:50,360 Speaker 2: storage or handling or distribution in order to meet environmental guidelines. 571 00:29:50,440 --> 00:29:53,040 Speaker 3: They're changing those rules every year or so. I mean, 572 00:29:53,400 --> 00:29:56,880 Speaker 3: there's a regulatory agency that you know has standards for 573 00:29:56,880 --> 00:29:59,600 Speaker 3: these tanks, and they look to change them based on 574 00:30:00,000 --> 00:30:03,600 Speaker 3: events or to meet climate goals. And like you mentioned, so, yeah, 575 00:30:03,640 --> 00:30:07,200 Speaker 3: there are standard practices in place, and you need to 576 00:30:07,240 --> 00:30:10,640 Speaker 3: take tanks out of service every certain number of years 577 00:30:10,680 --> 00:30:13,800 Speaker 3: to get it inspected and make sure it's up to code. 578 00:30:14,200 --> 00:30:18,560 Speaker 3: And yeah, essentially, you know, there's basically bylines that terminals 579 00:30:18,600 --> 00:30:22,479 Speaker 3: need to follow to keep safety procedures. And luckily, you know, 580 00:30:22,680 --> 00:30:24,760 Speaker 3: in the eight years or nine years that I've been 581 00:30:24,760 --> 00:30:27,120 Speaker 3: doing this, there hasn't been as many or that many 582 00:30:27,760 --> 00:30:31,440 Speaker 3: incidents of terminal leaking or fires or anything like that. 583 00:30:32,040 --> 00:30:34,720 Speaker 1: So around this time last year, there was a lot 584 00:30:34,760 --> 00:30:39,080 Speaker 1: of discussion of a diesel shortage in the Northeast and 585 00:30:39,240 --> 00:30:40,960 Speaker 1: it was a pretty big deal. I think the White 586 00:30:40,960 --> 00:30:43,560 Speaker 1: House actually put out a statement on it at one point. 587 00:30:44,400 --> 00:30:48,560 Speaker 1: How did that come to happen? How bad was it 588 00:30:48,640 --> 00:30:52,320 Speaker 1: in retrospect? And why does it seem to have gone away? 589 00:30:53,160 --> 00:30:55,080 Speaker 3: Yeah, I know, it's funny. You know, everybody lives kind 590 00:30:55,080 --> 00:30:56,800 Speaker 3: of in the short term. They're like, ah, you know, 591 00:30:57,160 --> 00:30:59,040 Speaker 3: we're right at a diesel and then you know, nobody's 592 00:30:59,080 --> 00:31:00,960 Speaker 3: talking about it today. It was the same thing with 593 00:31:01,040 --> 00:31:03,080 Speaker 3: IMO twenty twenty. I don't know if you guys remember that, 594 00:31:04,440 --> 00:31:07,760 Speaker 3: but yeah, essentially, you know that I believe that was 595 00:31:07,800 --> 00:31:10,880 Speaker 3: around you know, the war in Russia and Ukraine and 596 00:31:11,440 --> 00:31:15,520 Speaker 3: the sanctions happened and people were not accepting Russian oil, 597 00:31:15,560 --> 00:31:18,400 Speaker 3: so that you know, disrupts global supply chains, and there's 598 00:31:18,440 --> 00:31:21,960 Speaker 3: like this natural flow of markets, efficiency of moving the 599 00:31:21,960 --> 00:31:23,880 Speaker 3: oil from point A to point B that kind of 600 00:31:24,600 --> 00:31:28,880 Speaker 3: suffices the global demand for oil. So basically global demand 601 00:31:29,160 --> 00:31:31,920 Speaker 3: stayed pretty high, and you know, there wasn't enough supply 602 00:31:32,280 --> 00:31:34,880 Speaker 3: to reach that with the sanctions, so that's kind of 603 00:31:34,880 --> 00:31:37,800 Speaker 3: what led to the shortage in that time period. And 604 00:31:38,000 --> 00:31:41,480 Speaker 3: that can cause spikes when there's no inventory and say 605 00:31:41,480 --> 