WEBVTT - How Surging US Oil Output Is Being Moved and Stored 0:00:10.800 --> 0:00:13.960 Hello, and welcome to another episode of the All Thoughts Podcast. 0:00:14.040 --> 0:00:15.440 I'm Tracy Alloway. 0:00:15.080 --> 0:00:16.240 And I'm Joe Wisenthal. 0:00:16.560 --> 0:00:18.840 Joe, do you remember that time I bought a barrel 0:00:18.880 --> 0:00:19.239 of oil? 0:00:19.960 --> 0:00:24.720 That was a classic, classic moment in a well, yeah, that. 0:00:24.760 --> 0:00:27.840 Was class I can say it in all of financial journals, all. 0:00:27.720 --> 0:00:32.159 Of financial journalism were you Actually it wasn't a barrel though, No, 0:00:32.320 --> 0:00:33.479 it was honest, Let's be. 0:00:33.479 --> 0:00:36.680 Honest, it wasn't. I tried to buy an actual barrel. 0:00:36.760 --> 0:00:38.960 It was like a gallon, right, It was basically a 0:00:39.080 --> 0:00:43.160 jar of crude oil. I'm really happy I didn't buy 0:00:43.200 --> 0:00:46.000 an entire barrel in the end, because part of the 0:00:46.080 --> 0:00:49.839 experience of doing this was I realized how difficult it 0:00:50.000 --> 0:00:53.640 is to actually move and store oil. Oil is a 0:00:53.720 --> 0:00:54.480 dangerous thing. 0:00:55.240 --> 0:00:57.279 Yeah, you had it on the desk next to us, 0:00:57.320 --> 0:00:59.000 and then you left, right like you left for Hong 0:00:59.080 --> 0:01:01.520 Kong or you left, Yeah, delby and left the oil 0:01:01.720 --> 0:01:03.560 and like a bunch of vaporated I'm. 0:01:03.360 --> 0:01:05.840 Not sure I should tell this story, but I couldn't 0:01:05.840 --> 0:01:09.000 figure out how to dispose of my jar of crude oil. 0:01:09.200 --> 0:01:12.240 So I just procrastinated and left it on the desk 0:01:12.319 --> 0:01:14.759 and it slowly evaporated and poisoned my. 0:01:14.720 --> 0:01:17.959 Car and now the oil fumes for months and months. 0:01:18.040 --> 0:01:21.080 Yes, sorry about that too, right, I survived? All right? Well, 0:01:21.280 --> 0:01:24.319 I bring it up because I'm very, very curious about 0:01:24.360 --> 0:01:28.000 the business of storing and transporting oil right now. And 0:01:28.120 --> 0:01:30.920 part of the reason is because, as we've been discussing 0:01:31.000 --> 0:01:33.520 on this podcast, we had a really great episode with 0:01:33.600 --> 0:01:37.840 our colleague caper Bloss. For instance, US oil production is 0:01:38.080 --> 0:01:40.679 at a record I think it's like more than thirteen 0:01:40.680 --> 0:01:42.280 million barrels per day now. 0:01:42.720 --> 0:01:46.680 Yeah, it's really extraordinary. Obviously, the US just production booming 0:01:46.760 --> 0:01:49.639 like crazy. And you know you mentioned that episode with Javier. 0:01:49.720 --> 0:01:52.560 When we talk about oil, most of the time, right 0:01:52.600 --> 0:01:55.000 we're talking sort of like macro, like who are the 0:01:55.040 --> 0:01:58.400 big producers, how much global demand is there, what is 0:01:58.440 --> 0:02:01.360 the trajectory, what's happening in shit, what is happening in Saudi, 0:02:01.440 --> 0:02:04.000 et cetera. But as we like to do from time 0:02:04.040 --> 0:02:06.440 to time, like these aren't just numbers on a screen, right, 0:02:06.560 --> 0:02:09.480 Oil is definitely not just a number on a screen. 0:02:09.520 --> 0:02:11.520 And if you want to go long oil, if you 0:02:11.560 --> 0:02:14.359 want to, if you're bullish on oil, like you might 0:02:14.400 --> 0:02:15.960 be able to do that with a few clicks, but 0:02:16.040 --> 0:02:17.280 someone somewhere. 0:02:16.919 --> 0:02:18.600 We don't want to take physical delivery. 0:02:18.840 --> 0:02:21.120 You probably don't want to, but someone somewhere has to 0:02:21.160 --> 0:02:24.560 have the physical I don't know if it's counterpart or 0:02:24.600 --> 0:02:28.160 the physical exposure to meet your financial obligation. So if 0:02:28.160 --> 0:02:31.840 your trade oil futures, someone there, like I assume, takes 0:02:31.880 --> 0:02:34.720 the other side on some level by having exposure to 0:02:34.720 --> 0:02:39.880 the physical product, which means worrying about disposal, delivery, storage, tankers, 0:02:39.919 --> 0:02:41.760 and so forth. It is so like the sort of 0:02:42.160 --> 0:02:44.560 the side of the business that's not usually talked about 0:02:44.800 --> 0:02:45.880 we should talk about. 