 Energy in America, this time we're doing it on Friday afternoon with Lou Plurici, who joins us from Dubai in the United Arab Emirates by Vimx Calls. Great to talk to you Lou, great to see you again. Great to see you, it's early in the morning here, so I'm up and ready. And you left Jakarta where you were involved in a big conference on LNG, can you talk about the conference? Yeah, let's talk a couple of minutes about this. This is part of a U.S.-Japan cooperative effort on something called the Japan-United States Strategic Energy Program, or JUICIP as it's known, and it involves cooperation between the U.S. and Japan on a large number of energy issues. One of them, I think one of the, one of its nuclear power and another one is on energy efficiency and climate, and the third one is on LNG, particularly LNG in the Pacific. Very good. You're an organizer now, you're an organizer of that program. I'm the co-host of this with the Institute of Energy Economics in Japan, our sister think tank in Tokyo. It's great, and it demonstrates movement, doesn't it? It demonstrates a larger trend of U.S. involvement and sale of LNG in Asia, no? Yes, and I think we're going to talk about the broader implications of that today, and it might give your audience a sense of why this is so important. Okay, well let's start with that. Let's start with your slides, as you will. This is Lou Pooley, you're going to report to us on LNG in Asia today, and he is the president of, he brings the LNG Policy Research Organization in Washington, D.C., but he gets a lot of travel in, and I told him I would carry his bag any time. You wouldn't enjoy it, Jay. So let's go to the first, I think the first slide, just the title page, and yeah, one of the things I want to talk about today is not just the economic value of this, but the geopolitical importance and why it helps, it might even you might consider, compensate for a lot of other concerns people have about U.S. long-term commitment to the Asia-Pacific region. I think it's, we're going to be here. It's very important to U.S. and national security as well as energy security. So let's go to the next slide. I think the first point here is that we have to remember, there's been a lot of talk over the years about a Pacific Pivot or Asian Pivot, and it is without a doubt the Indo-Pacific region is the most single consequential region for America's future. And the United States has actually initiated, even under Trump in the last two or three years, a large number of programs, Asia, Asia edge initiatives I spoke to like just up. And a big part of this feature really is driven by the fact that the Indo-Pacific region is absolutely critical to the future of the United States. It's got nine of the 10 busiest seaports. It's got, the region includes the world's largest economies, U.S., China and Japan, and also six of the world's fastest growing economies, India, Cambodia, Laos, Burma and Nepal. A quarter of our U.S. experts go to the Indo-Pacific, and actually, exports to China and India have doubled over the past decade. And it's important to remember this is really the result of a free and open trade routes through the air, sea, bird space, even the cyber, even the cyberspace. And so it's a critical kind of region for the future of the United States. Let me ask you about one distinction, Lou. In a lot of these countries, the energy trade is done actually by the government. And when you say that the government is interested in LNG or participating in international energy trade, you're really talking about that country as a government. When you're talking about the United States, it isn't the government. It's individual energy companies, right? Actually, this is a good point. First of all, you are absolutely correct. And I think part of it is that, of course, the U.S. does need a lot of regulatory approvals to get the LNG on the water. But it is a relatively free market in the U.S. Once you get the regulatory approvals, you can produce as much LNG as you want. I mean, once all the export licenses are issued, and you can send it almost anywhere in the world except probably Iran and North Korea. So it's very much of an open market. And it's a fundamental change the way the world did LNG in the past. In the past, these were point-to-point sales, very specific destination restrictions. So the U.S. has really revolutionized this market right now. What interests me, though, is part of the introduction of the topic today, and you mentioned it, is how U.S. energy exports, specifically LNG, support the security and geopolitical interests of the United States. Well, what's interesting about that, and I offered to you as a thought, is that it's not the United States government that is doing this activity to support the security and geopolitical interests of the United States. It's private companies. And it's the actions and sales of private companies that are supporting the United States, right? Absolutely. But I think they're also supporting their stockholders, because they wouldn't be doing this unless there was a rate of return. Absolutely. So the regulatory framework has to be there, it has to be positive, the government has to view it. I mean, there are a lot of forces in the U.S. who don't want to see natural gas develop. They view it inhibiting our transition to the fuels of the future. But in Asia, you're absolutely right, because a lot of this gas goes into the power sector. The power sector is either highly regulated or owned by various countries. And although that's changing in Japan, and a lot of the new sort of what you call Pacific Tigers, when they look at LNG, their concern is, okay, I'm interested in this. It's clean fuel, but I'll be thrown out if my power