Energy Impacts Podcast: Tim Stewart, President of the US Oil & Gas Association, Talks About the One Big Beautiful Bill Act

Tim Stewart, President, US Oil & Gas Association, Stops by the Energy Impacts Podcast with David Blackmon in this episode to discuss the major impacts to the U.S. energy sector coming from the wealth of relevant provisions in the One Big Beautiful Bill Act of 2025 signed into law by President Donald Trump on July 4.

One of the industry’s most effective voices in Washington, DC, Stewart was actively engaged every day advising congressional members and their staff on provisions that are important for the country’s energy future. No one understands those provisions and their potential impact than he does.

Connect with Tim and his members at www.USOGA.org.

Follow USOGA on X at @US_OGA

Highlights of the Podcast

00:01 - Introduction

02:34 - A Return to Normal Energy Policy

04:31 - Stability Through Statutory Measures

05:38 - Permitting Reform & Renewable Pressure

08:19 - Capital Flight from Renewables?

10:57 - Natural Gas and AI Demand Surge

12:00 - VoltaGrid: Natural Gas Microgrid Innovation

14:35 - The Myth of Limited Gas Supply

17:19 - Repeal of Methane Fee from IRA

21:15 - Impact on Offshore Leasing and Investment Certainty

22:54 - Decline of ESG and Sustainability Reporting

25:59 - Rejection of Appeasement Strategy

28:52 - Looking Toward 2028 and Beyond

[End]

Enjoy the show!

Transcript:

What Does the US Oil & Gas Association Think of the One Big Beautiful Bill_

David Blackmon [00:00:16] Hello, everybody. Welcome to the energy impacts podcast with David Blackmon. I am obviously your host, David Blackmon, the guy with the cap on because my hair's a mess today. What little I have left with me today is one of our favorite people. Great American president of the U S oil and gas association in Washington, DC, Tim Stewart. How are you, my man?

Tim Stewart [00:00:41] David, it is good to be with you. It's been too long. We should be doing this more often, but it's great to spend time with you this morning.

David Blackmon [00:00:47] Yeah, we definitely should be doing it more often. And I apologize for letting so much time go in between here. Uh, I'll get better about it. There's so much happening in Washington. I'll be calling you every dead gum week.

Tim Stewart [00:01:00] Yeah, it's been a busy time, so.

David Blackmon [00:01:03] And so here we are. It's, uh, let's see, July 15th. We are, oh my God, are we just eight days down the road? No, no, no. We're we're, uh. What day did the thing pass?

Tim Stewart [00:01:15] Yeah, it's pretty much a week out, you know.

David Blackmon [00:01:18] 11 days. Since one big beautiful bill act was signed into law by President Donald Trump on July 4th, Independence Day, it had a ton of content related to energy and the oil and gas industry specifically, but also all other forms of energy and subsidies for them. And so we're going to, nobody knows better about what is and isn't in that bill. That I know than Tim does. And, uh, so I wanted to have this discussion with you. I really appreciate you taking the time to do it. I, I, you know, I have my own opinions about the stuff that was in there and how impactful it's going to be. But I wonder just from your perspective and the perspective of your members, which is kind of the spectrum of oil and gas producers in the United States from the, those little guys to the big guys. You know, how impactful is this going to be on the industry and is it going to, you know, help spur some more drilling and really, I think what's more important is more infrastructure being built in the country right now to move oil and gas out. How impactful is going to to be?

Tim Stewart [00:02:34] Yeah, that's a great question. I think we're all trying to absorb this right now. My initial thoughts are, you know, Washington operates off an interesting, two type of scenarios here, which is, if you're not part of the solution, you make all your money in prolonging a problem, right? And that's just the touch and go of DC, the give and take, so to speak. Second thing we always have to remind ourselves, David, is that Congress is really... Good at doing nothing until it's time to come to over completely overreact and then they do that. So a couple thoughts. I mean, I mean one from the US on Gas Association, we're very, very happy with this because while it is not a full loaf, it is certainly at least a half loaf, if not a bit more and we can make some great sandwiches out of this thing. And that's not there's nothing that precludes us from going back and baking another loaf of bread. In fact, Congress is already talking about that right now. Yeah, that's the irony of this whole thing is literally within probably 72 hours, I was back on the hill in other meetings and the conversation was, okay, now I got to go back and finish this in reconciliation part two. What this does is some really important things for our industry, David, which is one, it sort of returns us back to normal. It's not it's not that it's, not that particularly seismic in terms of of what are in there, because most of what we have in there was basically a return to how things were four years ago, eight years ago or 12 years ago as sort of a normal state energy policy in the United States. It goes to show exactly how off-kilter we were over the last four years under the Biden administration, when this seems groundbreaking, that holding early lease sales is groundbreaking. It's not, it's how things used to be.