0:02:45.760 --> 0:02:49.000 Absolutely, And just going back to that episode with Havier, 0:02:49.120 --> 0:02:51.160 I remember one of the themes from that was how 0:02:51.320 --> 0:02:54.840 much oil production patterns have changed in the past few years, 0:02:55.000 --> 0:02:58.400 and so I'm very curious if the storage and transportation 0:02:58.760 --> 0:03:02.480 patterns are also changing. So I'm pleased to say we 0:03:02.560 --> 0:03:05.360 really do have the perfect guests to dive into the 0:03:05.520 --> 0:03:08.160 business of storing and moving oil. We're going to be 0:03:08.200 --> 0:03:12.160 speaking with Stephen Barsamian. He is COO at The Tank 0:03:12.360 --> 0:03:16.320 Tiger and also the co host of the tank Talk podcast, 0:03:16.360 --> 0:03:18.840 so a fellow podcaster, Steve, thank you so much for 0:03:18.880 --> 0:03:19.760 coming on. All thoughts. 0:03:19.960 --> 0:03:21.880 Thanks Tracy, thanks for having me. Thanks for having me. 0:03:21.960 --> 0:03:24.480 Joe, maybe just to begin with talk to us about 0:03:24.520 --> 0:03:27.360 what the tank Tiger actually does. I was looking at 0:03:27.360 --> 0:03:30.919 the website. You describe yourself as a clearing house for 0:03:31.080 --> 0:03:34.079 terminal storage, and if you go to the website, Joe, 0:03:34.120 --> 0:03:35.800 I don't know if you've done this yet, I have, 0:03:36.120 --> 0:03:40.080 but you can look at basically kind of want ads 0:03:40.160 --> 0:03:45.960 for storage. It's like looking for you know, specialty chemical storage, 0:03:46.120 --> 0:03:50.320 this amount or I have available this amount of storage 0:03:50.320 --> 0:03:51.960 for a particular product. 0:03:52.200 --> 0:03:54.120 Yeah, I mean, Tracy, you kind of nailed it there. 0:03:54.160 --> 0:03:56.119 That's kind of what we do. I like to say 0:03:56.120 --> 0:03:57.480 we're Airbnb for tanks. 0:03:57.760 --> 0:04:00.720 I was going to say Tinder probably works too. 0:04:01.080 --> 0:04:04.880 My dad has used maatch dot com before, so yeah, no, 0:04:05.080 --> 0:04:07.480 that's kind of high level what we do. Essentially, we 0:04:07.560 --> 0:04:13.560 have customers that are terminals that store you know, petroleum products, chemicals, bioproducts, 0:04:13.560 --> 0:04:15.760 and they're all pretty much liquids and they go into 0:04:15.880 --> 0:04:18.520 a you know, a giant tank. I'm sure people have 0:04:18.560 --> 0:04:21.440 seen the Sopranos, the intro to the Sopranos, those ginormous 0:04:21.520 --> 0:04:24.800 tanks and the intro that typically holds you know, gasoline 0:04:24.880 --> 0:04:27.560 or diesel, and essentially you can lease them out like 0:04:27.560 --> 0:04:31.000 an apartment, and people pay for a term on that 0:04:31.120 --> 0:04:33.400 tank like you would pay for a term on an apartment. 0:04:33.920 --> 0:04:37.880 And essentially oil traders, oil majors, they usually are the 0:04:37.880 --> 0:04:41.239 customers that least those tanks. And there's terminal storage companies 0:04:41.240 --> 0:04:43.760 that are public companies that kind of lease them out 0:04:43.800 --> 0:04:46.440 third party, So that's kind of how it works. And 0:04:46.640 --> 0:04:48.640 essentially we kind of get in the middle of that 0:04:48.680 --> 0:04:51.600 and we try to facilitate the transactions of people that 0:04:51.640 --> 0:04:53.960 need storage and the people that have storage, and like 0:04:54.040 --> 0:04:55.520 you said, is kind of like one ads, you know, 0:04:55.640 --> 0:04:58.400 trying to find the perfect match. And really that's what 0:04:58.400 --> 0:05:00.360 we've done for the past nine years, and so far 0:05:00.279 --> 0:05:02.559 we're still in business and still paying the bills. 