00:31:43,560 Speaker 3: there's a you know, really cold winter and you need 606 00:31:43,600 --> 00:31:46,680 Speaker 3: heating oil and there's none there that like the price 607 00:31:46,720 --> 00:31:49,400 Speaker 3: just keeps going up, so it's, uh, that can cause 608 00:31:49,440 --> 00:31:52,640 Speaker 3: severe spikes. But when there's inventory, that kind of flattens 609 00:31:52,640 --> 00:31:56,160 Speaker 3: out those spikes because they kind of smooths that process. Today, 610 00:31:56,320 --> 00:31:59,520 Speaker 3: you know, we're not really having those issues. Actually that 611 00:31:59,600 --> 00:32:02,440 Speaker 3: level was kind of historic lows for low inventory, and 612 00:32:02,960 --> 00:32:05,920 Speaker 3: today now you know, we're building inventory and on the 613 00:32:05,960 --> 00:32:09,720 Speaker 3: distillate side and it's kind of more i would say, 614 00:32:09,720 --> 00:32:12,840 Speaker 3: a normal market, as you would say, and we don't 615 00:32:12,880 --> 00:32:14,760 Speaker 3: really have those issues today. And I would say that's 616 00:32:15,240 --> 00:32:18,000 Speaker 3: mostly because kind of the Russian oil has gotten out 617 00:32:19,000 --> 00:32:21,920 Speaker 3: and demand has you know, weakened a little bit for 618 00:32:22,280 --> 00:32:26,240 Speaker 3: our consumption standpoint, and refiners haven't been able to adapt 619 00:32:26,280 --> 00:32:29,600 Speaker 3: and produce more. You know, heating oil and more diesel. 620 00:32:30,000 --> 00:32:32,720 Speaker 3: So I think it's like a combination of factors like anything, 621 00:32:32,760 --> 00:32:35,520 Speaker 3: and that kind of causes a little bit of an 622 00:32:35,520 --> 00:32:38,080 Speaker 3: oversupply and that kind of fills the tanks, and you know, 623 00:32:38,640 --> 00:32:42,840 Speaker 3: that's almost like a self selling prophecy. Once inventory levels build, 624 00:32:42,880 --> 00:32:45,720 Speaker 3: that's what traders watch. And as they see inventory levels build, 625 00:32:45,720 --> 00:32:48,160 Speaker 3: that kind of decreases the price of oil and that 626 00:32:48,600 --> 00:32:51,600 Speaker 3: actually encourages more people to park moil. So it just 627 00:32:51,720 --> 00:32:53,120 Speaker 3: kind of builds like that. 628 00:32:53,240 --> 00:32:57,720 Speaker 2: So the Northeast, especially in winter, as you mentioned, uses 629 00:32:57,760 --> 00:33:01,480 Speaker 2: a lot of oil for heating. We produce a lot 630 00:33:01,520 --> 00:33:05,240 Speaker 2: of oil not in the Northeast. There's some pipelines, but 631 00:33:05,520 --> 00:33:08,120 Speaker 2: we can't because of the Jones Act. We can't. 632 00:33:08,920 --> 00:33:10,840 Speaker 1: So where's our Jones Act? 633 00:33:10,320 --> 00:33:14,520 Speaker 2: Like yeah, right there or time the Jones Act comes up. 634 00:33:14,680 --> 00:33:16,760 Speaker 2: But is there like a perversity or how do you 635 00:33:16,800 --> 00:33:18,760 Speaker 2: see that play out? When it's like, Okay, the US 636 00:33:18,800 --> 00:33:22,720 Speaker 2: has oil, there are tankers, there is domestic need. What 637 00:33:22,960 --> 00:33:26,960 Speaker 2: is the infrastructure like for getting or not getting oil 638 00:33:27,120 --> 00:33:30,400 Speaker 2: from say Texas to homes in the Northeast that want 639 00:33:30,400 --> 00:33:30,960 Speaker 2: to heat their homes. 