David Blackmon [00:04:28] The other thing that I think they're statutorily supposed to be

Tim Stewart [00:04:31] Right, where the nation is concerned. Yeah, and that's a great point. I was going to say that the final thing is, is when you live in a, if you live by executive order, you die by executive border and what Trump has done, uh, the Trump administration did from in the first, you know, three months of their administration was they sort of reset the table by executive order. But the one big bill actually puts it back into statute, and that's really key. And so the overall overall benefit mode, this is a fair amount of certainty that we can go forward, particularly on the federal leasing.

David Blackmon [00:05:04] Yeah, in fact, I saw a list yesterday of all the various energy related Trump orders that were put into statute, the language in this bill helps put into statute and make permanent and that's a really important aspect of all of it. You know, there's also quite a lot in there or some in there and probably not enough, but about streamlining permitting and kind of memorializing some of his executive orders around permitting is streamlining that. Uh, in there, but there's a lot more that remains to be done on that front.

Tim Stewart [00:05:38] Isn't there? Yeah, there is. And again, sort of, I think the house provisions were aspirational for sure. A lot of those NEPA streamlining provisions, which really would have made our industry's life much easier and certainly provide more stability, just didn't survive the birdbath. And that's a whole other conversation about the parliamentarian process in the Senate. But with that in mind, that's why Congress is now talking about a permitting reform bill. It's really interesting, not to get too far down the road right now, but some of those provisions that were in there, which required for you to qualify for the renewable tax provisions, the renewable credits in there need to be under construction by 2027. I don't know if your listeners have followed that or not, but that's the restructuring. All of a sudden what that does is that puts incredible pressure upon any developer who's doing a renewable project to get his project permitted and under construction. And this is going to be a fascinating Baptist and bootlegger coalition that's going to come up between the oil and gas industry and the renewables on permitting reform. And I've been mentioning that to some folks and like you're absolutely right. So that's gonna be really interesting to see how that plays out.

David Blackmon [00:07:00] Really is, and I'm interviewing Emily Dominich, who I think is, uh, Ben Dominich's sister, right? Who's setting up the administration's, uh. Streamlining permitting task force over there at the department of, uh I think it's housed at the energy, isn't it? The energy. Yeah. I'm, interviewing her Friday. So we'll, we'll get some more details, her thoughts on that as well. Friday. But yeah, the whole wind and solar thing, I mean, there's a lot of critics out there of that language that think that it's really too liberal and isn't going to really resolve the issue and it leads to things too wide open. I have a completely different view on that. I think it's going to cause all these financial institutions, private equity funds that have been funding so many of those projects to take a step back and say, well, do I really want to risk? Billions of dollars on these two industries when we think these subsidies are going away and their business models really aren't sustainable without the subsidies and I just think we're going to see a big capital flight out of those industries and it's going to put more well first of all what do you think about that I mean do you that will be a consequence So there.

Tim Stewart [00:08:19] I do. I think you're exactly right. You know, in an era of cheap money like we lived through for the last six or eight years, it didn't matter if a project penciled out because honestly, I do think a lot of that investment was never about actually producing energy. Was it actually about being able to take to either tax avoidance and or just make Maybe you're making money out of the tax credits versus anything else. And it didn't matter because it was you could capitalize that at a very very low rate now when you when you're looking at six or seven Percent capitalization and the tax credit goes away a lot of those projects simply don't make sense I I think you're gonna probably see some significant flight of capital out of the industry Unless they can get them these projects qualified under the the current tax credit regimen prior to 2027 Again, I got to be careful. Dave, I try not to bash my renewable friends. Sure, yeah, yeah. Because you and I both know we need more of everything right now. Our economy is growing. We've got to have a reliable, we got to ever have a a reliable multi-stream source of energy for us. We can get into the AI and the data center thing, but you cannot have, you'll never win the AI race with weather dependent energy resources, you know? So I, but I, to your earlier point, I do think, look, there's, it's probably gonna restructure the capital markets a little bit. It's gonna be pretty interesting to see what happens.

