Representative James Strickler and Representative Larry Scott discuss energy policies, politics, closing coal plants, uranium mining, enrichment, and spent fuel storage, and the energy transition – all in New Mexico.
[00:00:00] James Strickler: I love horizontal drilling. It’s just revolutionized our industry.
And we need, we need all the energy we can get, especially if you wanna fire up electric vehicles. If you don’t have power those electric vehicles are gonna be in kind of bad shape. So I like the idea of nuclear especially small nuclear reactors.
In, in San Juan County, we just shut down one of our power plants and coal mines prematurely. Really unfortunate we lost we’re, we’re losing 1500 jobs. I love to see those jobs transition to the nuclear business.
[00:00:33] Intro: Just because the facts are A, if the narrative is B and everyone believes the narrative, then B is what matters. But it’s our job in our industry to speak up proudly Soberly. And to engage people in this dialogue, those two and a half billion people that are on energy poverty, they need us. America cannot meet this threat alone.
If there is a single country, of course, the world cannot meet it without America that is willing to, we’re gonna need you the next generation to finish the nuclear regulation. We need scientists to design new fuels, focus on net public benefits. We need engineers to invent new technologies. We need over absurd levels of radiation property entrepreneurs to sell those technologies.
Then we will march towards this. We need workers to operate a. Assembly lines that hum with high tech. Zero components on prosperity need. Diplomats and businessmen and women and Peace Corps volunteers to help developing nations skip past the dirty phase of development and transition to sustainable sources of energy.
In other words, we need you.
[00:01:38] Mark Hinaman: Today I’m joined by two guests . We normally only have one, but today we’ve got two. We have Mr. James Strickler. James is a seasoned oil and gas professional. He spent, he or he said that he is on his 46th year working in the industry.
He is got a business degree in petroleum land management. And also served in the New Mexico State legislator for about 16 years. He is a, still a small independent producer out of Farmington. And our other guest is Larry Scott, who is an electrical engineer by training, but also spent 40 years working as an independent in oil as an oil and gas producer in Southeast New Mexico.
And he also served in the New Mexico State legislator. So, Larry James. How, how you guys doing?
[00:02:16] James Strickler: Doing great.
[00:02:20] Mark Hinaman: It’s Friday afternoon. Yeah. Larry was uh, before we started recording, he’s apparently also an accomplished pilot and was complaining that this is cutting into his time to going out and hang, hanging out at the hangar and flying so, I’ll try and be efficient here. I, I’d like to give each of you kind of the 60 second intro or ability to just kind of introduce yourself and tell us a little bit about your background, but also to help the audience just kind of familiarize themselves for those that are just listening to know who’s who.
So, James, let’s start with you.
[00:02:52] James Strickler: Thank you, mark. Pleasure to be here. Love energy.
I’m from Texas and, and been in the oil and gas industry for 46 years in the last 28 years here in San Juan County. And I worked the San Juan Basin worked for major companies most recently was El Paso Meridian, Burlington Resources. I’ve been on my own. The last uh, tomorrow will be my 19th anniversary. So I’m a petroleum landman, as you mentioned earlier. And I, I love, love, I love my industry.
And I love the the, the folks up here in San Juan county that, that work in the coal mine and the power plants. And they produce abundant supply of energy.
And we uh, uh, serving 16 years in the legislature, just finished up last year 2007 to 2022. Uh, 16 years on the energy committee. And I served as chairman for two years uh, 2015 and 16. So got a pretty good understanding of overall energy mix in New Mexico and in the country. You know, I lo I love uh, horizontal drilling. It’s just revolutionized our industry.
And we need, we need all the energy we can get, especially if you wanna fire up electric vehicles. If you don’t have power those electric vehicles are gonna be in kind of bad shape. So I like the idea of nuclear especially small nuclear reactors.
In, in San Juan County, we just shut down one of our power plants and coal mines prematurely. We can talk about that later. Really unfortunate we lost we’re, we’re losing 1500 jobs. I love to see those jobs transition to the nuclear business.
[00:04:27] Larry Scott: Mark, uh, I come from an oil and gas family. My father had a 35 year career with a major oil company, mostly in the offshore Gulf of Mexico, and that is where I spent probably the first eight years of my career was, uh, working. On offshore production facilities transferred to Southeast New Mexico. I, uh, started my own company back in the, uh, early eighties, and, uh, grew it to, uh, well, 60 well operation.
And now with the bulk of that sold, I am in, uh, semi-retirement serve in the New Mexico legislature. And also, uh, Have served since I’ve been in the legislature on the energy committee. So, um, uh, this is subject to that holds a lot of my interest.
[00:05:35] Mark Hinaman: So Larry uh, working on the Energy Committee what, what was that like? What, what kind of issues would you guys address? Give, give us some background perspective on that.
[00:05:43] Larry Scott: Well Mark our current administration, the New Mexico legislature is very, very progressive, as is our current governor. And just in the last couple of years we have, uh, passed. Uh, over my objection, the Energy Transition Act, which aims to, uh, bring New Mexico to a position of net zero carbon emissions by the year 2050.