640 00:33:31,040 --> 00:33:34,440 Speaker 3: I mean, obviously, with the invention of fracking and natural 641 00:33:34,480 --> 00:33:37,440 Speaker 3: gas that has kind of alleviated a lot of the 642 00:33:37,480 --> 00:33:40,040 Speaker 3: heating oil need and that's kind of, you know, helped 643 00:33:40,040 --> 00:33:43,040 Speaker 3: a little bit as well. I would say the majority 644 00:33:43,080 --> 00:33:46,160 Speaker 3: of the product for US in the Northeast is coming 645 00:33:46,200 --> 00:33:49,840 Speaker 3: from the Gulf Coast and their finery complexes down there 646 00:33:49,840 --> 00:33:53,320 Speaker 3: and via pipeline, by via the pipeline. Yeah, and then 647 00:33:53,400 --> 00:33:56,080 Speaker 3: you know further up north and like the New England area, 648 00:33:56,080 --> 00:33:57,360 Speaker 3: they're not connected to any. 649 00:33:57,240 --> 00:33:59,320 Speaker 2: Pipe, right, there's no pipeline like in Vermont. 650 00:33:59,480 --> 00:34:03,960 Speaker 3: No, they'll take diesel supplies from Europe via vessel, or 651 00:34:04,080 --> 00:34:07,240 Speaker 3: they'll barge it up from New York Harbor and put 652 00:34:07,280 --> 00:34:08,600 Speaker 3: it into terminals and you. 653 00:34:08,560 --> 00:34:11,680 Speaker 2: Know barge the way that means an inland water way 654 00:34:11,760 --> 00:34:14,799 Speaker 2: in New York. So you can you can do pipeline 655 00:34:14,880 --> 00:34:18,879 Speaker 2: from Texas to New York, yes, and then via barge. Yes, 656 00:34:19,120 --> 00:34:21,080 Speaker 2: that way you don't have to deal with any Jones. 657 00:34:21,360 --> 00:34:24,640 Speaker 3: You don't have to pay because Okay, yeah, barges. 658 00:34:24,280 --> 00:34:27,160 Speaker 1: Are so underrated. I always think that whenever they come up. 659 00:34:27,280 --> 00:34:31,239 Speaker 2: Yeah, no, totally. And also just America's blessed inland war 660 00:34:31,680 --> 00:34:34,040 Speaker 2: system is incredibly absolutely underrated. 661 00:34:35,000 --> 00:34:37,440 Speaker 3: Yeah, for sure, I was gonna say Jones as they 662 00:34:37,440 --> 00:34:40,640 Speaker 3: still do exist. People still do lease them and they 663 00:34:40,640 --> 00:34:44,120 Speaker 3: will still take them. Typically it goes to Florida. Most 664 00:34:44,160 --> 00:34:46,680 Speaker 3: of the jones X go from the Gulf Coast of Florida, 665 00:34:47,160 --> 00:34:49,759 Speaker 3: and you'll see some that go to New England, but 666 00:34:50,360 --> 00:34:50,959 Speaker 3: not as many. 667 00:34:51,600 --> 00:34:54,799 Speaker 1: So I know, it's been a busy few years for 668 00:34:54,920 --> 00:34:58,640 Speaker 1: the oil and commodities industry in general. But looking back, 669 00:34:58,960 --> 00:35:03,240 Speaker 1: you know, now versus twenty twenty, what's been the big 670 00:35:03,440 --> 00:35:06,480 Speaker 1: change in your business? If you could sort of, you know, 671 00:35:06,600 --> 00:35:08,520 Speaker 1: just encapsulate it for us. 672 00:35:08,600 --> 00:35:11,320 Speaker 3: Sure, yeah, I mean it's kind of crazy how quickly 673 00:35:11,360 --> 00:35:14,359 Speaker 3: everything so much has changed in only three years. I mean, 674 00:35:14,800 --> 00:35:16,920 Speaker 3: a lot of the oil majors were, you know, crying 675 00:35:17,200 --> 00:35:20,040 Speaker 3: because you know, oil prices were so depressed and refining 676 00:35:20,040 --> 00:35:22,880 Speaker 3: margins were terrible, and now oil prices are high and 677 00:35:22,880 --> 00:35:25,040 Speaker 3: refining margins are great and a lot of these big 678 00:35:25,040 --> 00:35:27,960 Speaker 3: companies are reaping in tons of profit. We've seen a 679 00:35:28,000 --> 00:35:31,640 Speaker 3: lot of mergers and acquisitions on the shale production side, 680 00:35:31,680 --> 00:35:34,520 Speaker 3: with a lot of independent shale producers getting gobbled up 681 00:35:34,560 --> 00:35:38,080 Speaker 3: by these oil majors because shale producers are seeing good 682 00:35:38,080 --> 00:35:42,440 Speaker 3: evaluations and the majors are looking to grow there drilling production. 