AI Could Power Huge Demand for Natural Gas by 2030
The demand for natural gas is on the rise, with Kinder Morgan anticipating substantial growth in the country by 2030. One of the major catalysts for this growth is the increasing demand for liquified natural gas (LNG) due to exports, which could more than double. Similarly, shipments to Mexico are expected to increase by over 50%.
Apart from these factors, additional demand drivers like artificial intelligence (AI) operations, cryptocurrency mining, and data centers are expected to contribute to the growing demand for natural gas. Kinder Morgan’s Executive Chairman, Richard Kinder, highlighted the significance of AI in driving the need for electric power, especially with the increasing demand for new data centers required to support AI applications.
According to Kinder, projections suggest that electric demand from data centers will grow at a compound annual rate of 13% to 15% through 2030. With data centers consuming a significant portion of electricity, the demand for natural gas to support AI operations is expected to increase significantly. He emphasized that while renewable energy will play a role in powering data centers, natural gas will be essential due to the need for uninterrupted power.
Given the energy-intensive nature of AI operations, natural gas is expected to play a crucial role in power generation for years to come. This growing demand for natural gas is poised to benefit Kinder Morgan, a leading natural gas pipeline giant, by driving the need for more natural gas power plants. This increase in demand is expected to boost volumes across Kinder Morgan’s pipelines, leading to higher rates and new expansion opportunities, ultimately growing the company’s cash flow.
Furthermore, Kinder Morgan has a growing backlog of capital projects, with a focus on supporting lower-carbon fuels like natural gas. The company expects to invest significantly in growth-capital projects in the near term, driven by the forecasted robust growth in natural gas demand and the increasing need for lower-carbon energy infrastructure to support renewable fuels, renewable natural gas, and carbon capture and storage.
In conclusion, the rise of AI applications is expected to fuel a significant demand for electricity, which will require natural gas to meet the growing energy needs. Kinder Morgan stands to benefit from this trend through increased demand for natural gas for power generation, providing investors with a potentially compelling opportunity to capitalize on the AI megatrend.
