AI energy needs will drive natural gas demand: EQT CEO

Global gas demand is forecasted to grow by 2.5% in 2024, according to the International Energy Agency. With energy demand rising globally, sources like natural gas are expected to be in high demand. EQT (EQT) CEO Toby Rice joins to discuss this development.

Rice highlights that the AI revolution has led to increased energy use. He projects that power energy demand will increase by over 75 gigawatts, with a majority of it powered by natural gas.

"It's never been a more important time to produce energy in this country, whether it's LNG to secure our allies or feed our tech customers in the AI boom. Unfortunately, it's never been more difficult to produce energy in this country. This is something we need to fix," he tells Yahoo Finance, advocating for political reform to ease this pressure.

Regarding natural gas, Rice describes this form of energy as "unique." He emphasizes that it provides security through "affordable and reliable energy," while also contributing to global decarbonization efforts. He predicts that natural gas will meet "a major league energy demand that's coming to this country."

"We need to be moving towards a 'best of the above' approach towards energy, and that means the most reliable, cleanest, most affordable source. As history has shown, that has proven to be natural gas," he tells Yahoo Finance.

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This post was written by Angel Smith

Video Transcript

In 2024 global gas demand is forecast to grow by 2.5% according to the International Energy Agency in even greater demand may be waiting in the wings beyond this year for natural gas.

EQT, one of the largest producers of NAT gas in the US points to A I fueling demand for the comity.

And Toby reqt CEO is joining us now to discuss, you know, we have been talking a lot about the increased demand for electricity that's gonna be fueled by A I and by data centers.

So Toby talk to me about what that means for natural gas specifically.

Well, it's pretty remarkable after decades of stagnant power generation, we're gonna actually see low growth increase in this country for the first time in decades.

Um Thanks to this A I revolution that's taking place.

Our view is that we're going to see power generation demand needs increase over 75 gigawatts.

And according to some estimates, you know, Goldman Sachs has said that 60% of that is going to be powered with natural gas, that means potentially 6 to 13 BC fa day.

More natural gas is going to be needed.

And when you compare that to the LNG story where we're gonna see an incremental 15 BC FA day of natural gas needed to feed our LNG.

And you can, and you also add in the 15 BC fa day of coal that's remaining to be replaced.

There's a tremendous amount of demand for natural gas.

The good news is we've got that resource here in the United States.

The question is, can we get it out of the ground through the pipelines to these customers that need it?

So what's the answer to that, Toby?

Well, it's, it's never been a more important time to produce energy in this country.

Um As I just mentioned, whether it's LNG to secure our allies or to feed our, our, our tech customers in the A IA I boom.

Uh Unfortunately, it's never been more difficult to produce energy in this country.

This is something we need to fix.

We built fewer miles of pipelines last year on an annual basis than we had in the prior 30 years.

The last big pipeline that got built required an act of Congress uh to get to get constructed.

That was Mountain Valley pipeline.

And I've got news for you.

If you think building a pipeline is difficult, try building a transmission line.

If you think it's hard to build a five acre oil and gas location, try building a 5000 acre wind farm or solar facility.

So we need to get back to a place where we get things built in this country.

And that means that political force needs to take a backseat and let market forces come back and start driving to make, make sure that the cleanest, most reliable, most affordable energy makes its way to the marketplace.

Um You know, it may seem difficult but people need to understand uh permit reform is completely within our control.

We just need leaders that will prioritize, you know, affordable, clean, reliable energy Toby guess what market forces sometimes are political forces.

They come together.

I mean, look at many of these large tech companies that are building these data centers.

Um They want it to be the wind farm, they want it to be in the case of Microsoft, the restarting of the nuclear plant and, and to your point, yes, these are sometimes difficult to construct, but that's a market force.

These large cap, these large tech companies want renewables.

So I wonder if that is going to be a limiting factor at all for the demand for natural gas specifically to power those types of facilities.

Well, we could look at the history of power demand generation in this country.

It's come from natural gas, a very large percentage of that.

You know, the reason why the United States is the world leader in lowering global emissions.

It wasn't renewables, it was actually natural gas replacing coal.

So this natural gas is a really unique.

Um story where you can both provide the energy security that you get by having affordable and reliable uh energy while also decarbonizing the world by replacing, you know, higher carbon intensity uh fuel such as coal.

So we think that regardless of your preference, this is a major league energy uh demand that's coming to this country and it is to require all of the above types of energy to meet this need.

But if we care about meeting these climate goals, on the timeline that the public has, if we care about protecting the 60% of Americans that are living paycheck to paycheck, that cannot withstand any more of this, this energy uh price shock, energy prices to Americans are up 35% over the last few years.

By the way, if we want to protect these people and meet these goals, staying in an all of the above situation for energy is not going to be good enough.

We need to be moving to a best of the above approach towards energy and that means the most reliable, cleanest, most affordable.

And uh as history has shown that has proven to be natural gas and the speed at which we can move is I think an and also uh pretty amazing force so that that affordability may be great for the end consumer.

It's not as great for you Toby when it comes to profitability, right?

So I am curious what you expect on the pricing front.

Um how much movement you expect from the some of these new sources of demand?

Well, what's really amazing, uh We have a tremendous opportunity where we can lower costs for customers.

And that doesn't mean that the natural gas producer like EQT is going to be giving up uh any of that profitability because when you realize this energy ecosystem that we live in has created a ton of bottlenecks that are in between, you know, affordable energy that we're producing here in Pennsylvania and consuming uh customers across the east coast.

It's just an example of some of these bottlenecks and how extreme they've gotten because of our inability to build pipelines.

I'll be selling gas in Appalachia uh this winter for about $4 and people in Boston uh will be paying 10 to $20 for that natural gas that uh is, is purely a symptom of not having enough pipelines.

And if you get these pipelines built, we can lower costs for consumers and give us an opportunity to produce more of that energy.

And, and it's a great win win situation.

But um we're gonna need to have some leaders that start prioritizing uh and balancing the needs of all consumers, not just prioritizing uh the environmental benefits.