I consider this, uh, to be an unrealistic and very expensive goal to reach. And continue to work to try to, uh, uh, mitigate some of the consequences of that legislation. So that’s, that’s what we’ve been faced with in New Mexico.
[00:06:39] Mark Hinaman: Do they, do they have a strategy for that or, I mean it, I know there’s a lot of sun in New Mexico, but every time that I’ve tried to scope the economics of solar projects, it, it doesn’t seem to pan out.
[00:06:55] Larry Scott: Well, of course solar panels are only good for about 25% of the 24 hour period and the lack of dispatchable power. Once renewables, uh, get into that, uh, 25 to 30% penetration range makes dispatchable power priceless. That renewable energy is not available and uh, and I think the consequences to our consumers are going be considerably negative, and I’m read that as reliable and more expensive.
[00:07:37] Mark Hinaman: Yeah, I, I agree. So what’s your background, Larry? You were an electrical engineer, but how did you how’d you get into oil and gas?
[00:07:45] Larry Scott: Oh, upon graduation from college, we were in the midst of one of those, uh, oil and gas cycles that, uh, was desperately in need of technical talent of really, uh, any major. And, uh, my early career was in, uh, providing. Power systems for offshore oil and gas production platforms. Of course, in an oil company, if they like the work you’re doing, they cross-train you to do oil and gas activities, which is where, how I ended up in Southeast New Mexico as a supervising engineer.
Uh, a lot of people making million dollar deals on cocktail napkins that didn’t look. A whole lot smarter than me and seduced by an oil and gas boom back in the late seventies to try my hand at my own oil and gas company.
[00:08:46] Mark Hinaman: Well, that, that’s great. Right? You know, it is one of the industries, or it was for a long time, one of the only industries that true entrepreneurship led to generating wealth. That was, almost generational, right?
[00:08:57] Larry Scott: Uh, that opportunity is largely gone by the wayside with the capital requirements for this, uh, new technology, but I am a representative of a entrepreneur that that did well.
[00:09:15] Mark Hinaman: No, absolutely. That’s great. James, tell us a little bit more about your background. Working as a landman in New Mexico
[00:09:23] James Strickler: well, you know, the o the oil and gas industry is high risk, and I’ve been laid off twice in my career.
[00:09:28] Mark Hinaman: it’s, it’s a rite of passage.
[00:09:30] James Strickler: So that’s, that’s kind of a it’s a common occurrence. I was first laid off in, in 94. I was laid off again in, in 2004, and the second time I decided to go in business for myself and I just picked up scraps off the rich man’s table.
I’m a, I, I acquired oil, gas leases in good areas here in the San Juan. Got, got really established, made some good acquisitions, and the industry’s been really great. My wife and I raised seven kids. Two of my sons, two of my older sons. Are in the oil and gas business as well.
They’re both professional landmen uh, Texas Tech graduates. And so it’s been really good business for me. I love the health and safety, the practices that the industry has continued to improve on. We’re environmentally sensitive to everything that we do and and I, I become very close to uh, Uh, the coal miners and the power plant workers in my community because we, we have two very large coal mines and, and power plants.
And representative Scott mentioned the energy Transition Act and that pretty much prematurely shut down the San Juan generating station that PNM public service in New Mexico operates. And it was a, it was a terrible piece of legislation. It this, this plant. As a, a 20, 25 year plus life remaining.
And PNM decided to shut it down three or four years you know, early and 20 years prematurely. And it and it really adversely affected our economy, and we’ve lost again, it, it’s the livelihood of 1500 jobs and the tax base has really taken a beating, especially central consolidated schools, which is a a 90% Navajo community student body.
And so uh, and 40% of the workforce came up with the Navajo community. It’s very important. And so we are, you know, we’re, we’re uh, reeling right now, so this nuclear power in, in reading some, some of the material that, that you were kind enough to furnish me. Uh, 70 plus percent of these uh, coal fired power plants are ideal for small nuclear reactors because of the infrastructure that’s already in place and the quality workforce.
We’ve got a lot of high technical folks that can transition like 70% of the workforce can easily transition. In the nuclear side, these small nuclear reactors. So I’m pretty fired up. I’m, I’m uh, that uh, I wanna save these jobs.
[00:12:08] Mark Hinaman: I, I love the passion and the commitment to, to the people that are on the ground and that, you know, have had a good career in economic prosperity and a community and have done a lot for society. But then, yeah, like you said, because of political powers shift one way or the other, you know, it, it, it transforms what people can, are allowed to do for a living, which is, can be very sad.
I, I wanna unpack a lot of that. But before we dive in, you know, that. James, we, I, I looked at some of the bills that you had researched previously or, or had proposed previously, and I feel like the legislator and the attitude in the state in New Mexico is kind of transformed over time.
I’d love to get your guys’ kind of perspective. Is, is that true, would you say in call it, the past five to 15 years, the state’s politics have kind of moved towards. Being more strict on the energy industry than not. And if so, why?
