[Music] Welcome to the Energy Solutions podcast. I'm Todd Snitchler, president and CEO of the Electric Power Supply Association. Joining me today is Senator Alan Armstrong of Oklahoma. Before joining the US Senate earlier this year, Senator Armstrong spent decades in the energy industry, including nearly 15 years as president and CEO of Williams, where he helped oversee the growth of one of the nation's leading natural gas infrastructure companies. Today, he's brought that experience to Condis, where he's focused on one of the most consequential energy policy issues facing our country: permitting reform. As electricity demand continues to grow, the United States will need to build new generation and other critical infrastructure more quickly and efficiently. Competitive power suppliers are responding to this new era of demand growth, investing in tens of gigawatts of potential new power supply. But policy barriers and rising construction costs, in addition to supply chain delays to secure critical equipment, are keeping those investment dollars from turning into operational generation quickly. Modernizing the permitting process will be essential to supporting investment, strengthening reliability, and ensuring the nation can meet our future energy needs. In this episode, Senator Armstrong discusses his transition from the private sector to public service, reflects on the lessons of the shale revolution, and shares why he believes permitting reform is critical to America's ability to build the infrastructure needed to power continued [music] economic growth. Here, their conversation.
Senator Armstrong, thanks for joining us today on our podcast here at EPSA. And for listeners that may not be familiar with your background, I'd like to start there so people can understand a little bit about where you're coming from. Before you joined the Senate a few months ago, you spent decades at Williams, one of the nation's leading natural gas pipeline companies, including nearly 15 years as the CEO. Can you tell us a little bit about your career and what drew you to the energy industry and then ultimately what led you to public service?
Well, interestingly enough, I'd always been attracted to big construction projects early in my career. So, I was a civil engineer and was always kind of fascinated with what humans could do together to build large scale infrastructure. And so, I started off as an engineer with Williams and worked on a number of large projects for them. And over time, I just saw how kind of nonproductive a lot of the permitting processes had become. They weren't really any longer protecting the environment the way we had intended for them to be. They just were really handles on the ability to stop projects and often actually reduced the innovation and the ability to work with communities and landowners to actually protect the environment. And so it felt like something that had started off to be a way to protect the environment coming out of the 70s, it actually started turning into something that really prevented companies from being innovative and smart. I think that's a weird place for our country to be when it really needs to be building itself out right now.
The world has changed a bit in the last 15 years and I think we're facing a whole different set of challenges as you note. So building on that, you've kind of got a unique perspective of one of the more transformative events over the last, we'll call it 50 years, which was the shale gas revolution. And for those that may not be familiar, all the way back in the '90s, the US supply and the role of natural gas played a very different role than it does today. And as that unfolded and as natural gas became both more affordable and more abundant, it's kind of transformed the economy. So as you look at that from your prior experience, kind of talk to us a little bit about what was the state of the world then and kind of where are we now? What has that evolution enabled and how has that actually gotten us to a place where we're having far different conversations about abundance as opposed to scarcity? And you were kind of on the front lines of that. We'd love to hear your perspective about how we got there from here.
It's a great point and if you roll the clock all the way back to the Jimmy Carter days, which was, you know, prior to my career starting, but nevertheless had a lot of implications for the natural gas industry at the time. Recall that we actually had a law banning being able to use natural gas for power generation because we felt like it was too precious of a commodity and we wanted to keep it for industry and for home heating. So, that was kind of where we came out of. And as we started to be able to develop the shale resource and realize that we actually had an abundance of it, it was kind of amazing if you think about how low cost natural gas is today and has remained low cost for quite some time, and really has made its way into the market not because of regulation but because of how low cost it's been. And that we've had that just because we've figured out how to get gas out of the ground, you know, at a lower and lower cost. I think for the last decade there's been this debate around well gosh well we've lowered the cost but no way can this curve of lower cost continue, right?