0:05:02.600 --> 0:05:07.440 So wanted storage unit with sensitivity and I don't know, 0:05:07.760 --> 0:05:11.839 affinity for poetry slightly round them. 0:05:11.880 --> 0:05:14.800 How much of the business, if you look overall, is 0:05:14.920 --> 0:05:20.320 sort of like big sort of long term relationships between 0:05:20.520 --> 0:05:24.280 some oil producer and some storage company, and then how 0:05:24.360 --> 0:05:27.080 much maybe we have the tank tiger's business or anyone 0:05:27.160 --> 0:05:29.840 else's business is perhaps like sort of like I don't know, 0:05:29.880 --> 0:05:33.000 maybe the term is odd. Lots of oil storage where 0:05:33.480 --> 0:05:36.359 some storage company has a little bit of extra space 0:05:36.480 --> 0:05:39.560 beyond what their contract is. I mean, I assume there 0:05:39.560 --> 0:05:41.800 are like long term contracts, but why do you like 0:05:41.839 --> 0:05:44.880 talk about the breakdown there of how these deals usually 0:05:44.920 --> 0:05:45.359 come together. 0:05:45.800 --> 0:05:46.000 You know. 0:05:46.200 --> 0:05:48.640 So my dad who started the company, he worked at 0:05:48.680 --> 0:05:51.520 HESS for over thirty years and he kind of started 0:05:51.800 --> 0:05:55.839 the third party leasing of terminal storage at HESS. Those 0:05:55.920 --> 0:05:58.920 terminals are now not obviously owned by HESS anymore, and 0:05:59.000 --> 0:06:00.919 he kind of saw the need in the market to 0:06:00.960 --> 0:06:03.640 create this company. And you know, when he was doing 0:06:03.640 --> 0:06:06.159 deals a hes it was you know, largely long term 0:06:06.160 --> 0:06:09.000 deals or spot deals and essentially you know, trying to 0:06:09.040 --> 0:06:12.279 find the best fit for their excess capacity and assets. 0:06:12.839 --> 0:06:15.240 So I would say, you know, typically today, you know, 0:06:15.279 --> 0:06:17.400 with us being in the market, we've kind of added 0:06:17.400 --> 0:06:20.719 some liquidity and transparency a lot of the big players. 0:06:20.800 --> 0:06:23.479 You know, there's big and small terminals, and a lot 0:06:23.480 --> 0:06:25.360 of them have you know, like you said, long term 0:06:25.400 --> 0:06:28.159 customers that have been there for years and years. And 0:06:28.200 --> 0:06:31.960 then there's swings in the market where there's contango, which 0:06:32.000 --> 0:06:34.880 I hope your folks know what that is. It's basically 0:06:35.279 --> 0:06:38.160 in the future's market when the price is more than 0:06:38.200 --> 0:06:41.400 the today's price. So essentially you can put oil away 0:06:41.440 --> 0:06:44.240 and make money by storing it, and then baquidation is 0:06:44.279 --> 0:06:47.800 the opposite, so that's de incentivized as storage. So that 0:06:47.920 --> 0:06:50.280 kind of fluctuates, and you know, people leave and enter 0:06:50.320 --> 0:06:52.520 markets all the time. Companies change all the time, so 0:06:52.800 --> 0:06:55.479 leases run off, so that kind of leaves that excess 0:06:55.480 --> 0:06:58.800 and incremental storage capacity that's you know, up for a 0:06:58.920 --> 0:07:00.240 spot or long term. 0:07:00.400 --> 0:07:02.599 I was just gonna ask one quick question. This comes 0:07:02.680 --> 0:07:04.240 up in a lot of the episodes we do on 0:07:04.400 --> 0:07:07.159 trucking where we look at the rates and they say, okay, 0:07:07.160 --> 0:07:09.920 there's a spot rate and a contract rate for trucking. 0:07:10.200 --> 0:07:13.040 Is there basically an equivalent where you could sort of 0:07:13.040 --> 0:07:15.840 plot over time what sort of contracted rates there are 0:07:15.880 --> 0:07:18.440 for long term relationships and then like a spot rate 0:07:18.480 --> 0:07:21.400 that fluctuates both up and down relative to the contract. 0:07:21.480 --> 0:07:23.280 Yeah, definitely, I mean that's you kind of hit the 0:07:23.360 --> 0:07:25.120 nail on the head there. You know, you know, long 0:07:25.200 --> 0:07:27.800 term rates they're kind of steady at a certain threshold 0:07:27.840 --> 0:07:30.440 and it has to make sense for both sides, and 0:07:30.680 --> 0:07:32.640 there's spot rates and that kind of moves kind of 0:07:32.680 --> 0:07:35.280 with the markets, and that's yeah, exactly. 