David Blackmon [00:09:52] Well, and I think it's relevant to oil and gas because if if there is a lot of capital flight out of wind and solar as a result of this and I just got an Enveris study indicating that's going to be the case in a pretty significant way that I'm going to write about tomorrow. It's going to put more pressure, in my view, on natural gas to, you know, really be ready to expand. We've got to have the supply, we have to have infrastructure to get more gas to more natural gas power plants that were already being planned to come online because of AI and data centers to power them, at least in the near term. And I just think if you're not going to have all the anticipated new capacity for, you know, you'll have a portion of it, but not all that's been anticipated from wind and solar. Then that just puts additional pressure on the natural gas industry to expand and be able to perform. And I just wonder, you know, what you're hearing, what your thoughts are on that.

Tim Stewart [00:10:57] We're living in an incredibly disruptive time in a good way, you know, and this goes to everything. I mean, this goes from the administration where I've repeated this line over and over to you. It's like, this is not a Republican administration. This is a disruptor administration.

David Blackmon [00:11:12] Yeah, yeah. It's a great line. I wish I'd have thought of it.

Tim Stewart [00:11:15] Thank you and and you cannot bring a Republican playbook to this administration because they're they're not Republicans They're disruptors and you see that across the board and and it's interesting from our industry I mentioned the Baptist bootlegger coalition between renewables and Well gas that may crop up. There's one that's underway right now, which is between Oiling particularly natural gas and the crypto grows and the the big data guys, you know, they realize about a year ago They cannot get from here to there One of the great, I use this all the time, which is in this disruptive environment, the old model, the utility model is not going to play anymore. You're going to have a thousand microgrids crop up because the old model of the utilities cannot meet the demand. And behind the meter, so to speak, these micrograds are going to be driven by natural gas, which means our industry has to innovate on a couple of things, both on the production but also delivery mechanism. And then the end utilization. One of the coolest things, and I suggest you probably get these guys on your podcast at some point, is talk to the Volta grid guys. I don't know if you're familiar with them or not. Um, but the real quick for the listeners, you know, Volta grid is a company, uh, that is probably the one, the largest power producers in the United States right now, because they have the off, they have the behind the meter off grid micro grid generation capacity using mobile natural gas turbines. VoltaGrid, David, is, for all intents and purposes, is a spin-off out of Halliburton. Hallibourton, five years ago, when the Biden administration was putting pressure on, and ESG, and those things, Halliburgton made the concerted effort to move their fracking fleets, the new fracking fleets from diesel to natural gas, and they invested in a small company called BoltaGrid. Ultra grid's gone from $5 million to it's gonna be over $4 billion this year in three and a half years based on what they do Which is providing an energy electricity via natural gas Yeah, fascinating story, but it just goes to show that one is disruptive but it's also innovative coming out of the industry and to your point which is natural gas is going to be I think probably the the the bell of the ball here in the next five years as as we do this AI race to China to beat them at their own game. So it's an exciting time to be in. And back to the big, beautiful bill, it sort of helps expedite our ability to produce, which is...

David Blackmon [00:13:45] So natural gas being the bell of the ball, you know, there's, there's always been these critics and they're still out there. 15 years ago was mainly from the chemical companies who wanted all that natural gas to stay very cheap for themselves. But, but now it comes as much from the climate change community as anywhere else that, you. Using all this natural gas, uh, the more demand we create from natural gas, the prices go higher and we don't have enough supply. To prevent that from happening. That's really a complete myth. I mean, you would think everyone would understand how much of a myth that really is. Talk about the magnitude, the real magnitude of the natural gas resource in this country and why prices continue to remain very low in spite of the LNG exports, for example.

