George Yates is a third-generation oilman and the CEO of Heyco Energy Group, a Dallas-based oil and gas company. In this episode, Yates talks about his company’s investments in conventional and unconventional plays in Europe, how Russia’s misinformation campaigns about hydraulic fracturing increased Europe’s dependence on imported energy, and why he is optimistic that his company and others will soon be able to produce more hydrocarbons in the U.K. and Europe. (Recorded November 1, 2023.)
Robert Bryce 0:04
Hi, everyone, welcome to the power hungry Podcast. I'm Robert Bryce. On this podcast we talk about energy, power, innovation and politics. And we're in London for a special episode of power hungry podcast. And I'm pleased to welcome my guest, George Yates, my friend and guest, George Yates. He is the CEO of Heiko Energy Group, a Dallas based oil and gas company. George, welcome to the power hungry podcast.
George Yates 0:26
Thank you, Robert, great to be with you.
Robert Bryce 0:28
Now I want you I don't want all of my guests, but guests on this podcast introduce themselves. So if you don't mind, imagine you've arrived at a dinner party or somewhere and you don't know anyone. And you have 60 seconds to tell them who you are, please introduce yourself.
George Yates 0:43
I'm, I'm a third generation independent oil and gas operator. My grandfather got the family in the business in the 1920s. So a long, long history built with my family, a business in southeastern Mexico, what we call the Delaware basin. We've done a lot of things over time, interesting things. One thing we got involved with 25 years ago was international exploration and development. So we were exposed to the geology of Europe, we built on that. That recent developments in our company. So we're based in the US, we have US production in a few few plays. But we operate in Europe, which is sort of an interesting reversal of how most companies operate.
Robert Bryce 1:53
So if you don't mind, just interrupt. So you have you own interest in production in the US, but you're not drilling in the US. In
George Yates 2:00
the US, we're not operating. Okay, we are not operators, we
Robert Bryce 2:04
so you have interest in wells, but you're not. You're not the controlling interest. That's right. So then you're not the ones determining where you drill, and how you drill or that well,
George Yates 2:12
we have we have pretty large interest and some of them. So you
Robert Bryce 2:17
have a say you have a say and how it's deadly resolutely. But the difference between the non operated and it's something I actually I kind of know this, but I don't fully understand it. So it's your non operator in the US and most of your operations, but in the Europe, you're the operator, which means that is that the difference, then we're going to drill here and now is that explain that difference?
George Yates 2:38
Well, that's right. And operator does the major planning for development for drilling provides the staff and resources to get that done.
Robert Bryce 2:49
So the geologists, the accountants, the roughnecks are they, they decide which contractor they'll hire to do the drilling and completions. And that's, that's
George Yates 2:59
what we do. And, and we have an office in Nigeria, we we acquired a gas field in northern Spain last year, last year. And so we operate that we operate production.
Speaker 2 3:14
We are drilling in Spain now
George Yates 3:17
we will be we will be in the first quarter of next year. We have two to three wells to drill in. In a field development wells where we're really pleased with that acquisition. We also have a big unconventional play. We can talk about unconventionals a little later, in Spain that could really make a difference to Spain into Europe. And in the UK, we acquired that part of of AIM listed public company that we did not own and and took it private. So how does now effectively a subsidiary but it does Egdon resources and spell it for me
Unknown Speaker 4:09
again, what is the name again? E g,
George Yates 4:11
d o n? E, G DOI and Egdon resources.
Robert Bryce 4:17
So it was a publicly traded company on the London exchange No,
George Yates 4:19
no on the aim exchange. Okay. And we were really pleased with with that acquisition for a couple of reasons. We love the staff. We have great human resources that fit in very well with human resources we have over in in Madrid.
Robert Bryce 4:42
And what does that headcount if you don't mind me asking it What's your footprint? How many employees now do you have in Europe?
George Yates 4:51
20 probably compare
Robert Bryce 4:54
that to your office in Dallas, how many do you have in Dallas?
George Yates 4:57
Well, our total headcount is about 28 or 20. time.
Speaker 2 5:00
So you have almost as many people when you do we actually have
George Yates 5:03
more people in in Europe. Oh, you do? Okay. But part of that is because we operate a gas plant that involves more people. So then
Robert Bryce 5:16
that's a gas processing plant that's against processing, right. So for just a quick aside, so gas processing means you're pulling out the liquids, whether it's propane, butane, or something else so that you can put it into a pipeline or if there's other contaminants co2, nitrogen, you're exactly you're stripping out or in the worst case, sour gas, hydrogen sulfide. So right processing is the refining part of the natural gas business. A lot of people don't know about just, you know, get people to hit them up to the lingo here. So, so you have a gas plant, but so that's an addition to the technical or office staff, you have then engineer we
George Yates 5:52
have operations that are at our gas plant,
Unknown Speaker 5:57
and about how many people would that be?
