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Top U.S. Gas Producer EQT Sees AI as Biggest New Source of Demand


These translations are done via Google Translate
  • EQT boss sees potential for AI data centers across Appalachia
  • US gas market may work through glut, spurring price volatility
A power substation near a data center in Ashburn, Virginia.
A power substation near a data center in Ashburn, Virginia. Photographer: Nathan Howard/Bloomberg
A power substation near a data center in Ashburn, Virginia.Photographer: Nathan Howard/Bloomberg

Data centers for artificial intelligence will comprise the biggest addition to US natural gas demand in coming years, according to the boss of the EQT Corp., the country’s largest producer of the fossil fuel.

US consumption has already soared over the past decade. Gas became the No. 1 power plant fuel after generators switched from coal, a dirtier source of energy. The start-up of export facilities on the Gulf Coast also added major new customers outside the US.

But AI may deliver a more sudden and dramatic jolt to US energy markets. The immense scale of the power needed to run planned data centers that train or execute AI capabilities has become a major narrative for both the energy and tech industries this year. The extent of tech companies’ needs was highlighted last week when Microsoft struck an unprecedented two-decade deal to purchase electricity from a restarted Three Mile Island nuclear plant in Pennsylvania.

AI-related electricity demand is expected to translate to between 6 billion to 13 billion cubic feet of gas a day in the short term, Toby Rice, EQT’s chief executive officer, said Tuesday. That compares with current total US consumption of just over 100 billion cubic feet a day.

AI Poised to Drive Up Power-Plant Demand for Gas Even More

Generators are the biggest US natural gas users in 2024 estimates

Source: US Energy Information AdministrationNote: EIA data show gross exports; other category includes vehicle, pipeline, lease and plant fuel uses

Rice says EQT can tap new customers in Virginia, the hottest data center market in country. His company’s Mountain Valley Pipeline went into service earlier this year, bringing gas from the Marcellus shale basin into the state, a favored location for tech companies like Amazon.

He sees similar opportunities in the southeast of the country, and added that tech companies are also looking nearer to EQT’s home town of Pittsburgh as well as Ohio and West Virginia. The region already has power-related infrastructure.

“People are looking for gigawatt-type scale footprints,” Rice said in an interview in New York. “We’ve got a lot of these retired coal facilities that have existing electric infrastructure already built. You just need to put in the power plant, switch that coal with natural gas and it could be a faster opportunity.”

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For all the transformative talk surrounding AI and energy, US gas prices have been subdued over the past two years. Current benchmark gas futures trade at around $2.50 per million British thermal units.

In the near-term, prices are likely to stay range-bound at $2 to $3 because of the oversupply that followed the mild weather last winter, according to Rice. It will take about six months to work through the glut, he said, assuming temperatures revert to normal next winter.

If prices do rally, the EQT boss warns of possible spikes similar to those seen in 2022, when futures exceeded $10 after the invasion of Ukraine sparked turmoil in global energy markets.

One reason for his view is the changing make-up of US power supply. Many power stations would previously have been able to change over to burning coal when gas prices jumped. But a lot of those facilities have made a permanent switch to gas in recent years.

That means gas prices that would have been capped at $5 can now potentially bounce from $2 to as much as $9, a level that would force factories and other industrial users to curtail operations, Rice said. Regional variations could be even more extreme, he added, with pipeline constraints pushing gas in New York or Boston to as much as $20. “Buckle up for volatility,” Rice said.

Gas traders will be watching EQT if such a rally does become reality. The company has actively curtailed its production in response to the recent price slump, but it can bring volume back online within hours, if desired. Rice estimates daily US gas production at about 101 billion cubic feet a day with a further 1 billion to 2 billion cubic feet that could be put back online over a short period. EQT accounts for about 1 billion cubic feet of curtailed volume, he said.

The marginal cost to bring new production in the US online is about $3.50 per million BTU at the benchmark Henry Hub delivery point, according to Rice. Right now, it looks like producers may want to hold back some activity in 2025 as futures prices for next year are trading below that level, he said.

EQT’s own break-even point is $2, which Rice described as a “stress case scenario” that allows the company to cover drilling and operational costs and still generate free cash flow. He added that such a low breakeven minimizes the need to hedge.



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