[00:13:06] James Strickler: I’d like to answer that real quick because I’ve, I’ve had the privilege of serving under three governors and, and my colleague Larry Scott, under two under Richardson Senator governor Bill Richardson, former Congressman Bill Richardson. He was, Fairly pro business and and pretty good pretty reasonable with the oil and gas industry, for example.
He was more of a moderate and he was running for president and it, it moderated his views. And the speaker of the house being Luhan was liberal, but he, he was pro business. And it’s kind of interesting dynamic. Same thing with Michael Sanchez. Who was the Senate Majority leader, but and we had to, we had to do some, you know, we had to balance the budget.
So he did a pretty good job. We had a big budget shortfall and, and we balanced the budget. We had to come up with $700 million and, and it, it was painful, but it, you know, it, it happened. And under Susanna Martinez, a Republican she, she was a good balancing individual that, that had a veto pen.
And so if bad legislation got through she was able to stop that. So we had checks and balances. Really the first 12 years of my career, the last four years, unfortunately the moderate Democrats have been swept out of office. And so we don’t have that balance. Last four years have been tough.
MLG, Michelle Luan, Grisham has not been very, very friendly to the largest industry in our state private sector industry in our state. We, representative Scott and I also serve on the tax committee and and 40% of our, our our revenues come from oil and gas, so it’s kinda.
It’s, it’s, it’s a little bit strange that you would wanna hurt that industry ’cause you can’t replace those dollars. And we’ve got a three, three plus billion dollar surplus thanks to oil and gas. So it’s, you know, you don’t want to kill the goose that lays the golden egg. And I think Larry and his colleagues have done a brilliant job this last session.
I wasn’t there, but they were able to stop a lot of bad bills. And I, he’ll have to talk about that, but that’s kind of the history of the last 15 years anyway.
[00:15:19] Mark Hinaman: Yeah. No, that’s helpful. Larry. Do, do you wanna talk about a couple of ’em? Things that come to mind?
[00:15:23] Larry Scott: The current administration and Mark, I’ve made this comment on more than one occasion, and that it does not seem like the current political environment has any adults in the room, at least not those driving the bus because, as representative Strickler mentioned, uh, the petroleum industry directly or indirectly is responsible for almost $4 billion out of a state budget of $9 billion.
So to say that that industry needs to sunset in favorable, in favor of renewable energy, just. Uh, doesn’t make a lot of sense because we have nothing on the horizon that would come remotely close to, uh, replacing that economic activity.
[00:16:32] Mark Hinaman: Yeah, well, I, I know the answer, but for the benefit of the audience, why, why couldn’t we do that with renewables? Why, why doesn’t that value exist with renewables as you guys see it?
[00:16:45] Larry Scott: Well, so far renewables have not been a generator of, uh, taxes to the state government. They’ve been a consumer of taxes to the state government. Those projects would not exist without some sort of government subsidy at both the federal and state levels. They are, they are. Uh, Uh, constructs, if you will, of the environmental community and their obsession with carbon dioxide.
[00:17:23] Mark Hinaman: So why, why wouldn’t they exist? My perception is the physics just aren’t as good. You know, you don’t get as much out as you put in for every dollar that you invest in. So it, no matter what you do,
[00:17:38] Larry Scott: If you’re not getting as many BTUs out of the project as what you have to put into the project, you are never going to make that up on volume.
[00:17:50] Mark Hinaman: So we’ve alluded to nuclear a few times. Do, do you think there’s opportunity in New Mexico to bring new nuclear in?
[00:17:58] Larry Scott: I do not I, the current, the current hostility towards nuclear energy goes back all the way into the forties in spite of the fact that we have Los Alamos National Laboratory, Sandia National Laboratory.
[00:18:15] Mark Hinaman: Yeah. The the OG lab, right? Where, where Oppenheimer went and invented nuclear energy as a science, right?
[00:18:23] Larry Scott: There you have it. But, and I’ll give you a very recent example. My community supported a, uh, an outfit, uh, that has a very advanced technology to store. Uh, in a semi-permanent manner spent nuclear fuel rods. This is a nationwide problem that we here in the southeast part wanted to try to solve. And the, uh, legislation coming out of the house and signed by the governor actually, uh, precluded, uh, that.
Installation going forward without state regulatory approvals, which will not be forthcoming. Uh, those folks have spent a considerable amount of money, and right now it looks like it’s all going to be up for not.
[00:19:23] Mark Hinaman: This is the Holtec facility, right?
[00:19:25] Larry Scott: That’s correct.
[00:19:26] Mark Hinaman: So that it’s essentially a worthless concrete pad then. So if anyone’s not familiar, it’s a Several acre, or it’s designed to store the dry cask storage. And we’ve had a waste expert on that, you know, has talked about this. Super safe literally hasn’t hurt anyone ever and will not be hazardous to anyone after several hundred years.
And this would just be a place to put it, you know, so I find it, I find it very strange that. Well, ignorant might be the word that people would oppose that. Okay. Well, James, you had mentioned the San Juan generating station and that they closed that prematurely. Tell us a little bit about the station.