George Yates 6:02
Probably eight, okay, people. Okay, operate fair fairly transplant? Yeah, okay. fairly small. Gotcha. We believe in lean operation, I'm much more comfortable. Do I am an independent? Right. Sure. And the beauty of what we do, Robert is, is that, for me, is that I get to work around a fairly small number of really bright people. Right. And so we have great technical capabilities. And we offered to finish in the UK in the UK with our acquisition of, of Eglington. Right, we we add to our pipeline of conventional projects, which which we're really excited about, these are projects that don't require a change of law don't require government change policy, right. And we are pleased with the acquisition, the public markets have really punished small oil and gas producers, right, no place to be. And so bargains can can be had, but also the operation will be much more effective and efficient as as a private.
Robert Bryce 7:26
And so what was the total cost on that acquisition of egg and then
George Yates 7:31
we, we owned about 45% of it, we we acquired what we didn't own and converted to US dollars was about 17. Seven
Robert Bryce 7:42
$17 million. And that was in when did that close? George? We
George Yates 7:46
we closed it in? Chill. I think it was July, but finally we're able to have a court hearing in September. Okay. So the court hearing took it private. I took it off the public exchange when I have a public company there are all kinds of issues hoops, and that's that's another reason why we wanted to take the company company private but when Egdon also is as a very large footprint in the Bowland shale, Gainsborough trough, which is our favorite basin in in in the in the Boland Midlands and in the UK. So, so we have a combination of conventional production and and development. It's I say in our in our pipeline, right. But we also have the the unconventionals, right, that we've been working on for some time, and naturally are more speculative because we don't have government permission to surely have a regulatory environment to go ahead and develop those. But they're very needed. Right. That's the message there. So
Robert Bryce 9:07
explain them since this where we you know, given where we are in the Bowland shale and the what Trump was it again, the gains. Gainsborough, Gainsborough Gainsborough truck angle, so that you believe that's the sweet spot for the shale deposit in in the UK for in the bowl and shale anyway. Well.
George Yates 9:31
The reason we like it is because we tested it with an oil operated by gas in March of 2019. Before the moratorium of course was
Robert Bryce 9:46
for the moratorium on hydraulic fracturing on hydraulic. So we'll come back to the band and then to the abandonment of the band and the reinstatement of the band under Sunak. But we'll come back to that but go ahead so the test in 2019 Well We
George Yates 10:00
found the beautiful shell rock, friable all the ingredients, friable what is ease Well, brittle, you can track it, no too much clay, okay? For instance, gas very, very gas prone, although with some liquids, we had a very solid 1400 feet of black shale with 700 feet of sand all of which was sourced and the black shale alone are our Weatherford who did the technical work for the grip, gave it more gas in place than per square mile than any any of the headline plays in the United States. So a very large target.
Robert Bryce 11:01
So I want you to repeat that and I we've chatted offline and over the last few years about this. So you're saying that the test that you've done and from what you're telling me this area is real is pretty much unexplored in terms of unconventional production and to be clear, unconventional involves extended reach will long horizontal segments of wells that are hydraulically fractured with high pressure water and sand and a little surfactant to release oil and gas from those shale sources. And you mentioned source rock and the shale. And that's the difference between unconventional and conventional, if I'm not mistaken is that you're actually targeting targeting the source rock which would later turn into a conventional deposit that we've been tapping for more than a century. So but just to be clear, and I'll stop talking here in half an hour. So
George Yates 11:51
I told you I was going to enter
Robert Bryce 11:56
more gas in place per square mile in the in the Gainsborough trough as part of the Bowland shale, then in the Marcellus than in the Haynesville then in the then in the shales that are known in the Permian Basin, this could be one of the great untapped resource shale gas and oil resources on the planet. And yet, no one's talking about it. Am I am I? Am I missing Tehran?
George Yates 12:21
You're on target, right? The only thing that I pulled you back on Okay, a little bit please, as we're working on on the basis of information from one well, right, so we hate it, we need to do and we need to draw more first, but what what we have is in an unconventional resource, you want the right kind of rock, right? You can complete you want a lot of in place reserved. So you've you've you've got something to work with. Right? And so the Gainsborough trial of hands that it's it's very exciting, the Royal geologic society it's done studies of the bowling and they put a huge amounts of of oil and gas in the bowling. And and
Unknown Speaker 13:15
can you tell me what those those numbers have?
George Yates 13:18
No, no, not offhand. They're big. They're but they're very big. Oil geologic, sir. No, we sort of had our doubts about it. And we were a little skeptical. But with with the Springs Road one, while the well in the Gainsborough, we're sort of lean in that way resources is very, very large. It's a target. It's also very gaspereau. Although it will, it will have some liquids in it. And the other thing about the Gainsborough top trough, which is probably important, if you follow the history of development in the Bolon. The development of Olin started in in the Bolin basin to the west. And the Gainesville rose to the east and the operator unfortunately, appear to have moved a fault after fracking at least. There was a fairly minor seismic event which got people frightened. Right and, and the government shut down the drilling and I think clearly overreacted. But we've spent a lot of time and man hours gaining expertise on the relationship between hydraulic cracking and fault movement, particularly the kind of fault movement that you can feel on the surface. And so we're We're pretty confident in in results in this. In fact, we even we even had a couple of really smart geophysicist scientist at the University of Bristol. Do a study for us and the Gainsborough truck the Bowen Basin is, is highly faulted and fractured. It's it's got a geologic history with lots of tectonics going on against Baroque trough by comparison is very quiet. And so So the probability of I think in the report, if I can paraphrase, there is an order of magnitude less probability of a seismic event that could be felt on the surface in the Gainsborough trough, so the Gainsborough has a lot going on for
Robert Bryce 15:54
so that seismicity potential I guess we're way to think about it and Gainsborough trough is far less than in the bowl and shit.
