Oil prices hovering between $60 and $70 have put American shale producers under pressure. Chief executives are increasingly vocal about bearing the brunt of the pain. But Doug Burgum, US Interior Secretary and chairman of President Donald Trump’s National Energy Dominance Council, is not concerned.
Appearing in On The Record with Hadley Gamble, Mr Burgum says: “We’re helping them two ways: we're driving up global demand, we're driving up domestic demand because of all of the AI factories, because we're going to be producing more electricity, and we're lowering their break-even point by cutting the red tape.
"I'm bullish on the future of the shale producers in this country because what they have everybody wants … I tell the shale producers, if they're feeling down, go talk to a hyper scaler, because if you've got energy that can be produced into electricity, they want to buy it from you, and they're willing to pay more for that electricity than ever before.”
As China races ahead on electricity production, Mr Burgum says the US is going “gangbusters” to catch up, hoping to cash-in on the “tech guys” leading the demand.
“The biggest challenge we have right now is electricity. We do not have enough electricity to win the AI race,” Mr Burgum says. “The tech guys ... are becoming the biggest customers in the world for energy. And it will only get bigger.”
That is why he remains “bullish on the energy business”, he says, despite a glut of oil on the market pushing prices lower and uncertainty over how the US will meet Europe’s energy needs.
"I would look at the macroeconomics: a robust US economy, a strategy around US energy dominance and selling energy to our friends and allies,” Mr Burgum says. "AI demand is going to do more for driving energy prices.”
This week, Mr Trump signed the biggest trade agreement in US history with the EU, a commitment that includes $750 billion worth of energy over the next three years, but with scant detail on just how the US can achieve that level of production.
"I think the first step is obviously increasing supply,” Mr Burgum says. "And when you see this kind of demand signal coming from a trade deal, [it’s] very encouraging for companies to say we're going to continue to invest in the US.”
Mr Burgum believes it is time to develop America’s natural resources. “The President’s mantra is ‘drill, baby, drill’ but it’s also ‘map, baby, map’. Just recalculating and remapping what’s in the Gulf of America, the numbers nearly doubled,” he says.
“The estimate is there’s $28 trillion of oil and gas assets just in the Gulf of America alone … so we’re talking about $100 trillion to $200 trillion of natural resources … on our balance sheet that could be developed.”
But American energy dominance does not mean putting other producers out of business, Mr Burgum says, quite the contrary. The demand picture means both US and Opec producers win.
"Opec, Opec+, the Middle Eastern countries, the United States are in a position to be the major suppliers of energy to the world. Two billion people that don't have enough energy, 666 million people that don't even have electricity. Take AI demand,” Mr Burgum says. "This is going to be a good business to be in for the decades to come.”
The man in charge of securing America’s natural resources says now is the time to put them to work.