If, and Larry you might know this, but size of the station. You mentioned fifteen hundred jobs. Was there a coal mine next to it? Give us some color on kind of what, what the project was and why they closed it.
[00:20:20] James Strickler: I’d be happy to mark. The San Juan generated station is again, it’s operated by public service in New Mexico. The city of Farmington owns a minority interest 5, 6%. All the owners decided to exit the you know, their ownership interest. And the City of Farmington under the operating agreement agreed to take over the the entirety of the plant.
So they, they secured a a partner to operate the plant. And this partner is in Chan Energy and ENC Chan Energy had a bold and creative. Project to do, do some carbon capture and and, and they were kind of ahead of their time. This was in 2019 20 18, 20 19. And carbon capture is the rage right now.
Industry is really embracing carbon capture and they were way ahead of the game, 2, 3, 3, 4 years ahead of the game. And it’s it’s a big industrial project, $1.2 billion to construct. The facility there’s currently 800 megawatts of power. Two. Two of the four units are in operation to give you a magnitude.
It’s a pretty good size. Used to be 1600 megawatts. They, they shut down two of the four units and this was a an ideal project. The energy department of Energy ranked it high on their list. They gave some grants. A test well was drilled to sequester you know, to capture the carbon and sequester what was so fan phenomenal about it.
The, the technology’s there. They were gonna put you know, some, many units redundant units. So like four. And if one’s down, you know, three are gone and it trips 90% of the carbon. And so currently the the power plant coal mine, they were generating about 20, 2100 pounds of carbon per megawatt hour.
And with this system in it’d be down to 300. And so it, it would be, ironically, it would be cleaner than wind and solar with natural gas to back it up, which is about 600. Pounds per megawatt hour. And it’s kind of ironic and, and we could sell. I mean we could sell all the, all this electricity to California.
It would comply with their their rules. By the way, California they’ve recognized natural gas as, as clean energy because most of their, most of their powers generated by natural gas. And so this was an exciting project in in state government, just like Representative Scott was talking about Holtec in that storage facility, the state government just, you know, just really hurt this, this great opportunity.
[00:23:02] Mark Hinaman: Yeah, what, what was the primary driver behind not doing this carbon capture project? Why, why not?
[00:23:08] James Strickler: Well, I think they the powers that be the environmentalists, they hate coal. I mean, they just, they just hate coal. They hate oil and gas. They just hate coal more than they, they hate oil and gas, but believe me, they hate all of it. And and unfortunately, wind and solar is just not gonna cut it.
As representative Scott said solar runs about 25% of the time. We didn’t mention this but wind runs about 45% of the time. So you use an average of 35%, you need natural gas to back it up, or small nuclear power. And so you gotta have base load, you know, 24 7 fuel because wind and solar just is just the physics.
I mean the, the wind doesn’t always blow and the sun doesn’t always shine. Those are just facts. But the, the, these environmentalists, at least that Larry Scott and I have been dealing with, don’t bore them with the facts. They, they haven’t taken a math course recently. And They, they need to.
[00:24:10] Mark Hinaman: Who are these specific groups? Who, who would you guys interface with? Are they individuals in the legislator?
[00:24:17] James Strickler: Oh, they’re, they’re they’re nonprofits. I mean, they’re,
[00:24:20] Mark Hinaman: Big names Greenpeace, Sierra Club.
[00:24:23] James Strickler: they’re the Sierra Club. Yeah, the Sierra Club is one of ’em. The Conservation voters is kind of a, a, a combination of all these different groups. They’re very well organized, very well financed. And yeah, they’re, we’re all gonna die in five years.
[00:24:39] Mark Hinaman: Well, I, I, I think their whole business model is selling fear and catastrophe to people that, you know, wanna do good in the world and will make donations to them. And it’s like, wind and solar as far as an environmental project are disasters, right? For how much land use and mining they require.
Like this is really, really bad for the It’s, and I, I think the public can still be fooled by that now, and people can make careers and build nonprofit organizations off of selling the dream of wind and solar because it’s not apparent yet. But in areas that wind and solar has higher deployments, you know, and it’s more visible.
People do have more pushback.
[00:25:19] James Strickler: Mark In Europe, wind and solar does not work. It is just too cloudy. And they, they don’t have the sun resource and they don’t have the wind power. And and we’re trying to, you know we’re trying to follow the European model, which has been an abysmal failure. And with the Ukraine, Russian War it really has been you know in the forefront.
And they’re paying three times more for energy than we are, and we’re trying to do the same dumb thing. And believe me the eastern part of the United States, they don’t like wind towers. I can tell you that. And, and like you said, we don’t have enough land available for Solar Farms. Out west, we do. I mean, we, you know, we have a lot of desert here and we have a lot of good solar sites here, so more so, but boy, where most of the people live east of the Mississippi it is, it is tough.
[00:26:13] Mark Hinaman: Absolutely. Now, the, the, the San Juan generating station, let’s circle back to that. Do, do you know, the mine lands specifically, are they just gonna reclaim it? This was an op open pit mine?
[00:26:23] James Strickler: This is an underground mine.