George Yates 16:00
Yes. Then then the Bolin base and Bolin basin. Okay, then then any basin that's highly rational to alter
Robert Bryce 16:08
fracture? Yeah. So I have to ask you the interviews, you're talking about this, George, because you have such a long history in oil and gas and family does. Why not just play in the US sandbox? I mean, you've got all these, you know, I interviewed George Kaiser briefly one time and he said, he was well known among a lot of people as being very good at risk analysis. And he said, we have to know where your risks are, right? You know, where are they concentrated. And if you understand that, then you can make you understand, you know, how to move forward. But you are going from Texas or New Mexico where, you know, the regulatory issues, you know, the geology, you know, and there's less and we you know, where I'm, you know, from where I'm sitting, right, there's a lot less risk coming into Europe where you're jumping into a regulatory thicket where you know, you've got a what do they call a lot of above ground risk and a fair amount of under, you know, below the ground risk, right, because it hasn't been drilled that much. You don't know, we've got to still typify the deposit. So why go to Europe? I mean, why wouldn't you just stay home? I mean, I'm just curious. Well, it's just because the opportunity is the potential is so much larger.
George Yates 17:16
Well, if if I had had a great crystal ball, or half of my half of my career, we had investment bankers, dropped by my office and say, the Permian is dead. It's time for you to get out just like everybody else. Yeah, so
Speaker 2 17:31
Robert, been wrong, wrong, and they've been wrong, or what bromine is still the hottest play in the world,
George Yates 17:36
what we what we chose to do with the one, the one thing that we did, might be notable it back in the 1980s. And I've always been blessed with with a wonderful staff capable staff and and we, we drove a great discovery in the bone springs.
Robert Bryce 17:59
And the Blue Springs is part of the Permian Basin. Yeah,
George Yates 18:01
it's part of the it's part of the Delaware right at the shelf. Okay.
Robert Bryce 18:04
I think the Delaware basin is part of the Permian very well, that area anyways,
George Yates 18:09
the bone springs today is is the bone springs, the Wolfcamp are the top targets for horizontal drilling and Delaware base, or basins the hottest, hottest place in the world for unconventional development.
Robert Bryce 18:26
And that's it's contiguous, or is that do you consider that part of the Permian? Yeah.
George Yates 18:32
Okay, that's the only is the western side and western side.
Robert Bryce 18:34
So it's closer to the Mexico border from Texas
George Yates 18:36
it's about a third to a half of it is in Texas and the other half is, is in New Mexico, southeast Mexico.
Speaker 2 18:51
lived in South a lot of on federal land then a lot on
George Yates 18:54
public land. Yeah. Which people don't realize, right. Yeah. As they say, shall never work in Europe because it's all public land. And I have to remind people that some of the best early plays and unconventional development were on public land right Jonah field.
Robert Bryce 19:15
So I interrupted you on the bone spring because I just wanted to clarify because you know, I kind of know some of these things, but I always have to check my Okay. Well, do I really understand so you said you drilled in the 80s a successful well in the bone spring? Well,
George Yates 19:27
we discovered a field Okay. And, but it was a it was good carbonate field was a conventional reservoir, lots of permeability, but we we knew that we had to draw a lot of wells to find similar fields. We looked for a bailout, right? And we came up with a bone springs sand, and bone spring sand is a possible bailout. And as far as I know, but while we experimented with it, we fracked it we experimented with the frack we kept going laying in and, and completed as far as I know, the first commercial well, and the bone springs in the vertical world, it was unconventional. We didn't know the term conventional, right? But it was it was unconventional. So we built, we built a spread, we built a lot of resources. And then in 2000, we had to decide whether to get big or, or do some, let somebody else do the development for us. And and so we got together emerged are operated assets in the Delaware with Matador resources. And so we became a large shareholder, Matador and I still have a substantial position and
Robert Bryce 20:51
Matador is now one of the biggest independent players in the Permian. They're
George Yates 20:55
a wonderful company, and they're publicly traded publicly traded,
Robert Bryce 20:59
likely now likely a takeover target given what's what's been going on lately? Well,
George Yates 21:03
you know, I've seen their names on that list. But we, we've, we've had a wonderful relationship. And so we've seen our our acreage developed, and we profit from being a stockholder and doing that, so we're not out of it, but
Robert Bryce 21:25
that was, but that's always the challenge, right? For any company is the scale issue. Right? You know, do you have enough money? Do you have enough resources? Do you have enough manpower to, you know, scale up? And so at that point, you said, well, we don't so we're gonna partner up. But you know, we talked about conventional unconventional several times. And this is the key differentiator with your now your holdings here in Europe, right, some conventional some unconventional, so I asked you to introduce yourself, I gave you 60 seconds, 60 seconds and no more. Explain the difference between conventional oil and gas well and unconventional. Go,
George Yates 22:02
can can conventional is our reservoirs, you don't have to prac Okay, reservoirs that don't require hydraulic fracture, yes. And that you you can you can develop, the way I define it is under under current regulation, you can develop it. And, and so on the risk side, we don't see very much risk in our conventional resources in Europe.