Tim Stewart [00:14:35] Yeah, it's fascinating if you think about it, you know, you probably could sit down and show that net the price of natural gas is exactly the same as it was 15 or 20 years ago. And the reason being is because one, we're just very, very good at finding at what we do, you know, however, 20 years ago, you didn't want to find gas, you wanted to find liquids when you went out, right? But now I think the resource, the new markets for the resources sort of changed all of that. The infrastructure has slowly been built up where rather than flaring you can actually get it out and ship it off to a market. I was talking to the congressional staff last week, we were doing a briefing and the question was on natural gas and it's like, well, what is it for and it was basically natural gas 101 and I have to remind everybody. There's 6,000 consumer products that use natural gas or as a baseline ingredient. Everything from the ibuprofen that I took this morning to my performance t-shirt that I was wearing, Jim, my electricity is being generated right here on Capitol Hill from the Capitol Hill power plant. The markets are there, they are expanding. And every time I do a chat GPT or a Grok search, I'm using 10 times the amount of computing power, which means, I mean, as a regular Google search, and the result of that is that there's a far more greater demand for energy. Again, I know that doesn't answer your question, but I do think we are going through this natural gas renaissance. And it's being driven not by the oil and gas industry, but by the end users of it, particularly data, which is kind of cool to have them be doing our marketing for us.

David Blackmon [00:16:21] Yeah, you know, I really met that Capitol Hill power plant when I first started working out in DC occasionally, uh, this was in the mid nineties. It was a coal plant. And then we had all the hysteria about climate change and Al Gore and pollution. And, and then they, you know, they could have converted all that to wind and solar if they'd wanted to, but they converted it to natural gas instead, because that was, that was something that was going to supply power for 24 hours a day, which they kind of need on capital. Um, so one, one other thing, the one big, beautiful bill act did was repeal a lot of stuff in the reflation inflation reduction act. Most notably for this discussion, that new tax on natural gas that was stuck in, or I guess they call it a fee, that was stuck into the Inflation Reduction Act. How important was that in terms of a goal for you and your members?

Tim Stewart [00:17:19] I, it was huge, particularly for the smaller members, to be honest with you. Yeah. And then the way that thing was put together, I mean, I remember you and I sort of complaining about this four years ago, which was, you know, that methane fee was a fee that was implemented and then started under, under the Biden, the inflation reduction act bill, which levied on primarily small consumers, and then the regulatory structure was you will start paying the fee and that fee will increase. And while that fee is increasing, while you're paying it, we're going to build the actual regulatory mechanism around it to tell you why you're playing the fee. That fee was in place three years before the final rule came out from under the means of the Biden administration. And the fact of the matter is, is that somewhat survived the birdbath. You know, it was kind of, we wanted a straight repeal and the parliamentarian ruled against that, but she said if you push it outside the 10-year window, then it meets the bird bath. But more than anything, that is a fundamental sense of fairness, which is if I'm a small producer and I've got infrastructure around, I've the rigs on the ground, so to speak, and you're charging me a fee without telling me how or why I can come in compliance so I don't have to pay the fee. You just keep telling me that I have to pay it until you tell me that, I don't t. That's not fair. And that was actually really important for the small producers. It was, it was an indirect tax on consumers. Yeah. Uh, and it, it didn't necessarily spur the technological innovation that the, but that the Biden administration and their authors of the, of the IRA said that it would, uh, it, was just a matter of, all right, I'm going to have to pay this and I'm going to wait and see. So that was a big deal, I think, uh for, particularly for the small producers, um, you know, the stripper wells, for example, probably those guys were probably the most impacted by that. And so that was a big win for us. We had some pretty big wins in this bill, to be honest with you, that we don't like to trump it too much, but we got, we had some really big wins, you know? We don't wanna make ourselves a target, so to speak.

David Blackmon [00:19:30] Exactly. Yeah. Well, and people don't pay enough attention to the stripper well question because it's like eight to 10% of our total supply comes from stripper wells. Yeah, yeah. I mean, if you don't, if, you don, if you implement these policies that are going to put those little guys out of business, you're going to have a supply issue pretty quick.