[00:26:24] Mark Hinaman: Underground mine. Okay.
[00:26:26] James Strickler: But to your point, there’s a surface mine that provides fuel coal to Arizona public service, and they’re doing the right thing. They’ve got a, they’ve got 10 to 15 years to, to Come up with a, an alternative.
[00:26:41] Mark Hinaman: Okay, so there’s an underground mine that was feeding the San Juan generating station, and there’s a local But it’s mined in New Mexico and then they train it over to Arizona.
[00:26:48] James Strickler: There’s two coal mines. The, the underground mine serves the PNM facility. San Juan generating station. The surface mine provides coal for Arizona public service.
[00:27:00] Mark Hinaman: Okay, gotcha.
[00:27:02] James Strickler: Arizona Public Service has their facility on site. It’s at the mouth of the mine. So Arizona Public Service is located in San Juan County? It’s at the mouth of the mine, it’s going full speed ahead, and they’re glad to have it.
It serves Arizona and Nevada. And they’re glad to have that, that, that available power.
[00:27:22] Mark Hinaman: And, and they didn’t close that plan, right?
So this is, this is a perfect contrast, right between like coal mine adjacent to each other, power, two power plants very close to each other and one shot’s down. Lose a bunch of jobs, lose power generation, the other one doesn’t. And who’s making more money? Who’s, who has more jobs, whereas, which economy is better?
[00:28:30] Larry Scott: Mark in the last year of operation. San Juan, according to the Energy Information Agency, was putting up about, uh, something less than 5 million metric tons of c o two annually, and we closed that down in the, in the name of saving the environment, but the math very simply doesn’t work. Because 5 million metric tons in the scope of the worldwide c o two emissions is not even a rounding error.
It, it works out to four decimal places in the, in the scope of the planet’s atmosphere. So to sacrifice 1500 jobs for, for that little a benefit, didn’t seem like a good idea
[00:29:31] Mark Hinaman: With, without a viable backup plan. Right?
[00:29:34] Larry Scott: with no viable backup.
[00:29:35] Mark Hinaman: You know, this is a comp, this is a phrase that is thrown around a lot now. A just transition like, well, we as the imperial, you know, federal or state government, we can’t just come down and take people’s jobs away without having a solution. But that’s what’s happening.
All over the country right now. Right.
[00:29:51] Larry Scott: P came up with, I think 40. In the, uh, legislation intended to provide, if you will, a just transition for those folks that were losing their jobs, which amounted to about half of the annual payroll that was lost as a consequence of closing the plant and the mine down.
[00:30:20] Mark Hinaman: Yeah, that’s tough. Now, Larry and James I’d sent paper to you guys ahead of time and one of your colleagues had sent it to me. But it was Report put out by the Bipartisan Policy Center titled Can Advance Nuclear, repower Coal Country. Larry, I, I don’t know if you had a chance to look at this, but I guess a question that I have, and you know, James, you cited that the plant could be potentially converted to, to nuclear.
I guess I’d ask Larry, do, do you agree with that or from your technical background, do you think that there’s opportunity for some of these goals?
[00:30:52] Larry Scott: All the power plant needs to generate electricity is a source of steam, and to the extent that nuclear power can provide that steam. They absolutely make those old plants candidates for repowering because those turbines don’t care where the steam comes from as long as there’s enough of it.
[00:31:17] Mark Hinaman: So why didn’t PNM convert it to a nuclear power plant? What, do you guys have any insight on what their motives were?
[00:31:23] James Strickler: Well, PNM mark PNM had to replace this 800 megawatts of power. And so they appealed or they applied to the public regulatory commission, New Mexico to buy that replacement power from Palo Verde nuclear power plants. So they’re very, they’re strong po you know. I mean, they’re already doing it.
[00:31:44] Mark Hinaman: They’re already doing it.
[00:31:46] James Strickler: And the PRC, for some weird reason, turned ’em down and and because they thought it would cost too much. Well now you know, the cost of everything has gone up whether it be natural gas or even coal’s gone up. I mean coal is going full speed ahead. And, and, and, and, you know as far as production and, and worldwide power, I mean, coal is the, the king of energy production. And so I, I think PNM, you know, saw low hanging fruit there. They they wanted to buy 150 megawatts of replacement power from Palo Verde that was available at a reasonable price. And, and the PRC turned them down.
[00:32:27] Mark Hinaman: And you used this acronym a couple times, PRC, what, what does PRC stand for?
[00:32:31] James Strickler: So a public regulatory commission. They’re the regulatory authority that governs all these power plants. Of course these are regulated monopolies. They have a trade area, you know, and that’s, that’s the public regulatory commission’s responsibility. And so PNM I mean, why build a new plant when you can buy it from an existing plant?
And and these small nuclear reactors are, I think they’re. They’re ideal because they’re like 70 megawatts a unit. And you know, you could put in four or five units and, and, and, you know and be in, be in great shape. But Larry has
[00:33:12] Larry Scott: mark, I want you to, I want you to think about the economics. Of renewables as opposed to, uh, dispatchable power plants. And when the sun’s shining and or the wind is blowing, these guys have to have someplace to go with the power that is generated as a consequence. And this is already occurring in California.