Robert Bryce 22:31
And is it fair to say just interrupt, because I want to be clear that conventional, well then would be a vertical, well, you wouldn't have a horizontal segment of that, well, then is that
George Yates 22:40
fair, that's generally true. If you have a highly fractured reservoir, you want to open up more rock, and you might drill a horizontal or it's more likely a slant.
Robert Bryce 22:52
But the key differentiator is that you're not required in a conventional well to use hydraulic fracturing. So you don't need a what's called a frack spread, which are a bunch of treasury big pumps on him for seeing enormous amounts of water, sand, and surfactant into the reservoir to or into the target area to threat to fracture the rock so you can bring more oil and gas out. So is that that's the key differentiator, you don't have to use that high pressure pumping in between a conventional well and unconventional
George Yates 23:20
I'll go back to what you said earlier. Shale is a source rock in a shale play here essentially mining the source route, right. So one of the differences between conventional unconventional is you've got conventional traps where where the oil is migrated on the source rock. And, and in in the case, in our case, where we described conventional is not needing the kind of stimulation that shale needs. And then you've got unconventional oil, which is basically sorcerer. It's very tight. A lot of the oil and gas is still in place, right? Not all of it has migrated out and you need generally horizontal drilling and multistage hydraulic fracking, for good recoveries and in that rock. So that's how I define
Robert Bryce 24:18
Gotcha. So and to be clear, the reason why you have to do that high pressure pumping and high, extraordinarily high pressure is the I get my porosity and permeability mixed up. But the I think it's the permeability of some of these shales is roughly equal to that of what we see in concrete, right. It's very, very hard, not necessarily hard, but very tight formations where you have to if you want something to come out of it, you've got to fracture it to make it work,
George Yates 24:48
you've gotten stimulated. In some cases, like our conventional play in Spain, it's naturally fractured for maximum production and it also needs hydro like cracking every well that's been drilled in his play in the last 50 years. It's fluid gas. So there are always exceptions. But But yes. When I talk about unconventional I'm talking about shale or rock that has to be stimulated with hydraulic fracking, right? And generally in Europe unaccessible. Right and development
Robert Bryce 25:28
because of the prohibitions on hydraulic fracturing. Well, since we're talking about that very issue, how big of a role did Russian money play? In your view? Because it's been reported by numerous entities. Matt Ridley's reported on it. Matt really is a friend of mine and very savvy and very, very curious. A poly map and remarkable characters written about this that they there are studies that have shown that, in fact, that Russian money was involved in the in the origin organized efforts to ban hydraulic fracturing in Europe. Do you believe that? I do believe that? And why would the Russians do that?
George Yates 26:14
Pretty obvious? Well, let me walk you through. Let me walk you through it. Let's, let's go back about 15 years. Sure. We, we did not operate in Europe, but we had some working interested in, in Europe. And and everything was very pleasant. We didn't have pushback, you know, full transparency. And if you wanted to see it well, but we stayed in the well plan that was quite easy. And we sent it out to environmental groups, no problem. And then suddenly, militancy occurred. And I was told that suddenly, some of the radical environmental groups had lots of money. And I was told the money came from Russia.
Robert Bryce 27:05
And you heard this from sell yourself from people that you know, here, and you're here, because you were credibility, because you were drilling then at that time in in Spain, and we're Where were you operating then at those?
George Yates 27:18
We were, we're doing some planning in, in Spain, right. For,
Robert Bryce 27:22
for multi well developed projects. And this is now in the so the 2010s. That timeframe here. Yeah,
George Yates 27:30
in that timeframe. Okay, so we've documented at least $100 million that was spent by Russia, right? Funding environmental groups that were based in the United States, in the United States. Yes. You're talking
Robert Bryce 27:50
about, in addition to European groups that were that were getting money from the Russians, but you're saying that there were that Putin, and presumably Gazprom, which is the state controlled gas company in Russia, that they were funneling that much money into NGOs in the United States.
George Yates 28:09
There are two two different sources one, one has been documented very, very clearly. point you back to work that was done about seven or eight years ago by Lamar Smith, when he was chairman of the Science and Technology Committee in the House. He conducted hearings, got bank records, and and so everybody knows who's curious that the Russians funded these anti fracking campaigns. They were centered in Europe, but it also occurred in the United States we think the amount spent was double or triple that amount of money there there is a foundation that has funneled a lot of money to the anti fracking campaigns but there's no transparency on ownership but it's got a lot of Russian flavor.
Robert Bryce 29:14
Does you recall the name of that foundation off the top of your head
Speaker 2 29:21
sticks it was easy to see chain Yeah, right. I remember Sunday Yeah.
