Jordan Blum, editorial director, Hart Energy: We are here at NAPE in downtown Houston. I'm joined by Arjun Murti, the partner at Veriten. Thank you so much for joining us. You're talking about all things energy transition, energy evolution, where are we in the transition?

Arjun Murti, partner, Veriten: I joined Veriten and I’ve had this perspective that the energy transition is on track to be very messy, that a mixture of unrealistic policy aspirations and unappreciation or under appreciation for the significant energy needs of the rest of the world and how you go about meeting it is going to lead to a very messy energy environment. I think that's been playing out. I think we're in the early days of trying to get things back on track and having healthier policies and a healthier discussion, but we're coming off the bottom here, so it's still a pretty challenging time in this whole energy transition narrative.

JB: So obviously being at NAPE, there's a lot of bullishness still on fossil fuels on oil and gas. You were saying yourself that LNG is not a transition fuel, but where do you feel right now in terms of bullishness on crude oil versus natural gas? Obviously they both have futures, but which one has the longer lifespan, so to speak?

AM: I don't think we know. My standard line at this point is I don't think there's a decade, let alone a year, where we know either crude oil or natural gas is going to peak, and I think they all have their pros and cons. Where I am optimistic is that there's a substantial unmet energy need for really the other 7 billion people on earth that are not amongst, I call it the lucky 1 billion of us in the U.S., Western Europe, Canada and a few other places. They're using a fraction of the energy we use, and they're frankly going to need all sources of energy: crude oil, natural gas, they're going to be using coal and they're going to care about renewables and electric vehicles (EV). Especially if a country or a region doesn't have as much crude oil for geopolitical reasons for security supply, they're going to try to do new stuff. So I think I'm personally bullish on all of it, and I think there's a big role to play for the traditional oil and gas business in meeting the world's energy needs.

JB: And you do see a lot of LNG growth in this country. Do you see that continuing, even though there is a so-called pause on permitting right now?

AM: We've had substantial LNG growth to date. I'm not a fan of the pause, but I think it deserves a little more of a discussion. We don't need LNG to become part of the culture war. I mean, I think most Americans have never frankly heard of LNG. So the idea that somehow this permit pause is going to make the New York Times headlines, it's not a good development from the perspective of keeping things policy and what's best for our country, what's best for the world type perspective. The reality is there are a lot of projects in the queue. A lot of them weren't going to go forward anyway. There certainly are companies and industries within America who would rather us not export LNG. So there's going to be petrochemical and power generation folks who might prefer that we have an oversupply of natural gas here. I think ultimately it's going to be inevitable that we export LNG out of this country. I think it's a good thing for America. I think there's plentiful natural gas supply domestically to meet all of our needs and I think will help the rest of the world to meet their needs with our LNG.

JB: I heard you complimented Chesapeake Energy and their acquisitiveness, so I think that's fair to say you're pretty confident about the future of natural gas here.

AM: Yeah, so the LNG business specifically has historically been the domain of the largest companies, and I think that's still the case. I think the question is if you've traditionally been a domestic gas producer like Chesapeake with Southwestern, EQT is another one, and a handful of others. Their current size is probably not quite big enough to truly compete on a global basis where with LNG, you're going to need projects in different countries, you're going to need ships, you're going to need import terminals and that requires a big balance sheet. I think the Southwestern merger with Chesapeake is a good step in the right direction to having a more substantial company. What I liked about it, what I talked about in my speeches, is it's one of the first examples of recent M&A that I think goes on the offense to make a better company, to participate in the future energy needs of the world versus one that's more defensive in nature that says, well, we have to fix our balance sheet or cost cut, and there may be some of that with this merger, but I really appreciated how the management teams of both companies talked about helping the world meet its LNG and natural gas needs, and they'll have a better chance to do it as a bigger company.

JB: Very good. On the other side of the coin, and this maybe impacts crude oil a bit more, you talked about EV adoption is slower in the U.S. but you said Norway is the canary in the coal mine, China is maybe approaching an S-curve. Can I get you to elaborate a bit there?

AM: I think there's this simple notion that a lot of people who aren't energy experts have is that the way to replace oil is to do it with electric vehicles. Gasoline, which is what we drive our cars with, is about 25% of the oil demand barrel. So even if you had 100% EVs, you still have diesel, jet fuel, LPG, petrochemicals, all these other uses of oil that aren't addressed. I think the idea that EVs are the be all that ends all, first there's a lot of questions on how you source copper and critical minerals, of course you think are more carbon intensive, ironically enough to begin with. To me it's going to boil down to geopolitical security. So the countries where you've had more of an EV S-curve is actually Norway and China. And in the case of Norway, they have reduced their gasoline demand by using EVs, but the rest of their demand has actually gone up so that their overall demand is about flat.

And it just to me is the proof, or at least an early anecdote perhaps is the better way to say it, that simply displacing gasoline cars with EVs is not necessarily going to kill your overall oil demand. I'd say in China's case, there's a strong geopolitical imperative to not continue to import even more oil than they already do. They're the largest oil importer, 11 MMbbl/d. They're only at 4 bbls of oil consumption per capita, we're at 20 bbls, most of the rich world is at 13 bbl, so they've got a long way to go to become truly rich, and I think they're going to try their hardest to find alternatives to oil and natural gas. And that to me is the role and opportunity for new energies.

If you're a developing country and you are not long crude oil or natural gas yourself, you're going to try your hardest to do this other stuff for geopolitical reasons. And that's where I think LNG does play a role, but EVs and a whole bunch of new technologies have a bright future in a lot of these places.

JB: Thank you so much for joining us here at NAPE. I really appreciate it. To read and watch more, please visit online at hartenergy.com.

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