683 00:35:42,600 --> 00:35:44,600 Speaker 3: But without actually having the drill holes in the ground. 684 00:35:44,600 --> 00:35:47,200 Speaker 3: They can just acquire company. So you know, we're seeing 685 00:35:47,239 --> 00:35:50,080 Speaker 3: a lot of that. And from refining standpoint, I mean, 686 00:35:50,560 --> 00:35:52,960 Speaker 3: there's going to be new refineries built across the world 687 00:35:53,000 --> 00:35:55,480 Speaker 3: and that's kind of eat away at, you know, domestic 688 00:35:55,520 --> 00:35:59,000 Speaker 3: refining capacity from us on the midstream side. The terminal side, 689 00:35:59,000 --> 00:36:02,080 Speaker 3: we've seen a lot of mergers and acquisitions as well. 690 00:36:02,239 --> 00:36:06,279 Speaker 3: You know, a few big recent biots happened and that's 691 00:36:06,360 --> 00:36:08,960 Speaker 3: kind of changed the hands of the names of the tanks, 692 00:36:09,080 --> 00:36:12,200 Speaker 3: so same assets, different names, and that's kind of what 693 00:36:12,280 --> 00:36:16,280 Speaker 3: we're seeing recently, you know, just in the past few months. 694 00:36:16,800 --> 00:36:20,480 Speaker 3: And basically what I mentioned earlier was the global demand 695 00:36:20,600 --> 00:36:24,520 Speaker 3: for renewables and that's not just talk. It's happening today 696 00:36:24,600 --> 00:36:29,080 Speaker 3: and there is definite capital expenditures being put into building 697 00:36:29,120 --> 00:36:33,319 Speaker 3: plants and building terminal infrastructure to house you know, these 698 00:36:33,360 --> 00:36:36,359 Speaker 3: renewable fuels. So it'll be interesting what the next few 699 00:36:36,440 --> 00:36:40,240 Speaker 3: years hold for that. But yeah, I mean it's constantly 700 00:36:40,280 --> 00:36:42,080 Speaker 3: changing and that's kind of what keeps me on my 701 00:36:42,160 --> 00:36:46,319 Speaker 3: toes and keeps me interested in this oil game. But yeah, 702 00:36:46,360 --> 00:36:49,399 Speaker 3: it's been different since twenty twenty. A lot of things 703 00:36:49,440 --> 00:36:50,359 Speaker 3: have changed. 704 00:36:50,200 --> 00:36:52,919 Speaker 1: All right. Steven Barsamian, thank you so much for coming 705 00:36:52,960 --> 00:36:56,200 Speaker 1: on odd Lots and explaining the business of storing and 706 00:36:56,239 --> 00:36:58,879 Speaker 1: moving oil and its various products to us. We really 707 00:36:58,920 --> 00:36:59,560 Speaker 1: appreciate it. 708 00:37:00,080 --> 00:37:00,879 Speaker 3: Fun. Thank you for. 709 00:37:13,440 --> 00:37:16,400 Speaker 1: Joe. That was a fun conversation. I enjoyed that it 710 00:37:16,440 --> 00:37:18,799 Speaker 1: brought back a lot of memories for me about that 711 00:37:19,080 --> 00:37:23,680 Speaker 1: buying oil project. And there's actually a broker who took 712 00:37:23,719 --> 00:37:28,200 Speaker 1: me out on his boat to go around, like sounded 713 00:37:28,239 --> 00:37:30,759 Speaker 1: really fun. Yeah, and look at all the terminal facilities 714 00:37:30,760 --> 00:37:33,080 