0:07:35.320 --> 0:07:39.760 It so I know, some oil majors obviously have their 0:07:39.800 --> 0:07:43.120 own storage, but a lot of people are clearly leasing 0:07:43.160 --> 0:07:45.560 it from third parties. Why is that? Like, why not 0:07:45.720 --> 0:07:47.600 just build out your own capacity? 0:07:48.200 --> 0:07:50.160 Some do, but it's kind of like, do you know 0:07:50.240 --> 0:07:54.680 the old economics model that I remember from an episode 0:07:54.720 --> 0:07:58.400 of the Office. Usually, you know, you don't want the 0:07:58.440 --> 0:08:01.720 liability and you have to essentially use that tank all 0:08:01.760 --> 0:08:04.480 the time if you're going to be building it. That's 0:08:04.640 --> 0:08:07.800 really what leasing comes in is you don't have that 0:08:07.920 --> 0:08:10.960 general liability of operating a terminal, so you just can 0:08:10.960 --> 0:08:12.840 come in and go as you please when you need 0:08:12.840 --> 0:08:15.120 it and when you don't need it. Most oil majors 0:08:15.160 --> 0:08:18.800 do own their own storage for their own operational use. 0:08:18.880 --> 0:08:21.520 I would say a lot of you know, oil majors 0:08:21.520 --> 0:08:25.360 now these days are trading physical trading, and they will 0:08:25.360 --> 0:08:30.040 take advantage of arbitrage opportunities by leasing storage in certain markets, 0:08:30.080 --> 0:08:33.360 whether that's for blending or moving product from A to 0:08:33.400 --> 0:08:36.840 B or you know, taking advantage of contango as I mentioned. 0:08:37.160 --> 0:08:39.920 So they kind of do both. And there's oil trading 0:08:39.960 --> 0:08:43.840 companies that exist that are just you know, these companies 0:08:43.880 --> 0:08:46.920 that trade commodities from all different parts of the globe, 0:08:46.920 --> 0:08:49.920 and basically they operate with long term and short term 0:08:50.000 --> 0:08:53.120 leases to take advantage of the same trading opportunities. As 0:08:53.160 --> 0:08:54.120 I kind of just mentioned. 0:08:54.720 --> 0:08:58.760 You mentioned those tanks in the opening scenes of The Sopranos. 0:08:59.320 --> 0:09:04.120 Mayas so would be that in suburban New Jersey or 0:09:04.160 --> 0:09:06.840 suburban New York or wherever they are, there is probably 0:09:06.920 --> 0:09:09.440 not a lot of appetite to build. More that there 0:09:09.480 --> 0:09:12.320 are neighbors who probably do not want those big fields 0:09:12.400 --> 0:09:15.880 or those big terminals or the big storage facilities to 0:09:15.960 --> 0:09:17.960 continue to expand. I imagine people don't want to live 0:09:18.040 --> 0:09:22.080 next to them. Whereas on the production side, I imagine, 0:09:22.120 --> 0:09:25.280 you know, in sort of depopulated parts of like North 0:09:25.360 --> 0:09:28.400 Dakota or Texas or wherever there's explosion, there's probably not 0:09:28.480 --> 0:09:31.199 much of a less of a constraint. So is there 0:09:31.240 --> 0:09:35.440 a mismatch in the country's ability to produce oil, which 0:09:35.480 --> 0:09:38.280 seems like it can ramp up like crazy, versus the 0:09:38.320 --> 0:09:41.800 country's ability to store oil, which I imagine, especially in 0:09:41.840 --> 0:09:45.840 strategic locations near ports, near where people live, is going 0:09:45.880 --> 0:09:47.599 to be somewhat constrained. 