George Yates 29:27
But we have a file on this Robert, if you if you liked it? Well,
Robert Bryce 29:31
I am interested because that one of the things that to me is you know, we were here in in London at the Art conference and there's been a lot of talk about the philosophy of the anti humanist in the mouth museums and why they're opposed to energy and hydraulic fracturing and climate tourism and the rest of it so there's a lot of talk about the philosophy and why it is you know, alternative religion etc. Well, my question Okay, well, that's all fine but Cui bono, right, where's who benefits right? Where's the money, but show me follow? The money who benefits from all of this? So it was it was I'll ask the question this way. So was was was were the Russians putting money into these anti fracking efforts in the US and in Europe to prevent more shale gas development so that the US and Europe would be more dependent on Russian gas is that
George Yates 30:18
you hit that target Russia wanted to put out of, he wanted to kill the baby in the crib. Right? He did not want competition from your base. Natural gas. We can we can show you. Well, the next thing that happened. The investment by Putin was very effective. People became frightened if you had a Facebook account. You lived in Europe, you saw Gasland remember that? Film? Yeah, sure. You know,
Robert Bryce 30:54
I was Fox. Yeah. Josh Fox. Yeah, right. Yeah. gasline, which was all
George Yates 31:00
white a fossil was and and it's scary people and and that was followed over a few years by six countries outlawing hydraulic fracking in various ways banning or, or a lot lying and including some of the most prospective shale plays in in Europe. Right. So it was a very effective campaign. The other thing that I'll point you to as we gain a little altitude here, he not only repressed competition in in Europe, Europe, bought into the Russian dependency, right and said, everything's okay. We have all this Russian gas. You've we know what Germany did, certainly but but other parts of, of Europe as well. And so you see that decline in domestic and natural gas throughout Europe. Very, very steady decline
Unknown Speaker 32:07
from the Trump 2010. On from
George Yates 32:10
2010 on and a remarkable increase in imports of Russian gas. Right. And that time came when when those curves hadn't crossed, and the dependency was complete, almost complete for the Ukraine invasion. So I see I see this as one piece. That's this was part of long term strategy. Yeah.
Robert Bryce 32:39
I found I found the reference because I wrote about this when it was it was in the hill. Last year, but almost exactly a year ago. In fact, November 2 2022. I wrote about it. There's the will not bragging about my work here, but I'm just thinking put it in context. This I wrote this almost exactly a year ago after Rishi Sunak reimpose the fracking ban here in Britain. I said it's a gift of Vladimir Putin and a disaster for British consumers and industry. Remember, Putin and his cronies helped fund the anti shale gas propaganda that led seven European countries to ban fracking. 2014 Anders Fogh Rasmussen then Secretary General of NATO, former Prime Minister of Denmark said quote, Russia as part of their sophisticated information and disinformation operations engage with so called NGOs nongovernmental organizations, organized or environmental organizations working against shale gas to maintain European dependence on imported gas 2016 The Wilfred Martin Centre for European studies in Belgium, published a report that found the Russian government gave about 82 million euros to quote NGOs whose job is to persuade EU governments to stop shale gas exploration. Yeah. And in 2019, Britain imposed a ban on fracking so, so now here we are in 2023. Britain it will I don't want to get too technical. Britain is screwed. Germany is screwed. They are you know, they they're not drilling there. You haven't relaxed their bands on track, and they reimpose them. What happened. So the band comes in place in Britain will focus on Britain since we're here in London. They oppose the ban in 2019. Liz trust comes into power as a Tory, earlier this year. She says no, we're going to we're going to forget this band we need to drill. She's in an office for what a cup of coffee I don't know six weeks or something. She goes out. And one of the first things Rishi Sunak does as an incoming Tory of trust. His own party says Oh, no, we're gonna keep the ban in place. What the actual hell is going on? I mean, don't they see this, this threat to that now even if they repeal the ban on fracking, it's gonna take a while for them to ramp up I mean, there's no doubt right it's gonna tell you but what the hell these are the Tories these are conservatives they're supposed to be rational about this stuff will happen here in Britain.
George Yates 35:00
I have I have no real explanation for it, except for the fact that the the Green Movement has been institutionalized in governments all over Europe to the point that some of the precepts are, are unquestioned unchallenged
Robert Bryce 35:28
the precepts of the climate Tizona disaster, catastrophic climate change that, that that those that mindset has been Yusei as has been institutionalized. So it's become part of the ruling parties on both sides on both sides.
George Yates 35:46
I have a reason for thinking that might change because the current politics damn well, better, right? It has to it has, it has to so taking the UK as an example, the UK uses about 2.9 I think was last year, trillion cubic feet of three 3,000,000,000,003 TCF a year, roughly three to year, half of that is domestic, right. And about a quarter of it is imported pipeline gas and about a quarter of it is is LNG, the domestic part of that is declining very quickly. Right. And the
Robert Bryce 36:31
and the pipeline gas now is mainly from Norway, is that right?
George Yates 36:34
pipeline gas is mainly from from Norway, right? The Rishi Sunak the government is, is hoping to ramp up part of the North Sea, right. But the most you could expect down to the North Sea, it's frankly a tired, tired base. And you might you might level some of that decline rate. But in new supplies, the new supplies are going to need to come from shale that has the potential of the largest volumes and short it's time to be to be able to ramp up. Right. The shale and and, Robert, you as we as we look at as we look at this shale in in the UK shale in Spain, shell in Europe could accomplish essentially all the objectives that the the green Tories or others say is the objective with renewables, you're all to energy. Right, that is low carbon, right, that we've we've put together a study in Spain indicating with the ramp up with the development of our our resources over there that we could just eliminate a lot of carbon eliminate a huge amount of carbon,
Speaker 2 38:06
because replace because you can displace coal. Well, no,
George Yates 38:10
you you you displace pipeline gas and LNG that carries a much higher per Oh,
Robert Bryce 38:17
I see. So you're saying that that that amount of co2 intensity of domestic production would be lower than that image.