The generators pay to transmission companies to take that power because they have to do something with it. Now, a, a dispatchable plant that can consistently put a kilowatts on the grid for say 4 cents or 6 cents per k w h, cannot compete. And those plants have to be designed to run at maximum efficiency, which means they would be designed to run at say, 90% of their productive capacity all the time.
So trying to cycle these guys back and forth to match what renewables are able to put on the grid. More cheaply at certain times of the day is, is problematic. You can’t get a return on investment of building nuclear or coal or natural gas or anything else when, uh, perhaps 30% or 40% of the time it’s gonna have to sit there idle because it’s sunny.
It’s a, it’s a, it’s a problem that I don’t see an easy solution around.
[00:35:16] Mark Hinaman: Okay. Well, Larry, I, I’m very familiar with your part of the world and Hobbes and Lee and Eddie County in southeast New Mexico were incredible energy powerhouses, right? You’ve got WIPP there, URENCO, and then certainly the Delaware Basin and Central Basin platform to tons of energy infrastructure there.
But that’s not where the decisions in New Mexico are being made. It’s where a ton of the revenue for the state is coming from, but it’s not where the decisions are being made necessarily.
[00:35:44] Larry Scott: Is exactly correct. The decisions are made from the population centers along the Rio Grande corridor and those generally speaking. Are gonna be, uh, a very more environmentally conscious, uh, with respect to renewables than either the Southeast or the northwest.
[00:36:05] Mark Hinaman: Right. I think we should reframe this. ’cause just like I said earlier, it to me it’s environmentally ignorant to think that a more diffuse and less energy dense technology is better for the environment.
[00:36:17] Larry Scott: To being an adult in the room, you cannot run a mechanized society at any reasonable cost without having something available 24 7.
[00:36:33] Mark Hinaman: People understand that where it’s very cold often. But so how, how do we change this? What, what is, what would be a pathway to helping people realize that? Hey, you know, dispatchable power is really, really valuable. Energy dense fuels are awesome. How, how do we help convince people of that?
[00:36:54] Larry Scott: If I knew the answer to that question, I’d be a lot richer.
[00:37:00] Mark Hinaman: Like, I’d be doing it.
[00:37:01] Larry Scott: I’d already be doing it, and I’d be a lot richer than I am today.
[00:37:05] Mark Hinaman: Okay.
[00:37:06] James Strickler: Well, I’ll tell you what, mark, I’ve got, I’ve got some ideas on that. I have two, I have two beautiful daughters that married two Europeans, one in Ireland and one in Netherlands. And, and I had an opportunity to, to see firsthand their energy policies and they’ve been at abysmal failure. And we’re, you know, and we’re just repeating history.
The physics simply don’t Allow enough energy for wind and solar. And what makes wind and solar viable is natural gas to back it up because you can turn, turn on the natural gas electrical generation on and off. You can’t with nuclear or coal for example. And so I think we’re gonna wise up.
I, I think as the cost of energy goes up and up and up as it is in Europe, They’re going back to coal. They’re burning firewood. I mean it is, you know, they and they’re going to nuclear. I mean, that’s the way to go. I mean, and, and Finland just opened up a nuclear power plant. Of course, it, it was a large facility I think 1800 megawatts.
And unfortunately, it costs three times what it should have. And you’ve gotta get your cost containment down. But, I, I think the American people are gonna be sick and tired of paying high power and light bills and natural gas bills this winter alone in San Juan County. Our, our, our power and light bills and and gas bills almost doubled because there was kind of an energy shortage in San Juan County.
What happened was, California didn’t have enough gas storage and they had to buy on the spot market and the kind, the cost of of natural gas skyrocketed to an all time high. Now it’s dropped like a rock now, so everybody ought to get some benefits, but that four months it really hurt people and I think that’s gonna wake up.
The consumer’s gonna wake up. And we’re, we’re used to very affordable energy in this country that makes us competitive. China is going, you know, they’re going strong with coal. I mean, they have no, you know, no alternative. And they’re going with nuclear as well. Wind and solar, again, it’s, it’s, it’s just not helping China.
It’s just not adequate, you know? So I think the math is gonna help us. Maybe I’m, maybe I’m being overly optimistic, but, but anyway, people’s, people’s pocketbook is hurting right now.
[00:39:29] Mark Hinaman: Yeah, the, the people that I know that are. Plugged in in Europe. Yeah. Energy prices are extremely high and that has forced people to reconsider and become more energy literate about what it really takes to power the world and power humanity. And so I, while it’s a sad story and you wish that. You wouldn’t have to teach people this way.
Sometimes the most effective way to, to teach the child that the stove is hot is say, well, go ahead and touch it, you know? So, we’re, we’re a fan of Nuclear. And Larry, I know you said earlier that you don’t, you’re, you’re not optimistic on New Mexico bringing more into the state. But again, I’d like to just circle back to that, that, that seems very strange to me.