0:09:47.480 --> 0:09:50.320 For sure, Joe, I mean, we live, or I live, 0:09:50.600 --> 0:09:52.120 all of us live kind of in the New York 0:09:52.160 --> 0:09:56.240 area and near carb is the nymex hub for gasoline 0:09:56.280 --> 0:09:58.920 and diesel, and we have a I don't know if 0:09:58.960 --> 0:10:01.080 people have noticed, but there's a a bunch of tanks 0:10:01.120 --> 0:10:04.480 farms in the area and really that kind of has 0:10:04.520 --> 0:10:07.320 actually constrained over the years. A lot of terminals have 0:10:07.400 --> 0:10:11.160 been sold and turned into warehouses, and like you mentioned Nimby, 0:10:11.280 --> 0:10:13.640 you know, nobody wants to see, you know, an oil 0:10:13.679 --> 0:10:16.160 tank pop up in their backyard. So a lot of 0:10:16.160 --> 0:10:19.000 that is actually kind of constraining here in this geography, 0:10:19.280 --> 0:10:21.680 whereas you mentioned other parts of the US and the globe, 0:10:21.760 --> 0:10:24.160 they probably more willing and there's nothing around them to 0:10:24.160 --> 0:10:26.880 build more tanks building tanks. I mean, it kind of 0:10:26.880 --> 0:10:29.520 fluctuates with the market. As I said before. You know, 0:10:29.559 --> 0:10:32.839 we started the podcast with production growth. That was a 0:10:32.840 --> 0:10:34.840 big boom in midstream in the early parts of the 0:10:34.840 --> 0:10:38.240 twenty tens with the fracking, and kind of midstream followed 0:10:38.280 --> 0:10:41.959 along with that to facilitate the movement of that production. 0:10:42.480 --> 0:10:44.760 And that was kind of the big midstream boom there. 0:10:45.120 --> 0:10:48.360 And then you know recently with the opening of the 0:10:48.559 --> 0:10:51.640 Mexican border, there was a big boom for midstream needs 0:10:51.640 --> 0:10:54.720 to move product to Mexico, whether it was by rail. 0:10:54.760 --> 0:10:57.959 So sorry, the tanks are midstream midstream tanks, no, just 0:10:58.000 --> 0:11:00.040 making sure, but that tanks are considered me. 0:11:00.280 --> 0:11:04.240 Midstream, yes, yeah, midstream terminals, yes, kind of all midstream 0:11:04.240 --> 0:11:08.680 includes you know, pipelines, tanks, et cetera. So yeah, there's downstream, midstream, 0:11:08.679 --> 0:11:11.160 and upstream. So you had, you know, the big boom 0:11:11.200 --> 0:11:13.560 for Mexico. There was a lot of tanks built for 0:11:13.600 --> 0:11:16.559 that movement of product to Mexico that all these companies 0:11:16.559 --> 0:11:19.319 were able to do business in Mexico. So that provided 0:11:19.320 --> 0:11:22.640 the opportunity to expand and build more tanks for that. 0:11:22.720 --> 0:11:25.920 And then recently we've seen on the chemical side and 0:11:26.080 --> 0:11:30.520 on the agricultural side, which kind of leads into renewable fuels, 0:11:30.720 --> 0:11:34.480 we've seen quite a large movement to build more tanks 0:11:34.559 --> 0:11:39.080 for housing renewable fuels. And you know, that's not a coincidence. 0:11:39.080 --> 0:11:42.160 There's been you know, global push to get into renewables. 0:11:42.559 --> 0:11:46.400 When I say renewable fuels, that's you know, biodiesel, that's ethanol, 0:11:46.559 --> 0:11:50.920 that's renewable diesel. This product called staff that's meant for airlines. 0:11:51.600 --> 0:11:54.480 It's a replacement fuel for jet fuel. And then you know, 0:11:54.559 --> 0:11:58.400 there's the feedstocks that are used to produce these products, 0:11:58.400 --> 0:12:02.760 and those are typically like palm oils, veg oils, use 0:12:02.840 --> 0:12:06.479 cooking oil. All this product does need to be imported 0:12:06.640 --> 0:12:09.959 and then moved to the production facility. So that's kind 0:12:10.000 --> 0:12:13.760 of facilitated this kind of new boom in midstream and 0:12:13.880 --> 0:12:17.440 terminal infrastructure of building more tanks for that and that's 0:12:17.800 --> 0:12:20.480 largely I mean, we've seen it largely across the US, 0:12:20.800 --> 0:12:24.679 and it's predominantly happened in the Gulf Coast too, where 0:12:24.800 --> 0:12:26.920 I would say the Gulf Coast is one of the 0:12:27.000 --> 0:12:30.960 largest holders of tanks inventory in probably the US, and 0:12:31.120 --> 0:12:34.839 just sheared total capacity. It's definitely the most active in 0:12:34.920 --> 0:12:35.880 the largest. 