Tim Stewart [00:19:50] You combine that with, and the whole purpose, if you think about how they crafted this four years ago, not that we have to be talking about what happened four years ago versus four days ago, but it was really interesting that whole Inflation Reduction Act bill was designed primarily not to reduce inflation, but on the energy side was to either reduce the production and or consumption of fossil fuels, fossil energy. And so stripper wells, for a good example, they threw billions of dollars into orphan abandoned wells, where actually the amount of money they put into the orphan abandoned well reclamation programs available probably far exceeded the number of orphan abandoned wells that were available at the time, but it was built in anticipation of shutting down the stripper well and making them uneconomic. So if you take 10%, like you say, 10% of the stripper well production offline, and you add to that the fraud intense and purpose of the onshore and offshore federal portfolio, which is 25%, they almost got halfway there, just from that one bill of shutting down probably 40% of production in the United States. And that for a while, that put intense pressure on the private and the state lands and even the tribal lands to bring new production on. Again, all of that's changed because those provisions have been returned back to normal, which is great, and I think we're off to a good start.

David Blackmon [00:21:15] Yeah. And returning to normal order, you mentioned the offshore, the return to normal leaf sales that are required under the law, you know, that the Biden administration just ignored and refused to hold is going to be huge for the offshore industry. I mean, this first lease sale they're already planning is going to encompass almost the whole Gulf of Mexico. It's crazy. It's really a bold step, I think.

Tim Stewart [00:21:41] It is the capture rate on those offshore lease developments. So as you know, 10 to 15 years. Yeah. And we've been going through, we've got sort of a donut hole that exists right now, going back 15 years ago from the Obama administration when they slow block things, but you're exactly right. This, this companies need to have options, you know? The, the super majors need to have an option being onshore or offshore. And the small independent producers need to have options if they're a New Mexico or a Texas operator to have some of their production on federal lands. And I think again, what this bill does is it provides the options and provides a certainty that we all have been needing for the last four years.

David Blackmon [00:22:22] Yeah, we've got a good question from one of our viewers. Do the US Oil and Gas Association members anticipate sustainability reports to be phased out? Cost of capital with this big, beautiful bill to drop. ESG financiers in the major banks have inflated the cost of capital around the world. I don't know about that last statement, but I mean, are you're? Are your members anticipating not having to do the sustainability reports in the near future?

Tim Stewart [00:22:54] Yeah, and the reason why is it's been fascinating. Some of the compliance reports that we do, which we spend, a company will spend hundreds of thousands of dollars in preparation and submitting and nobody actually ever reads them. This goes with the disruptor sort of nature of this administration across the board, be it an EPA or Interior or Treasury or what have you, which is. We don't care about sustaining and extending and perpetuating the process, we want a result. And if we can cut 80% of the process out and produce a result, that's what we want to do. It's been real interesting, the conversation, that's a great question, I'm glad they asked that. Conversation about how do we streamline federal permitting and APDs, for example. We've had some AI companies come in and present to Interior saying, we can cut 80% of the APD process out just by using a certain type of AI, which has taken the federal, the BLM permit process itself and incorporated EPA requirements and individual state requirements on top of that. And actually created, built the AI specific, not using chat GPT, but the specific AI. And producing an 80% expedited process, that's gonna be great. And that's going to help for reporting and everything else. So I do think we're moving, again, we're going into a very disruptive time. It's gonna, it's gonna big and it's going to be beautiful and as necessary.

David Blackmon [00:24:29] Yeah, just a little anecdote, I'm one of those nerves that logs into investor presentations from time to time from some of the big companies. And three, four years ago, a company like Exxon or Chevron and more so Shell and BP would have spent 15 minutes talking about ESG and their sustainability reports and those things. And I listened to Exxons first investor call of the year this year, and they didn't even talk about it, didn't even address it. I mean, it's just not a topic of conversation. Larry Fink at BlackRock, I mean you really want to have a real example. Larry Fank at Blackrock didn't mention ESG in his last earnings call, which is extraordinary because two years ago it would have been half the call.