prices go way up. So there's a reluctance to make long-term commitments. So there's a lot of interesting work underway to see how LNG can fit into shorter-term contracts, be more sensitive on the price side. So you're absolutely right. It's a very, very delicate issue. And you're right there. You're right there at that point. I want everybody to appreciate that. Yeah. We're right in the eye of the storm on this one. So and of course, this is driven by, we go to the next slide. This is driven, I think it's very important to understand, in the United States, we have some of the lowest natural gas prices in the world, probably, except for places where it's dominated by the government. Natural gas prices are about $2,000, a million BTU or 1,000 cubic feet. You can see here, even with these low prices, the efficiency of the North American production platform as such is that US production has continued to grow. And by that blue line, you can see here that the percent going to exports is rising, and it's actually rising quite fast, as you can see from the next slide. So the US in 2016 was virtually a zero exporter of liquefied natural gas. And today, by 2020, it's going to hit something called 67 million tons, or about 9 billion cubic feet a day. And that, within a period of three years, we've gone from zero to more than 20 percent of global LNG trade. Those forecasts show the US as being the largest LNG exporter in the world by 2025. So it's quite important to understand that this is very disruptive. It's changing the whole world oil market, and it's giving lots of countries who have been reliant on coal access to a much cleaner fuel. Is there political tension on this? I mean, for example, if I'm in the oil business rather than in the LNG business, I would look across the way and say, gee, they're eating my lunch. Almost everybody who's in the oil business is also in the gas business. So that's part of it. The other part of it is that these are really kind of distinct markets. The power sector and the residential distributions in it for gas no longer relies on the well at all. So it's really a fight between coal and in some cases renewables, and there may be a few other exotic fuel out there like wood pellets or something, but it's mostly that's where the battle is being fought at. The petroleum or liquid, the liquid market, there might be some competition in the marine bunker fuel area, but liquids are being driven by petrochemicals and gasoline and diesel. Okay, the other interesting thing about the Pacific is we go to the next slide is that in the Asia-Pacific gas markets, there's like three mature countries, Taiwan, Korea, and Japan. And the reason I call them mature is they have dominated world LNG trade for 30, 40 years. They are the largest purchasers of LNG, and they have made the market, right? And so what's different now is that their markets are kind of stabilizing, their demographics, their power sector are not growing dramatically. And so the action in LNG in the Pacific is occurring in these key newer markets which are trying to sort of clean up their fuel base. We go to the next picture. You can see this here. And here you can see here the Philippines, Thailand, India, and then China. And you don't have to be that observant to take a look at that blue space and see. Yeah, the future of LNG in Asia is going to depend on what the Chinese do. And the Chinese have access to their own supplies, which they've been working on, but that's not been that successful. They have pipeline gas from Kazakhstan and Turkmenistan. And they also have pipeline gas from Russia and Myanmar. But last year, their largest source of growth was imports of LNG. It's not affected by the trade war, the tariff war right now. But they're importing from the United States, what effect? Yes, we're going to get to that. And it is a problem and it's not a problem. And the way to think about it is this way. There are big portfolio, what they call portfolio players, people like a company called Jera in Japan and other parts of some of the big oil companies. And they purchase or produce LNG from a wide range of geographic locations. And then they are in the position to allocate that LNG in a way that minimizes transportation costs. So while it may be efficient for US LNG to go to China, it's actually more important for the market to get bigger. Because a big portfolio can take the US LNG and they have Australian LNG and other LNG and just reallocate it. And say, oh, you don't want, you're going to put a tariff on US LNG. Here's the Australian LNG I'm going to take and substitute the US LNG for markets that don't have a tariff. But it's not a good thing. This trade war with China, we have to find a way out of this. If you watch what happened to the stock market, you'll see what I'm talking about. Even today. Well, let me ask you one more question about these charts. The charts suggest that a greater volume of LNG is going to the bigger countries and to the smaller countries in Asia. And so this obvious growth in the amount of LNG they're taking. But they can't really buy it if they don't have the infrastructure to move it around within the country. I guess that means mostly pipelines. And they have to adapt their equipment, their utility, I suppose, to run on LNG. That requires a lot of money. And I'm wondering who is providing the money, who is providing the technology, who's on the ground helping them build the infrastructure that supports their increased purchases. Yeah, this is actually also a great point. Yes, if you do not have what's called regasification, you don't have a regulatory structure to deal with the vagaries in LNG pricing. You don't have all these sorts of things. That market's going to