And surprisingly, you know, it has and I think it's one of the things that our nation, you know, we don't kind of stand back and give the independent producers of our nation the credit they deserve because their ability to continue to keep the cost of production lower and lower and lower with fantastic technology that they've deployed over and over, is really something that has continued to make America the powerhouse that it is and we just don't want to pat ourselves on the back for that. You know, and particularly the independent producers of our country have provided a lot for us but they find themselves constantly having to defend what they do. And in reality, love to see, you know, just for a day or two see what the picture would look like without the benefit of what our independent producers have done here for our country. So that's the good news is that we have a lot of low-cost resources and great technology been held here. I always like to tell the story when I think about technology and how we've gotten here. When I first came in as CEO as Williams, we were looking at spinning out our E&P operations. Today that's part of Devon and now merged with Coterra, but at the time it was WPX. And we spun it out in a tax-free spin-off to our shareholders and prior to that though we were looking at alternatives and the Chinese National Petroleum Corp was very interested in forming a partnership with us.
And they truly thought that we had this, you know, back then it was directional drilling, there was definitely hydraulic fracturing, but it's not the same kind of long lateral that we have today. But nevertheless, you know, new technology. It was producing a lot of new gas in places that we hadn't thought we had, particularly in the Rockies. And Williams was a leader in that space. The Chinese National Petroleum Corp had us over there. They had us at the negotiating table. And one of the things they were insisting on was that the drilling activity would be directed from Beijing. And so we had to end the talks over me telling them that we're not going to do this because you're not going to be happy and we're not going to be happy, right, as partners. You're going to ruin what we've learned to do as a country, which is really push those decisions of how we get better every day, push that down to the lowest level. And so it really made me proud to be an American and realize we do have something that's pretty hard to replicate culturally, which is our capitalism and our incentive compensation that we push down in our organizations as a form to make sure we're bringing the best ideas forward in our companies. And that was so foreign to them and so distrusted. They truly thought we just had this, you know, the recipe to Kentucky Fried Chicken hanging around. All we had to do was get that. And so anyway, I think really telling about what has made the US great in this area. And it's a success story that I think we don't celebrate enough here, frankly, as a country.
Well, there's a lot of great lessons to unpack there. And I wish we had more time to do that, but we'll save that for a future time when you're retired from your active political career. We'll come back to that. So, as you noted at the outset, you've been here in the Senate for a few months now. You were appointed and unique to Oklahoma law, you can't run for reelection and so you've come to DC as a short-timer, which is kind of unusual. Not everybody makes that choice. So before we dig into the Senate negotiations and kind of permitting generally, is there anything in particular that surprised you as someone who came into the Senate from outside and has had to kind of learn the ropes quick, fast, and in a hurry?
Yeah, boy, that's a very long list of things that have surprised me. I would say we generally on the outside don't understand how the jurisdictions of committees work and how hard it is to actually get a bill introduced to the floor even when there is support amongst members of the Senate on both sides of the aisle for the issue. And so that's been probably the most surprising to me is how much real genuine support there is within the Senate for getting a permitting bill done, but how difficult it is because of leadership particularly on the minority side that in this case just don't want to see anything positive done in the short term. So but not understanding how really, really difficult it is to get a bill pushed forward. I could understand it if people said, 'Well, this isn't interesting. It's not important and we're not going to give it any time.' Sure. But that's really not the case here. And so that's probably been the most surprising thing to me. And as well, how much of the floor time for the Senate is tied up in cloture motions for nominations, which really these days consumes a tremendous amount of floor time. And yet, if you went to the Senate floor right now, I just came back from presiding, you know, a little while ago, there's not much going on there, but there's been a motion, there's been a cloture motion, and so it has to be out there for a certain amount of time. So, I would just say it's the procedures, the process that have been set up over time, and each party finds ways to try to slow the other party down on a regular basis, unfortunately. So, that's probably been the most surprising thing to me.
Yeah. The reputation as the world's most deliberative body apparently is very well earned.
If there truly was good debate and deliberation going on, I would respect that, but that's generally not the case.
Not where we are.