What would have to change in New Mexico for them to, to get behind this idea of, Hey, yeah, let’s convert some of these coal plants into nuclear plants? Let’s bring some micro reacts into the, to, into the oil field and power operations there. You know, what, what would, what would this take?
[00:40:32] Larry Scott: Well, there will have to be a shift, really a, a monumental shift in the regulatory environment, which I don’t see occurring until the lights go out. Now when that happens, The first cold winter day in Albuquerque with a blackout or a brownout may start changing some opinions, but I don’t see nuclear being an option in this state until something pretty dramatic occurs.
[00:41:09] Mark Hinaman: That’s tragic
[00:41:10] Larry Scott: I can’t disagree.
[00:41:11] Mark Hinaman: Yeah. ’cause you’ve got, you’ve literally got the birth and the, the long-term resting place of nuclear fuel there, meaning Urenco, where they enrich it, you know, and the waste isolation pilot project where they, they’re storing the spent nuclear fuel from the military and it’s like two demonstrations.
[00:41:29] Larry Scott: Well, and Urenco is creating these pellets that go into these fuel rods. So that’s the birth of the fuel system for the nuclear industry and those folks. Have absolutely been a, a magnificent addition to this community, and I wouldn’t think there would be. I can’t see any reason why whole tech at the other end of the cycle wouldn’t have been a great addition to the community also.
But there is a lot of animosity over past transgressions with respect to mining, with respect to the Trinity site. And those folks claiming they were damaged as down winders, uh, that is, uh, that’s a tough hill to climb. It’s gonna be difficult to overcome.
[00:42:20] Mark Hinaman: James, let’s, let’s talk a little bit about that. The Navajo Nation is closer to you, right? And there’s a lot, been a lot of, yeah, just, just like Larry said history that people feel like was unjust. In one way or another. Has that been your perspective, being local to kind of the Navajo nation with a lot of the mines and give, give me a little more.
[00:42:39] James Strickler: Yeah, the Navajo community has, has been adversely affected with all the, all the these 50 year old minds, 60 year old minds. Using poor technology, poor environmental controls, and it’s it is, it’s, it’s hurt those communities. You fast forward to today just like, you know, horizontal drilling and, and multi-stage hydraulic fracturing.
You know, it, it is just a game changer. And modern techniques to mine uranium is, is Is remarkably safer and better, but you got these legacy mine sites and need, they haven’t been cleaned up and they’ve caused some environmental harm and, and, you know they feel like they’ve been shortchanged and, and those remedies and that the government hasn’t done their job in cleaning this up.
And and that’s wrong. I mean they, they have, you know, the Navajo community have every right to be upset. And and so it is, it is a tough obstacle to overcome. And but it, but the success stories in Southeast New Mexico and the those facilities down there that, that they have demonstrated what, what you can do with the proper technology and engineering and so forth.
But these old legacy mines, they need to be cleaned up. And there is.
[00:44:01] Mark Hinaman: That’s, that’s been my perspective when I’ve studied it also. Yeah. Well, you know, so there’s a lot of old sites that haven’t. That they, they used old technologies or rudimentary, very elementary technologies, like literally pick and shovel and digging holes in the ground without any ventilation systems.
A lot of it without mechanistic extraction solutions without respirators. Right? And these, these are exposures to hazards that we know of and we’re aware of. And like you said, it needs to be cleaned up, but often if there’s not, A capital source or demand to clean it up to incentivize cleaning it up, then it, it doesn’t, right?
It just gets abandoned and I don’t know, I, I view. A revitalization of the nuclear industry as an opportunity to potentially help go and clean that up. Meaning like, oh, we know there’s a bunch of uranium here. Let’s invest more. And you know, if there’s a higher demand for this material, then we’ll be able to, to, you know, reclaim a lot of these old mines and clean it and m ine a lot more of it.
But would you agree?
[00:45:07] James Strickler: Mark, you’re exactly right. The, the, the challenge that the mining industry has not only, you know, not only uranium copper. Steel, whatever. It’s cheaper to do it internationally, you know, they, they not in my backyard. They, you know, we’ll, we’ll, we’ll get all the rare earth minerals we can from you know, third world countries and they don’t wanna develop our resources here.
Alaska is well, is rich in mine resources, rail, earth, mineral mineral resources, unfortunately I mean federal government owns most of those lands and and access is just not there. It, it is like Larry, Larry Scott said. It is just, you know, it’s just, it’s hard to go, it is hard to cut through the regulatory you know, environment and so there’s no, there’s no incentives to, to reclaim those old mines and, and and, and, and recycle that, those tailings and, and put it to beneficial use.
Creates a lot of good paying jobs. But the, the government’s in the way, un unfortunately, the federal government in this case.
[00:46:15] Mark Hinaman: Okay, so what, what can we do then to perhaps move towards, and I know, Larry, you kind of answered this, but you’re not sure if, if we knew then we’d, we’d be doing it already, but. Small steps. What, what can the world do to move, move this conversation in a positive direction?