grow very slowly. So you do have a big program between the US and Japan to build out the human capital, if you like, or the regulatory structure to help the countries with a series of training programs. Then you have the international financial institutions like the IFC, which is a sort of arm of the World Bank. You are affiliated with the World Bank. It's a completely separate organization. And the IFC has been very instrumental in organizing the financing for like an LNG regasification facility and development of a power plant, or what they call floating storage regas units. In fact, last year there were two new entrants into the LNG field. You would be quite surprised. One was Panama and the other was Bangladesh. Ah, interest. So, yeah, so it is, but it is a very complicated issue. And it is one which takes a lot of hard work. And the governments are, I would say, very cautious, very careful how they proceed because they don't want to get stuck with the fuel that's going to spike power prices. This is why India, Pakistan, Bangladesh, they hang onto their coal-fired power so strongly. Yeah. But it seems to me going forward that we want them to, we as the exporter of the LNG, we want them to have the ability to build their LNG infrastructure. And we should be helping them, or at least advising them, on how to do that to increase our own exports. And that's a good piece of the Japan-U.S. cooperation on this project. And I think there's a side benefit to all of us in that. To the extent U.S. LNG may, throughout the Pacific, it provides, let's say, a heightened understanding of the value of the U.S. Navy and why these open and free trade routes are very important to the United States and to our allies throughout the Pacific. And notwithstanding some of the comments made by President Trump, I would say the commitment to this in the Pacific is very real. So let's, we can go see the next, let's go to the next picture here for a second. You can see here that it is finding, the U.S. LNG goes into the world market. Actually, last year, very large LNG prices are down right now. Most people don't think that will last long, but a large volumes of LNG made it into Europe last year. Some of it goes into storage and stuff. But you can see here from this chart that India and China are entering into the market in a way that they're drawing U.S. LNG to those sites. So this remains very important for the future of this market. And as we pointed out already, we need to find a way to give these countries a lot of flexibility, shorter term contracts, the ability to operate LNG on a seasonal basis. All features of the LNG market, which were a heavy capital market, heavy capital formation required, have not been the case in the past. But the banks and the financial institutions and the technology are all emerging to allow a lot more flexibility in both the development and the distribution of LNG. And if you go to the next picture, I think this is exactly what you were talking about, Jay. This shows U.S. tariff revenue, 12-month rolling total. I think, yeah, there's two interesting things about this chart for me. One is U.S. has been collecting a lot of tariffs, even going back to 2012. But you can see the spike under the, you can see the spike in revenues under the Trump administration here in 20, starting in late 2017, 2018. And we've gone from about 30 to 60 billion, so an increment of $30 billion in tariffs. Actually, for the U.S. economy, it's not a colossal number, but it is causing a lot of problems, I would say, in developing longer-term markets, particularly in China. So that's something we're going to have to fix this problem. I don't know how we're going to fix it, but we're going to have to fix it. And then if we go to the last picture here, or the second to last picture, this shows you global LNG demand by 2030. Now, these are based off a series of models. All models are wrong, but as we say, some are useful. And I think what this shows is the potential. This is not a prediction or a forecast, but what we say an optimistic potential. And you can see by that bar that the U.S. is in a position to fulfill a large increment of the growth in demand, a very large increment. So we will be connected to both Asia and Europe in a very fundamental, important way as an energy board. This is a kind of very unusual development. It's all driven by the technological advances, what you will call hydraulic fracturing or the extraction of unconventional resources in the U.S. That makes the U.S. a major, major exporter of not just gas, but also oil and petroleum products. So this is a very interesting development. It changes a lot of things, including the security relationship that a lot of countries have had with the Middle East. Before you go to the next slide, though, let me ask you this. I think it was just yesterday when, what's his name, Sanders, one of the campaigners for president, announced his energy program. And he said he wanted to spend, I think it was $16 trillion on developing clean energy by that same year you mentioned, 2030. What is that? That's 10 plus years from now. Where does that fit? I don't know where that fits, but I don't know where he's going to get the money to do that. Because what he's suggesting is probably not an economically sound program. Right now the North American production platform. It's largely the United States, but Canada, Mexico together produce one quarter of the world's oil production. That platform is worth a trillion dollars. It employs millions of people and all kinds of ancillary industries to support oil and gas development. It is a huge strategic benefit for the U.S. And a lot of it is driven by policies in the states, not the federal government, particularly