So, since coming to DC, is this what you would say that you've observed is the greatest barrier to doing big things? We've got some big challenges in front of us as a nation, and so I think we've got to think bigger and try to respond thoughtfully to answer those questions. Is this part of or is this the biggest barrier you see actually getting to the big things and getting them done?
Yeah. You know, the fascinating thing to me and I think it would surprise most people is there's not that much debate around the content. We put out a bill called the American Energy and Minerals Infrastructure Act and I think there's not that much argument on what needs to be done between party and within party. I mean, there's some argument about exactly how it should be done, but the key elements are really fairly agreed to. And some of that's because some of the great work that the House did. Sure. You know, folks like Bruce Westerman and Chairman Guthrie, both a lot of great work that's come out from the House, but there's just not that much argument about what needs to be done. And there's just argument about whether or not we can get it to the floor and particularly, you know, held up in committee. For instance, one of the big arguments is, well, from the minorities, we're not going to support doing anything because we've had our toes stepped on so hard by the administration on offshore wind and therefore we're not going to do anything. And my argument to that keeps being, well, this is our opportunity to legislate against that, right? If you don't like that happening, we should be legislating against that. And by the way, don't think you're the only person that's ever had your project stopped by the government. You probably got toes that are recovering from bruises as well, right? And so I said, you know, we need to rise above that and really work to legislate on this. So I hear that and I hear the emotion and the passion behind that, but I don't understand the logic behind it.
So maybe the hardest question I'll ask you today is in light of all that, are you optimistic that we can get bipartisan agreement on an issue like this? We'll talk about permitting in a minute, but on some of these big issues, is it possible to get that bipartisan collaboration? Because I think that's what makes it durable, right? If you pass a law, you've got to have bipartisan support that keeps everybody invested. Do you see it that way and do you think you're optimistic?
I think that so far while I've been here, it has been quite a bit of pushback on building support behind the bill we've rolled out because the committees keep saying, 'Well, we're going to do our bill and then you'll need to get in line and get on board with that,' which I'm not at all opposed to. I'd love to have an argument over the content of that bill. But we still sit here and, you know, don't have that. I remain hopeful and, you know, good, honest people continue to tell me that they think something will be coming out. So, I remain hopeful on that front that we'll see a bill come out here hopefully at the very beginning of the September session. So, that's my hope at this point, but it's frustrating to me that we're not in a position where we can actually have an active debate about the content of a bill that would come out of EPW and ENR.
Yeah. And just so listeners are clear, we were supportive of your legislation. So, we thank you for your work on that and are hopeful that we get something moving. So now the centerpiece of the work you're doing is on permitting and siting reform. You've been very clear from the outset. This is the one thing that you wanted to focus on. It's going to be the main objective of your limited time in office and while I try to be an optimist as you do and we've been vocal in supporting meaningful permitting reform, are you confident? Are you quasi-confident? Are you not confident at all?
On a scale of 1 to 10, I would say, you know, probably an eight on something coming out. Now, if you said, 'Well, is it meaningful and is it going to really address some of the critical issues?' I'm probably a six.
Yeah. So, that's sort of a quiet win. So, maybe the other way to ask the question, and you've been on the other side of this, is if the permitting deal can't be reached, I mean, what are the risks to the nation? What do we face if we continue to be burdened by, as you know, these outdated and inefficient permitting processes? And there are a lot of them. What's the negative side if we don't try to fix it?
You know, I think that people really better stand up and pay attention. We inherited a nation that we've built out great infrastructure, you know, over the years. And our generation has been the beneficiaries of great work before us that built out this great infrastructure. Sure. And yet today, I think we as the public have become very complacent and very concerned about what it's going to do to me personally and always feeling like that we're better off if we just stop this project. In fact, Jane Kleeb with the Bold Alliance came out here. She was in a Politico interview here a week and a half or so ago and she said it's never been so easy to be relevant as it is blocking data centers right now.
Number one. And number two, in her 20 years of doing this, she's never seen it so easy to block projects versus build projects.