Speaker 1: and the tankers out there and stuff. There are a 715 00:37:33,080 --> 00:37:35,920 Speaker 1: few things that stuck out for me. So I was 716 00:37:36,000 --> 00:37:39,520 Speaker 1: kind of surprised that we have actually built out storage 717 00:37:39,600 --> 00:37:43,680 Speaker 1: infrastructure to the extent that we seem to, because it 718 00:37:43,719 --> 00:37:46,080 Speaker 1: does seem like in so many other areas the US 719 00:37:46,160 --> 00:37:50,960 Speaker 1: sort of struggles with building just in case capacity, but 720 00:37:51,239 --> 00:37:52,920 Speaker 1: for some reason it seems to have worked out in 721 00:37:52,960 --> 00:37:53,680 Speaker 1: the oil world. 722 00:37:54,520 --> 00:37:57,040 Speaker 2: That was really interesting. I was also just like, really, 723 00:37:57,160 --> 00:37:58,759 Speaker 2: I mean, there were a lot of interesting things. And 724 00:37:58,760 --> 00:38:02,200 Speaker 2: I remember when March, I guess April twenty twenty is 725 00:38:02,239 --> 00:38:04,680 Speaker 2: when we had the negative negative oil prices one day, 726 00:38:04,680 --> 00:38:07,399 Speaker 2: and I remember thinking like, well, like there must be 727 00:38:07,480 --> 00:38:11,719 Speaker 2: some market somewhere that is essentially the mirror image to 728 00:38:11,800 --> 00:38:13,799 Speaker 2: this oil price. But we don't have a chart because 729 00:38:13,840 --> 00:38:16,520 Speaker 2: there's not, like, you know, I don't think like storage 730 00:38:16,560 --> 00:38:20,040 Speaker 2: capacity data is like as common as the oil price 731 00:38:20,160 --> 00:38:23,080 Speaker 2: data or as like readily available. But I remember at 732 00:38:23,120 --> 00:38:25,640 Speaker 2: the time thinking like there must be some chart somewhere 733 00:38:25,680 --> 00:38:28,320 Speaker 2: that is literally the mirror image of this, because someone 734 00:38:28,360 --> 00:38:32,319 Speaker 2: with some marginal storage capacity must have seen, you know, 735 00:38:32,400 --> 00:38:34,719 Speaker 2: the amount that they can rent out their space for 736 00:38:34,920 --> 00:38:38,400 Speaker 2: essentially like shoot up positive forty or something de facto 737 00:38:38,600 --> 00:38:41,000 Speaker 2: like that. Because if you have this oil and you're 738 00:38:41,000 --> 00:38:42,799 Speaker 2: producing so much and you run out of space, like 739 00:38:42,800 --> 00:38:44,640 Speaker 2: you're desperate, right right, So. 740 00:38:44,680 --> 00:38:47,640 Speaker 1: That was when everyone was joking about buying oil and 741 00:38:47,719 --> 00:38:48,800 Speaker 1: storing it in their bathtub. 742 00:38:48,880 --> 00:38:51,920 Speaker 2: You were, you were ahead of the curve on owning 743 00:38:52,000 --> 00:38:53,799 Speaker 2: oil ahead of that, but yeah, right, like that would 744 00:38:53,800 --> 00:38:56,000 Speaker 2: be the ultimate time if you had the capacity. Yeah, 745 00:38:56,120 --> 00:38:56,600 Speaker 2: just been making it. 746 00:38:56,640 --> 00:38:59,000 Speaker 1: Fortunately, I did think it was interesting. Steve brought up 747 00:38:59,200 --> 00:39:02,279 Speaker 1: the sort of creative storage solutions that you did see 748 00:39:02,360 --> 00:39:04,600 Speaker 1: at the time, So for instance, just keeping your oil 749 00:39:04,680 --> 00:39:09,440 Speaker 1: on railcars or just leaving it in pipelines for storage 750 00:39:09,480 --> 00:39:12,880 Speaker 1: as opposed to using them to actually move it. I wonder, yeah, 751 00:39:13,120 --> 00:39:13,840 Speaker 1: crazy times. 