places like La Jolla and Pennsylvania. So people, he can say whatever he wants. I just think it's ludicrous to think you're going to get that kind of transformation in 10 years. Huge amount of money, huge. So now we have Bolsonaro. We have Bolsonaro in Brazil, the lungs of the world, they call the rainforest there. It heightens awareness about climate change and the news is that everybody's mad at Bolsonaro for having ignored the climate change prospect in Brazil. And he denies it sort of like Trump. But the question I put to you is where do these charts, the LNG, these enormous transactions, these enormous changes you're talking about, where do they fit against climate change and dealing with climate change and the problem of climate change? So I would say that, and I'm not going to use the word bridge fuel, but to the extent that we expand gas production and distribution worldwide, we are backing out coal and heavy fuel oil. And that exchange, every time that happens, that reduces CO2 emissions. So it's not everyone moving in a cave and peddling their bicycle to generate their power. I got that, but it provides the massive amount of BTUs you need to run the world's economy. And there's going to be a very important role for renewables, a very important role. But it's not going to happen as fast as people would like. And even under the Bernie Sanders plan, I don't think people have a clue of how big this market is and how important it is in terms of the sort of energy density it provides to the world markets. We still have about a billion people who don't have any power at all in the world. Happened with just solar power. Renewables are going to have a big role, but they're not going to be enough. That's actually the reality. That's the reality. I mean, so if you don't want to live in Disneyland or fantasy world, you're going to have to use fossil fuels for a while. Yeah, Lou, may I say that we count on you for the reality. It's really important to be able to talk to you about this. Right. And if we go to the last picture, I just want to give you a sense of kind of what these meetings look like. So that's a meeting in Washington, D.C. we just had, and you can see it's people are very working diligently to kind of move the ball forward on this issue. Yeah. That's a serious meeting for sure. One thing strikes me. I mean, I really have a couple of questions for you to close here. One is so we're talking about Asia and, you know, very important transform transformational things between the U.S. and really all parts of Indo Asia. But what about Europe? Doesn't Europe need, isn't Europe a potential market for our, you know, LNG as well? Actually Europe is a very big market for the U.S. It's not growing, but the decision by the Dutch government to shut down the McGronigan field, the shift in the energy mix in Europe is going to continue to draw heavily on LNG from the world market. And a lot of that's going to be provided by the U.S. So in fact, Europe was the biggest market for US LNG last year. Well, we're a better, more even-handed seller, I hope, than Gasprom. And I wonder where Gasprom fits in the competition, not only to Europe, but I suppose to parts of Asia as well. They have gas and they have pipelines and so forth. So even the Russians even have some LNG through a company called Novotech, and they have been moving some of that LNG into the Pacific market. The so-called Nord Stream 2 project, which is this new pipeline to bring gas from Russia to Europe will likely bypass Ukraine. I mean, it's going to bypass Ukraine. But the Europeans have a fairly integrated grid now for gas. It's very competitive. And that's almost the subject of another program because there's a lot of interesting geopolitical and European-Russian relations tied to that plan. We should definitely do that program. But let me ask you one last thing before we close, and that is we've seen charts and graphs and indeed, that's a lot of what E-prink is about, showing the growth of these sales and exports of LNG to Asia. But what's the future? Let's take another look at that 10 years. What do you think will happen? Will the growth that we are experiencing now continue? Will it increase, decrease, go flat? Where is the US going to be as the period goes by? So I think the fundamentals of US, what the US has is a very large supply of cheap gas. And if the technology can keep pace, that gas is going to be a big feature in the world market. And that's going to depend on the cost of alternatives, the willingness of the buyers to take on some longer term, but not necessarily 20-year commitments, and the economic growth of the world market. So you have rising incomes, you have more and more people entering the middle class. They want all the things we have here in the West. And gas is going to be a big piece of that. And that gas is very, very competitively priced. And that's why it's going to be in those markets. And so we have to continue to make the exports and support the infrastructure and so forth in the years to come. It's in, as you said, our national interest. That's absolutely true. We need to, it's a very important feature of the American Energy Complex and it's also very important to our security and the security of our allies. Well, thank you so much, Lou. It's great to talk to you. Let me say that the broadband in Dubai is far better than the broadband in Jakarta. But we will follow you anywhere you go. Oh, yes. Okay. I'm heading home tomorrow. I'll see you. All right. We'll talk to you again in Washington. Very nice to talk to you. Take care. Thanks so much. Namaste. Namaste. Bye now. Thank you. Bye. Bye, man. See you. Thanks, Lou. Hope you enjoy it so much. Bye. Bye. Bye. Bye. Bye. Bye. Bye.