George Yates 38:26
And you have you have thrown into that energy security, right? Reasonable crisis, where your research, there's no way you can put on the kinds of volumes that we're looking at in these buys without affecting price, right. So price would be would be much more reasonable. And then you have all the economic benefits. The employment, we went together with Deloitte in our study in, in, in Spain, and then employment numbers are just mind boggling, which
Robert Bryce 39:00
is, which is key for Europe, which been D industrializing for a long time.
George Yates 39:04
And and Robert, if if they want to, if they want to decarbonize their electric grid, there's a way to do it with natural gas. Technology is really coming along. Right, we've got the net power alternative that could be used to decarbonize, it's perfect for the UK, because a lot of carbon capture storage options with with the North Sea, but even better than that would be industries built around commercial co2. So there is there is a way to have your cake and eat it. If I were, if I were a policymaker, that's what I'd like. Right? I would I would like to satisfy those voters who whose primary interest was co2, being very I'ma right. But I got to deliver reasonably priced energy, energy and stability to the power to the power market. And this can only be done. In my view by by shale reserves. I don't see anything else happening, except more and more imports, it's certainly not going to be done by doubling up on on windmills and renewables because the dependency for that is, is pushing the UK and others into real into a red zone. Right? dangerous dependence on Chinese supply chains. Yes. And then we're dependent on Chinese supply chains, right.
Robert Bryce 40:43
So I must have misread these numbers before but I'm looking at the TTF marker. So this is the Dutch trading hub, which is the European equivalent of Henry Hub in the US. So the front month price there is now about $15 per million BTUs, I guess, but that's it's roughly 5x what it is at the Henry Hub in the US, although I'm seeing actually Henry Hub prices have jumped quite a lot just in the last few days. What is it for that month is almost 350 It's been at three bucks for a long time. Yeah. So you follow smile,
George Yates 41:14
you've had to buy me dinner.
Unknown Speaker 41:22
Sure, good relationships, we can afford that here in London, you have
George Yates 41:27
a five to one, it's been a pretty good ratio, differential between Henri. And that's another reason that we're attracted to Europe, because there's going to be a period of, of high prices. And, and frankly, so
Robert Bryce 41:41
I'm gonna get more if you can make it happen. And you're saying this is obviously you have some altruism and your business but only some but your mate you gotta, you gotta make money, right. And so if you're able to bring new gas on online, in Europe, your profits are going to be higher. Now you have a lot more risk here. Right? Because the regulatory issues we've been talking about, is that your biggest risk here is that the regulations when you look at this is a technology that geology is IT workforce, when you when you look at you put a lot of money into this, and you spent a lot of time flying back and forth from Dallas to Europe. But a lot of your own sweat and blood and tears are not you know, and romance of the airplane has been lost on me. Right? I travel I don't you know, travel transatlantic as much as you do. But you really dedicated yourself to this. But is it is that your life's mission is why why are you so dedicated to this? You could you could work a little you've been at this a long time, you could take a little bit easier. But this is a big challenge. No.
George Yates 42:43
Is that another way of looking at me and saying You're no spring chicken? Well, I'm
Robert Bryce 42:47
being subtle here. Yeah, it's really clever. But I think it's a central question. But so yeah, why now? And one of the biggest risks you're facing, right? Well,
George Yates 43:01
why now is because of the opportunity, because we can we can buy reserves today conventional reserves that we can develop, and we can buy them at a very reasonable price. Based on what the financial markets you're doing, what the stock market is doing to punish right. Those that are motivated to sell. So we've we've been able to capitalize on that, right. And I'm very pleased by the end of Robert, don't worry about it, we're going to be fine. Even if regulations are not change to develop the bigger resources, but Europe is not going to be fine. If they don't change. And is it a mission? Yeah, it this is something that we can do. That will make more difference to the prosperity of more people than anything that I can imagine doing in a lifetime. Well, so
Robert Bryce 44:00
what is that? Well, I guess I'll ask the question this. So what motivates you then? And I'm not I'm stating the obvious here. I'm no spring chicken either, George. All right. I'm 63. I get up in the morning. While he says it sounds like I'm making popcorn, everything. But you could take it easier, but you've done well in your career. But why? Why are you so why are you working so hard at this? What is the motivation? Because
George Yates 44:26
I think it needs to be done. And we're in a position to do it. Of course there are financial incentives for us sure to get these projects, the big projects, the unconventional projects over the finish line. But also I see dynamics in the world, that that would encourage this to be done. And so you see what's the common theme of, of Western countries today? massive deficits, huge inflation, right? So, so called unconventional our renewables have exposed themselves and are not economic. And they're, they're demanding more of governments more subsidies. And sometimes you run out of other people's money. This is this is gonna be, to quote
Unknown Speaker 45:28
Margaret Thatcher, and
George Yates 45:29
it is this is going to this is going to be a difficult the invasion of, of Ukraine woke Europe up on energy supply issue, right. I don't think some of the leadership in Europe is reacting exactly the right way. Some of them say, well,
Speaker 2 45:50
it's just we're not showing that they should be reacting with greater urgency.