752 00:39:13,880 --> 00:39:16,560 Speaker 2: I'm also interested, you know, to like how I guess 753 00:39:16,560 --> 00:39:19,880 Speaker 2: at some point there was like a CME future contract 754 00:39:19,960 --> 00:39:23,160 Speaker 2: for capacity, and like intuitively there's got to be like 755 00:39:23,640 --> 00:39:28,040 Speaker 2: arbitrage opportunities where you're like, oh, I'm long Houston storage capacity, 756 00:39:28,080 --> 00:39:32,080 Speaker 2: its short Louisiana storage capacity, et cetera. But maybe those 757 00:39:32,120 --> 00:39:34,959 Speaker 2: markets have yet to be fully like a built down 758 00:39:35,040 --> 00:39:35,839 Speaker 2: liquid And so. 759 00:39:36,320 --> 00:39:39,840 Speaker 1: Do you think Steve will let us advertise storage capacity 760 00:39:40,080 --> 00:39:42,720 Speaker 1: on his website and see if interested? 761 00:39:42,800 --> 00:39:45,279 Speaker 2: Do you have storage capacity in your basement tracing. 762 00:39:45,000 --> 00:39:47,920 Speaker 1: I've got like one foot of dusk space for if 763 00:39:48,000 --> 00:39:49,880 Speaker 1: someone wants to storage to another jar. 764 00:39:50,480 --> 00:39:54,360 Speaker 2: It sounds it sounds like an environmental headache minimum. 765 00:39:54,440 --> 00:39:56,359 Speaker 1: Yeah, you're right, Okay, shall we leave it there? 766 00:39:56,440 --> 00:39:57,160 Speaker 2: Let's leave it there. 767 00:39:57,440 --> 00:39:59,919 Speaker 1: This has been another episode of the ad Thoughts Pod. 768 00:40:00,360 --> 00:40:03,760 Speaker 1: I'm Tracy Alloway. You can follow me at Tracy Alloway. 769 00:40:03,400 --> 00:40:06,080 Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart. 770 00:40:06,440 --> 00:40:09,480 Speaker 2: Check out Stevens podcast Tank Talk, brought to you by 771 00:40:09,920 --> 00:40:13,879 Speaker 2: Tank Tiger. Follow our producers Carmen Rodriguez at Carman Arman, 772 00:40:14,080 --> 00:40:17,759 Speaker 2: Dashel Bennett at Dashbot, and Cal Brooks at Calebrooks. Thank 773 00:40:17,800 --> 00:40:20,880 Speaker 2: you to our producer Moses Ondam. For more Oddlots content, 774 00:40:20,920 --> 00:40:23,920 Speaker 2: go to Bloomberg dot com slash odd Lots. We have transcript, 775 00:40:23,960 --> 00:40:26,759 Speaker 2: a blog, and a newsletter, and you can chat with 776 00:40:26,800 --> 00:40:30,080 Speaker 2: fellow listeners of the podcast and the discord Discord dot 777 00:40:30,120 --> 00:40:33,200 Speaker 2: gg slash odd Lots twenty four seven. We have an 778 00:40:33,320 --> 00:40:36,279 Speaker 2: energy channel and a transportation channel, so maybe people will 779 00:40:36,320 --> 00:40:37,359 Speaker 2: be talking about it in there. 780 00:40:37,880 --> 00:40:40,759 Speaker 1: And if you enjoy Oddlots, if you want us to 781 00:40:40,800 --> 00:40:43,839 Speaker 1: go on a field trip to Arthur Kill and look 782 00:40:43,880 --> 00:40:46,239 Speaker 1: at all the oil storage out there, then please leave 783 00:40:46,320 --> 00:40:49,880 Speaker 1: us a positive review on your favorite podcast platform. And 784 00:40:49,960 --> 00:40:53,200 Speaker 1: don't forget. If you're a Bloomberg subscriber, you can connect 785 00:40:53,280 --> 00:40:56,920 Speaker 1: your account and listen to all of the Authlots episodes 786 00:40:57,160 --> 00:41:01,600 Speaker 1: add free. Just connect your Bloomberg subscription into Apple Podcasts. 787 00:41:01,880 --> 00:41:02,680 Speaker 1: Thanks for listening.