0:12:51.120 --> 0:12:53.840 There used to be headlines about the US running out 0:12:53.840 --> 0:12:56.560 of oil storage. I think during the depths of the 0:12:56.600 --> 0:12:59.960 pandemic in twenty twenty we started to see those crop up. 0:13:00.040 --> 0:13:03.080 But even before then, I think during the shale boom, 0:13:03.320 --> 0:13:07.040 there was storage concerns and like the pipelines were getting 0:13:07.040 --> 0:13:10.959 clogged up and things like that. Do those concerns still 0:13:11.200 --> 0:13:14.480 exist today? If US oil production is at more than 0:13:14.520 --> 0:13:17.679 thirteen million barrels per day, we've seen this massive surge. 0:13:18.040 --> 0:13:21.520 Is the infrastructure to handle the movement and storage of 0:13:21.559 --> 0:13:22.800 that where it needs to be. 0:13:23.480 --> 0:13:27.120 Yeah, actually, we kind of overbuilt our pipeline capacity a 0:13:27.120 --> 0:13:31.240 little bit in anticipation of all this production and needing 0:13:31.240 --> 0:13:33.880 it to pretty much any incremental barrel we produced is 0:13:33.920 --> 0:13:36.800 exported because you know, we've kind of satiated our need 0:13:36.840 --> 0:13:39.840 with the refining capacity here in the US for like cruids. 0:13:40.360 --> 0:13:42.640 So yeah, we kind of overbuilt it a little bit, 0:13:42.720 --> 0:13:45.560 and the productions trying to keep up to get to 0:13:45.600 --> 0:13:50.200 that point where levels are paying for that infrastructure that 0:13:50.320 --> 0:13:52.920 was built. Yeah, kind of the things you mentioned, you know, 0:13:53.320 --> 0:13:56.320 for your prior point with the it was around like 0:13:56.320 --> 0:13:59.880 twenty fifteen when oil kind of cratered, and you know 0:14:00.000 --> 0:14:03.440 oil typically does booming bus cycles, as everybody says, and 0:14:03.480 --> 0:14:06.800 that was a bus cycle in twenty fifteen with all 0:14:06.840 --> 0:14:10.160 that production, and yeah, pretty much everybody that had a 0:14:10.200 --> 0:14:13.520 tank was filled during that time period. And then we 0:14:13.600 --> 0:14:15.800 have you know, the pandemic, which was more on the 0:14:15.840 --> 0:14:18.440 demand side where there was no demand for oil, so 0:14:18.520 --> 0:14:21.360 people had to park it every nook and cranny. I mean, 0:14:21.480 --> 0:14:23.800 that might have been the craziest two months of my life. 0:14:23.880 --> 0:14:24.920 During that What did you. 0:14:24.840 --> 0:14:28.080 See did you see creative storage solutions. 0:14:28.160 --> 0:14:29.400 Yeah, talk about that time. 0:14:29.560 --> 0:14:32.640 Yeah, No, it really was pretty wild. I'm not gonna lie. 0:14:32.760 --> 0:14:35.720 It was unprecedented for so many reasons, for so many people, 0:14:36.080 --> 0:14:39.120 and yeah, we did see so many unusual things which 0:14:39.280 --> 0:14:43.000 probably won't be replicated. We had people parking frack tanks, 0:14:43.000 --> 0:14:46.600 which are these small like portable tanks and filling them 0:14:46.680 --> 0:14:49.680 with oil next to you know, Cushing, which is you know, 0:14:50.120 --> 0:14:54.120 the Nimax hub for WTI and for futures contract that's 0:14:54.120 --> 0:14:57.560 the easiest plate to trade oil. So yeah, we were 0:14:57.560 --> 0:15:00.880 seeing that kind of weird level of detail of you know, 0:15:00.920 --> 0:15:04.040 filling up and moving fractanks to Cushing. You know, people 0:15:04.200 --> 0:15:07.120 filling up pipelines and not even moving the oil. It 0:15:07.160 --> 0:15:09.880 was a very very strange time. And you know, typically 0:15:10.200 --> 0:15:13.960 it's more of a flatter market than that. And we 0:15:13.960 --> 0:15:17.120 were seeing another weird thing, you know, people booking vessels 0:15:17.120 --> 0:15:20.520 and just parking oil on large vessels and parking at 0:15:20.560 --> 0:15:23.640 sea or near ports. I'm trying to think, Oh, oil 0:15:23.680 --> 0:15:26.280 on rail cars. That was another thing. People were parking 0:15:26.320 --> 0:15:29.880 on rail cars and parking in rail yards. So yeah, 0:15:29.880 --> 0:15:32.080 that was an interesting time, not gonna lie. I was 0:15:32.120 --> 0:15:34.120 doing a lot of work in a very short period 0:15:34.160 --> 0:15:36.880 of time, and also being in the lockdown was making 0:15:36.880 --> 0:15:37.400 it weirder. 