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AI Technology Set to Boost U.S. Natural Gas Demand

U.S. natural gas producers believe they have a role to play in providing gas for the soaring power demand from data centers and AI technologies.

While most large technology corporations seek solar or wind capacities to power their AI developments and data centers, renewables alone would not be enough to cover the growing demand for electricity, executives have told the Financial Times.

Natural gas, which currently meets 43.1% of U.S. utility-scale electricity generation, will continue to meet a large part of American power demand as new renewables capacity installations will need backup power generation, according to gas industry executives.  

“We’ve got a really amazing emerging market with LNG,” Toby Rice, chief executive at the top U.S. natural gas producer, EQT, told FT.

“But there’s a new emerging market that people are getting equally as excited about — and it’s power demand.”

So great is electricity consumption from data centers that U.S. utilities and regulators have raised significantly their forecasts for peak power demand in the coming decade.  

After more than a decade of flatlining power consumption in America, the AI boom and the chip and other tech manufacturing are leading to higher U.S. electricity demand.

Consulting firm Grid Strategies published a report earlier this year analyzing data from utilities' regulatory findings. The analysis found that over the past year, grid planners nearly doubled the 5-year load growth forecast, the key drivers being investment in new manufacturing, industrial, and data center facilities.

“The U.S. electric grid is not prepared for significant load growth,” Grid Strategies said in the report, noting that a recent “surge in data center and industrial development caused sudden, shockingly large increases in 5-year load growth expectations.”

The top executives at U.S. natural gas producers see the rising power demand and the LNG export boom as the two key factors that will keep their product in demand for years to come.


By Tsvetana Paraskova for Oilprice.com

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