George Yates 45:53
It shouldn't be reacting with greater urgency, but then the national security issue is right that right there on the on the table. And there is a political effect. You most people, Robert, don't pay much attention to political issues, until it means something to them, right. Energy means something to them. You saw what happened in by elections and in the UK a month or so ago. Right.
Robert Bryce 46:24
And in Germany, where and the yellow vest movement and the Dutch farmers and you know, this, I think there is does seem to be a change in sentiment that is happening. And I found some notes we talked about now it's a little more than a year ago, you said that in Spain, there's something like 200 trillion cubic feet of natural gas in place. And then you talked about the I found the numbers on the the the you called it beautiful rock in the EU in the UK, what was it 650 Bcf per square mile? That was right. 640. Okay, report. Yeah. So that was what the Weatherford that's the type of shale?
George Yates 47:07
No, no, that was a service camp. Oh, Weatherford? Oh, right.
Robert Bryce 47:11
Okay, right, that they had an estimate of 640 Bcf per square mile. And you said, That's almost double the best place in the United States. So yeah, so this could be just enormously I mean, the shale gas boom in the US fundamentally changed the US, I mean, you know, fundamentally change the geopolitics of oil and gas, we went from in a span of a decade from being a an enormous prospective LNG exporter, importer, to now the biggest exporter of LNG in the world. We're now exporting crude for the first time and you know, forever, right. And we're in a much different place than we were in 1973. So what, what is it going to? Do you think? I get this question a lot. So what's it going to take? You know, when's it going to take for people to sober up and see just how bad things are? What Why Why aren't you know, when are they going to wake up to the stupidity here? So answer that for me. What is it going to take for Europe to get their schema put it just get their shit together? Well,
George Yates 48:13
a continuation of today's trends, that's what I would say the political
Robert Bryce 48:17
winds of the voters, the voters are well, I'll just note, so Rishi Sunak. This just few weeks ago, and you probably I'm sure you saw this right. Soon as he backtracked on net zero and said, We're going to be pragmatic and realistic, right? This is a month or two ago, the poll numbers for the Tories went up four points in the next week. I mean, so so they're looking at this McCrone is looking at this, they're looking around and saying, Hey, we might not be embarrassed if we don't change our tune here. So you think it's that that the voters and sentiment of voters is is finally being recognized?
George Yates 48:46
Oh, yes. And realize the European Union goes through some elections. Right next year? Yeah. Which could be very, very important. We've got a winner coming on higher prices always focus the mind. Interest, I don't listen, I don't want to attack other forms of energy. I'm for every form of energy that works. Right. But some forms of energy are not working very well. Yeah. And that is being exposed to the public and right, and to the voter. So those are some, those are some trends that will tend to concentrate the attention of policymakers and we haven't given up on anybody will talk to anybody. And more and more diverse, more and more people are, are very interested in in finding a solution. And
Robert Bryce 49:48
so you think Sunak Rishi Sunak, of course, the current prime minister, so you think he could be persuaded that the Tories could come to their senses and then realize no, we better get fracking and get fracking right quick?
George Yates 50:00
Well, I'm no insider, with with the current government, certainly, but how far a step is it to go from saying we've got to have oil and gas, we're approving these new licenses in the North Sea, right for development how, how big a step is to say, and by the way, we have huge resources on shore that need to be developed as well. Or just lift the ban, and, and put, put the regulatory apparatus in it and plan be right to be able to accommodate those things that need to be done. Okay. So
Robert Bryce 50:41
let's assume soon that God says that tomorrow or does that tomorrow? I assume he has to get through Parliament. Right. And then how soon if that happened tomorrow that you got the approval, they repeal the ban? How soon could you have gas flowing?
George Yates 50:53
Well, the problem, Robert, is we have another election, to almost have to have labor, supporting that get that move to to get capital actually allocated to it. So
Robert Bryce 51:12
I see. So the capital is not going to be in place until you get regulatory certainty.
George Yates 51:16
Yeah, you've got to have some regulatory, sir. Yeah. So these these guys really have to do their job. Right? Yeah, it shouldn't be too much.
Unknown Speaker 51:24
I'm not I'm not holding my breath. George.
George Yates 51:28
I'm not holding my breath. Yeah. So what what we will do and continue to do is recognize the the, the merit of what we're trying to do, and the benefits of what we're trying to do. And, and what and politicians and policy makers run out of the other alternatives. Here we are, here we are. And maybe the best we can do, Robert. Right. I I see a lot of enthusiasm from some right to really think
Robert Bryce 52:07
attitudes are changing. So but let me just just a couple more questions, because we're right about an hour and a bit very fun chatting with you and getting your views on all these things. And obviously, seeing you know why you've stayed at this soap for so long. But it's imperative I think people understand that Britain has done this before. There's a book called The Secret of Sherwood Forest. Tell us about what happened. Tell me 1943 But your Okies came to Britain? Tell me about it. Tell me that story briefly.