0:15:37.440 --> 0:15:42.120 But what is the economic sweet spot for owners of 0:15:42.240 --> 0:15:45.360 midstream assets because obviously, you know, you know, we could 0:15:45.360 --> 0:15:47.280 talk about oil in terms of volume, or we could 0:15:47.280 --> 0:15:49.320 talk about oil in terms of price, and sometimes they 0:15:49.320 --> 0:15:51.400 move in the same direction. Sometimes not often they move 0:15:51.840 --> 0:15:55.680 I guess intuitively, often they move in opposite directions. What 0:15:55.920 --> 0:15:58.920 is the sort of like the dream business environment if 0:15:58.960 --> 0:16:00.200 you're in the midstream. 0:15:59.800 --> 0:16:04.720 Spance, Probably the dream is high oil prices and high contango. 0:16:05.360 --> 0:16:07.600 That's that's pretty much you know the dream. 0:16:07.440 --> 0:16:09.600 So high oil prices but even higher in the future. 0:16:09.680 --> 0:16:12.640 Yeah, exactly, I would say that's probably the dream scenario. 0:16:12.760 --> 0:16:15.160 Typically that doesn't happen, but yeah, that would be the 0:16:15.200 --> 0:16:17.680 dream scenario. I mean, then you have you know, producers 0:16:17.680 --> 0:16:20.480 still producing moving the oil, which you know they're paying 0:16:20.520 --> 0:16:23.480 tariffs for the pipeline and then you know they're paying 0:16:23.480 --> 0:16:26.600 it for the export of moving it from the pipeline 0:16:26.600 --> 0:16:29.360 to the tanks, to the dock and onto a ship, 0:16:29.440 --> 0:16:31.920 so that that's making money for the terminal all the 0:16:31.960 --> 0:16:34.680 way through. And then they're making money on the storage costs, 0:16:34.720 --> 0:16:36.520 which you know, people are just gonna park oil in 0:16:36.520 --> 0:16:38.960 the storage and yeah, pay for it. So I would 0:16:39.000 --> 0:16:40.880 say that's a good dream scenario. 0:16:42.040 --> 0:16:45.400 What makes for a good storage facility? And obviously I 0:16:45.480 --> 0:16:47.840 get that the requirements are going to depend on the 0:16:48.120 --> 0:16:52.080 exact product, but in general, what are the things people 0:16:52.120 --> 0:16:55.480 are looking for when they're looking for storage capacity? Is 0:16:55.520 --> 0:16:59.359 it just price or is it maybe safety or convenience 0:16:59.480 --> 0:17:00.120 things like that. 0:17:00.400 --> 0:17:03.600 So when we started the Tank Tiger, storage prices was 0:17:03.760 --> 0:17:06.480 very very opaque, and we tried to bring a little 0:17:06.480 --> 0:17:09.080 bit of light and transparency. Like I said, we've been 0:17:09.080 --> 0:17:10.840 doing this for eight years and now, so people kind 0:17:10.840 --> 0:17:13.280 of trust this, I think. So we've been able to 0:17:13.560 --> 0:17:16.080 kind of shed some light on storage pricing. And it 0:17:16.119 --> 0:17:18.000 was a black box day, you know, somebody could have 0:17:18.040 --> 0:17:21.000 been paying like two dollars more than the other person 0:17:21.040 --> 0:17:23.840 in that same terminal, or you know, vice versa. So 0:17:25.080 --> 0:17:29.640 we've been able to actually create kind of more transparency 0:17:29.640 --> 0:17:33.240 and liquidity in what we do. But to answer your question, yeah, 0:17:33.240 --> 0:17:37.040 I would say it's a combination of all. So typically 0:17:37.080 --> 0:17:39.960 in a you know, a flatter, more backuidated market or 0:17:40.040 --> 0:17:43.840 small contango market, the more what I call well connected 0:17:43.840 --> 0:17:48.119 facilities or desirable locations are going to be you know, 0:17:48.160 --> 0:17:51.040 the first to you know, get leased out, and typically 0:17:51.480 --> 0:17:54.439 those are you know, terminals in Houston, those are terminals 0:17:54.840 --> 0:17:58.280 in near carb like I mentioned in Cushing and along 0:17:58.280 --> 0:18:00.960 the river in New Orleans. You know, these are pretty 0:18:01.000 --> 0:18:05.359 much major trading