[00:46:33] Larry Scott: I think it has start with the education system. We have to. Uh, educating teachers to the, to the benefits of reliable, inexpensive power and the pitfalls of, of having to rely on, uh, windmills and solar panels and, and the, the technical assessments have to be, Brought to the level that those folks can understand and articulate to their students, and you’re a generation away, I think, from having, uh, people that can understand all of the consequences of these, of these policies.
[00:47:29] Mark Hinaman: Education. I support education. What do you think, James?
[00:47:34] James Strickler: Well, there’s a lot of misinformation there. There’s a lot of fear and intimidation. I can’t tell you how many committee hearings and before the Energy committee that we’re all gonna die in 12 years. And I, you know, I, I just don’t think I mean, that’s, That’s ridiculous. We’re gonna die of a heart attack before we die of climate change or, or cancer, or, or, you know, God forbid, you know natural, you know, natural illnesses. And we it, it’s, it’s, it’s, it’s misinformation. It’s miseducation it’s scare tactics and it, it, we’ve gotta overcome that. That’s not easy. The the education community you know, they’re, you know, they’re bombarded with a lot of you know, woke, woke ideology, you know, and it’s it, it’s, it’s it’s hard to overcome, but we must, you know, as a nation, we have to come to our senses and become adults in the room.
[00:48:30] Larry Scott: Yeah. Part of the problem is if you, if you are a scientist that is representing that, you know, we really don’t have that bad a problem. There aren’t any research grants coming your way. These, these, uh, environmentalists that are, uh, advocating for, uh, dramatic reductions in c o two to save the planet, have turned these representations into profit centers.
They generate, uh, research dollars, and I think in many cases, uh, the goals and objectives aren’t actually objective. They favor worst case scenarios to generate more research dollars. I don’t know how you stop that. It’s the, the environmental calamity community has, uh, turned, uh, their concerns into profit motives.
[00:49:49] James Strickler: Well mark, I wanna say something positive. It that sometimes the environmental community, they, they kind of they pressed their luck a little bit and with this governor Michelle Luan, Grisham, I know there was some disputes she wanted the parties to come up with some solutions compromise.
The environmental community said no and. The governor told ’em to jump in the lake. And I, I’m just being kind in using those, you know, that description and so, you know, the pendulum was gonna swing. It, it, it will and, and I have to be optimistic. I have seven children and two are in the business and I have eight grandchildren.
One on the way. So, well, you know, let’s go. I’m, I’m, we, you know, we need to make sure they have a great future.
[00:50:34] Mark Hinaman: I like that. You know, so my, my dad was in the oil and gas business too, and he always said son, I don’t think I was smart enough to figure out how, how to get us off this rock, but I could at least kick the can down the road long enough, till someone smarter than me showed up and figured out how we could I.
And so, you know, it’s, it’s fitting that you talk about, you know, educating the next generation and your grandkids potentially solving the problem, right? And generating a solution that gets us to be even more prosperous than we are today. Obviously, you could see pictures in, in my background for those that are looking, looking on video, right?
I love space and thinking about how we can continue exploring and expl explore our planet and the universe, but. You know, that’s, that’s why I love energy and I, I love all that it does for humanity. So, why don’t you guys both leave us on an optimistic note, you know, and I know James, you kind of just did.
But what, what gives you hope when you look at the energy landscape today, what what makes you hopeful and optimistic about you know, we’re, we’re going to continue to keep the lights on and there’s, there’s a lot of promise for the future.
[00:51:35] James Strickler: Well, I think we need to have time to, to do a a viable energy transition. And you know, again, wind and solar is, is popular now and you need natural gas to back it up. And and so we’re in this together and we’re, we’re a large oil and gas producing state, second largest oil producing state, I don’t know ninth or 10th and, and gas production.
And so we need to take advantage of those assets and and, and. And hopefully nuclear will. It may, it may not be, be on the horizon here in San Juan County. But in other, other states, other friendlier states these small nuclear reactors may really be a game changer and give us that base load fuel that we need at affordable prices.
So we need cheap energy. That’s, that’s our claim to fame in the US and we, we don’t want to go in the other direction, so I think I think economics will prevail.
[00:52:28] Mark Hinaman: I like that answer. What about you, Larry?
[00:52:29] Larry Scott: Yeah, the, the pendulum has swung too far to the left and, eventually, The consequences of that swing will be realized. And once these policies hit deep enough into people’s pocketbooks, I believe it will start to swing back toward the middle. And I, uh, beyond that, I am not, uh, very optimistic and I hate to say that.
But fighting the fights that we fight daily in the, in the New Mexico legislature, it is, uh, it’s very discouraging.
[00:53:22] Mark Hinaman: Well, maybe next time I’m in Hobbs I can have lunch with you and we can, I can provide, tell you some stories that might give you some more hope so.
[00:53:29] Larry Scott: Alright. Love to do that, Mark.
[00:53:31] Mark Hinaman: Cool. Larry, James, or should I say Representative Scott? Representative Strickler, was
excellent to talk to you. I really appreciate it today. Thanks so much for the time, guys.
[00:53:39] Larry Scott: Okay, Mark, thank you.