Tim Stewart [00:25:20] Yeah, yeah, they they still sort of with all due respect sort of bastardized the process, you know All right, and it's nice to see again in an era of cheap money. You can afford to To a virtue signal like that, but the return to profitability is is key I think right now and that's why these people like it's not profitable. I'm not interested

David Blackmon [00:25:42] Right. And that's, I mean, that's why you see what's happening at BP happening and why Shell is de-emphasizing wind and solar investments. You know, you can just go down the list of the big companies that are. Dedicating a lot more capital to their core business functions.

Tim Stewart [00:25:59] That's what's so fascinating to me, David, is, you know, four years ago, this goes to sort of the trade association dynamic in DC, we warned, we said to our members and we said, to the fellow trades, look, appeasement is not a winning strategy. You will not win by coming in and trying to, to parrot what they say back to you and those companies that, that tried to take that, they're, they clearly. Did not get their return on investment for appeasement that they thought that they would. So I think from my perspective, that's one of the right calls we made at the US Southern Gas Association is we're gonna fight back. We're not gonna pretend that gas stoves are polluting and giving children asthma, that's crap, and things like that, so.

David Blackmon [00:26:48] Well, it was the right decision. And it's a decision that should have happened 30 years ago, but I mean, the industry has always tried to go along to get along with these things. I mean I went to work for Shell 20 years ago. It's been 20 years this year. And they were already building an ESG, the whole department of ESG kinds of people, sustainability people, but that was 10 years before the term ESG was even invented, right? And so. You know, you're, I mean, they've been, we've taken this posture in the industry. Well, if we just appease these people, it's kind of the Neville Chamberlain approach we were in for 30 years, just trying to appease and go along. And yeah, cost takes a little bit of our profitability away, but we can deal with it. And we're doing a lot of these things anyway, so we might as well talk about it. And so, but you know it just doesn't work. And I think the Biden administration, one benefit, blessing from the Biden administration, the Inflation Reduction Act, is it kind of, you know, I think it spurred that decision to fight back. And you were one of the real leaders in that, and have been for several years now. And why I always call you when I have questions about this.

Tim Stewart [00:28:06] Well, it's very kind because your audience needs to know that you are my muse and whenever I need a question, I call you back.

David Blackmon [00:28:16] You're the one I can rely to call me back. Yeah, it's feeling it.

Tim Stewart [00:28:21] As the New Collaboration Society.

David Blackmon [00:28:22] Yes, it is, and for sure, and we're running up against time. One last question though. I pointed out in the last daily caller piece I wrote that we're just six months into the Trump administration, 42 months to go. It's entirely possible that we are going to get to the end of 2028 and it will be almost as if the Biden administration never happened where energy policy is concerned. Do you share that or is that an overstatement?

Tim Stewart [00:28:52] No, I hope so. I really do hope so the pendulum swings, obviously, you know, and no, who knows what goes into the into the midterm election, but I do think that people have really sort of come to the realization that they need what we offer from the oil and gas perspective. They cannot be, they cannot live day to day without us. And the transition is going to be long, it's going to generational, it can be year generations before we transition away. So let's keep providing cheap and affordable energy. And reliable energy to people and let's take our time and figure out what the next generations are going to have the opportunities to do. I think 2020, I do think with all the respect to the prior administration, the more forgettable they become, the better off we all are, you know, it really is. It was, we're gonna look back and go, what the hell were we thinking?

David Blackmon [00:29:46] It was like a bad dream.

Tim Stewart [00:29:47] Yeah, exactly. I mean, I used to wake up every single morning and wonder what bad thing was going to happen to our industry today. And it was literally every three days, they'd announce one other thing. And the fact that we're still around goes to show how resilient we actually are. And that's been a great blessing for America.

David Blackmon [00:30:05] It is an incredibly resilient industry. It always has been. It's always been based in science and technology and run companies run by really smart people and associations run by a really smart guys like you. And we really appreciate you and wish you the best of luck going forward.

Tim Stewart [00:30:24] That was great being with you, that was fun. Let's keep doing this, okay?

David Blackmon [00:30:27] Absolutely, absolutely. And thanks everybody for joining. Appreciate you as well. And we'll be back soon with another episode of Energy Impacts with yours truly, David Blackmon. Thank you