hubs and logistical hubs. And for at 0:18:05.400 --> 0:18:09.000 least oil terminals, the better the connected, which means, you know, 0:18:09.400 --> 0:18:13.040 the best pipeline connected facilities tend to do better than 0:18:13.040 --> 0:18:15.720 the other the ones that are not as well connected pipeline, 0:18:15.760 --> 0:18:18.520 and that kind of means is like they're bringing in 0:18:18.600 --> 0:18:21.720 oil from multiple locations, so it gives a person optionality 0:18:22.000 --> 0:18:26.639 and they're bringing it to their outbound connectivities to are 0:18:26.920 --> 0:18:30.240 vast and broad, so that kind of lends itself to 0:18:30.240 --> 0:18:33.480 be a favorable facility. And then you know, obviously price 0:18:33.600 --> 0:18:37.640 matters a lot as well. And then for logistically, it's 0:18:37.760 --> 0:18:40.760 you know, location, So customers that least storage want to 0:18:40.760 --> 0:18:43.399 be around other people that least storage, so they're able 0:18:43.440 --> 0:18:45.760 to move barrels from point A to B, and you know, 0:18:45.800 --> 0:18:48.400 that provides some liquidity and trading activity, so they don't 0:18:48.400 --> 0:18:50.359 want to be stuck in the middle of nowhere and 0:18:50.480 --> 0:18:53.119 nowhere to sell their barrels. And that kind of hurts 0:18:53.160 --> 0:18:55.200 a lot if they can't sell and the market's bad. 0:18:55.560 --> 0:18:57.879 So that's kind of what I would say lends to 0:18:57.920 --> 0:19:02.520 a favorable facility and crude in products, what clean products 0:19:02.600 --> 0:19:05.119 is like gesline and diesel jet and crude oil. You know, 0:19:05.160 --> 0:19:08.080 obviously it's crude oil, so they're kind of segregated in 0:19:08.160 --> 0:19:12.920 different terminals. Typically their different facilities handle both, so there's 0:19:13.040 --> 0:19:14.840 differentiators between those two. 0:19:15.520 --> 0:19:18.880 I have a really basic question since you mentioned the pipelines, 0:19:18.920 --> 0:19:22.400 but how does the oil or the product get from 0:19:22.680 --> 0:19:27.080 the pipelines into the actual storage facilities? Like what is 0:19:27.119 --> 0:19:27.800 the mechanism? 0:19:28.320 --> 0:19:31.680 Are we talking from crude oil or clean products standpoint? 0:19:31.920 --> 0:19:34.000 I guess we could do both. I'd be curious to 0:19:34.040 --> 0:19:37.600 hear the sort of like life cycle of both those 0:19:37.680 --> 0:19:41.080 things from like stuff comes out of the ground and 0:19:41.119 --> 0:19:43.080 then gets moved or stuff comes out of the ground 0:19:43.240 --> 0:19:45.720 and gets refined and then put into storage, because I 0:19:45.720 --> 0:19:49.400 don't really understand the physical process, yeah, the sequencing of it. 0:19:49.600 --> 0:19:53.680 And do the pipelines like plug in directly into storage tanks. 0:19:53.680 --> 0:19:56.040 I can't imagine that's the case, But go ahead. 0:19:55.760 --> 0:19:57.719 Sure, Yeah, of course I'll start with crude because that's 0:19:57.760 --> 0:20:00.600 where it all starts. So typically the you know, they 0:20:00.680 --> 0:20:02.920 drill it out of the ground, and the way it's 0:20:03.000 --> 0:20:06.240 moved is into kind of like an aggregation site. Either 0:20:06.280 --> 0:20:09.800 they move it via a truck or a pipeline that's 0:20:09.840 --> 0:20:13.800 connected kind of close to the well, and that's moved 0:20:13.840 --> 0:20:17.600 into like an aggregation terminal, and from that aggregation terminal 0:20:17.920 --> 0:20:21.159 a terminal that has tanks, so it's literally taken. If 0:20:21.200 --> 0:20:24.440 it's a truck that's driving it to the terminal, they'll 0:20:24.480 --> 0:20:26.560 stick a hose into the truck. It'll pump it into 0:20:26.600 --> 0:20:29.879 a tank, and then at that tank, there's multiple tanks 0:20:29.960 --> 0:20:34.439 in that little small terminal that'll pump into a bigger 0:20:34.520 --> 0:20:39.320 terminal and that bigger facility will then inject it into 0:20:39.640 --> 0:20:43.320