George Yates 52:35
The Okies Noble Drilling, right?
Robert Bryce 52:38
And I'm from Oklahoma and Okies, not really Oklahoma and so just kind of a derogatory term right. But that's what its origins are but
George Yates 52:46
so in to help support the allies in World War Two, noble journaling brought over trolling rigs and roughnecks, to the UK termed it from Ardmore, Oklahoma from Ardmore, Oklahoma, and it's something that's a very part proud part of their history. Yeah. This is the company went on to discover the ultra reveals in the Mediterranean,
Speaker 2 53:10
offshore Israel that are now a real island by Chevron down
George Yates 53:15
by Chevron, but energy independent Alaric. Right.
Robert Bryce 53:20
Tamara and Leviathan, Tamar and Leviathan fields, right? Yeah, yeah. Shut down because of the war
George Yates 53:27
because of the war. So the roughnecks developed oil, this is a period of time where there was an oil embargo, right in the UK, ver a very important lifeline.
Robert Bryce 53:40
Oil was very, very short supplies and their allies. The big inch and little big inch word would just be being built about that time, right in 1943. Yeah, yeah. These were the pipelines built from Texas and Oklahoma to carry oil and gas was just oil or was oil and refined products wasn't to the to the the East Coast for the war effort.
George Yates 53:59
I think that was crude oil. Okay, it was created a catalog system. Wow. Right. Right. Okay, which was, which was floated victory.
Robert Bryce 54:08
So but the punchline for that is that these they drilled over 100 wells in the span of a year went from zero production to 3000 barrels per day. I mean, it was a significant at that time, a significant contribution to the war effort. Yeah. And it was then it was done in a remarkably short amount of time, which I think is, to me is just part of the template for what could happen in Britain, if they just would get, you know, get on off the dime and realize, I think I would call it the parallel that they face. I
George Yates 54:37
think that parallel is is going to be more and more apparent. You're reading about it more and more in the newspapers are beginning to really focus. What do we do now? Is there an answer? And, and there is an answer. And the great, great news about it is it's also a very clean answer. Yeah, it's not
Speaker 2 54:57
we're not violating Clean domestic and cheap, what's wrong with
George Yates 55:01
clean domestic and cheap?
Robert Bryce 55:05
So last few questions. George, I asked these of all my guests. What are you reading? What books are on your top of your pile these days?
George Yates 55:11
Well, right, right now I'm about halfway through with the AI book that was written by Kissinger and Schmidt on artificial intelligence
Unknown Speaker 55:25
which he called the river.
Unknown Speaker 55:28
No, I actually don't bring
Speaker 2 55:31
up the Okay. All right. Eric Schmidt and Henry Kissinger, Henry
Speaker 1 55:35
Kissinger recreated on on writing a book on our 54 year yeah. Well, okay. And I also read, recently read Kissinger's books on leadership, which is an interesting book, I would, I would recommend, okay. So I'm an eclectic leader, generally, nonfiction.
Robert Bryce 56:04
I don't read a restriction. I don't read much fiction either. Well, occasionally a man and a man in Moscow that's what I've read some novel A gentleman
Speaker 1 56:11
a gentleman Moscow one of my favorite books.
Robert Bryce 56:14
It's amazing. Just an amazing one of my favorite and I said Mike told me you have to read this book but anyway, I almost tied me down said yet and I need to read more and more tools, but it's his name is immortals. Yeah, but
Unknown Speaker 56:25
have you read a nightingale? A
Speaker 2 56:28
night in Gale night? Nightingale? No. The nightingale?
Speaker 1 56:32
Fabulous, same thing put it? No, I put it in the same category as that gentleman from Moscow. Okay. But this was about the war effort, and, and smuggling American fliers who had been shut down and in France, smuggling them over the perineum.
Speaker 2 56:49
And this fiction book or nonfiction, it
Speaker 1 56:52
is based on nonfiction. But it is a novel. It's a novel. Okay. It's a novel. It's in the same categories. Great gentleman from Moscow. Okay. What gives you hope, George? What gives me hope is, is the human spirit and creativity we see all around us. We don't have any problems we can't. So we always go through, you know, seems like we have to fall into a ditch once in a while. Just for the challenge of crawling out. We feel like we're in a ditch now. And we, we probably are, but look at what we have going for us. In the United States and in the Western world. All we have to do is a few smart things. And I know some of those smart things can can get complicated, but in a time of crisis or a time of a real challenge. That's what we did. That's always no good.
Robert Bryce 57:59
I've neglected to mention you can look up George should have get heyco energy.com Heiko? Hey, co energy.com. George has been a pleasure. We talked about having you on the podcast for a long time. We finally made an app I pleased we did.
Speaker 1 58:12
I'm delighted. Always great to be with ya.
Robert Bryce 58:15
Well, thanks. Thanks to all of you out there in podcast land and to my my new friends, David and Vashi who are behind the camera here in London, making all this podcast magic happen. So thanks for tuning in to this episode of the power hungry podcast until next time, see ya
Transcribed by https://otter.ai