Chevron, Cheniere Confident Nat Gas Demand Will Boom

Giant Chevron and mid-cap Cheniere have said they are bullish on natural gas demand, which Chevron CEO Mike Wirth says he expects to beat expectations due to surging electricity consumption from big tech. 

Speaking to CNBC on Monday, Wirth said that while the market for natural gas was evolving rapidly, making it difficult to pin down, he expects soaring electricity consumption from artificial intelligence (AI) and data centers, combined with efforts to electrify the American vehicle fleet and manufacturing, to spur global natural gas demand, which he predicts “is likely to be higher than what people have been estimating up until now”.  

Chevron is counting on wind and solar power to remain lacking in terms of meeting peak demand needs due to their reliance on weather conditions. 

“Data centers don’t shut down when the sun goes down,” Wirth told CNBC, adding, “We need to have the ability to provide baseload supply for all of these needs. I think natural gas will be a big part of that equation going forward.”

At the same time, Cheniere Energy, the top producer of liquefied natural gas (LNG) in the United States, sees strong global demand for natural gas in the future, and a coming supply wave. 

During Q1 earnings reporting, Cheniere noted an estimated 200 million tonnes of annual LNG output capacity set to come online after 2025. 

Last Friday, Cheniere beat adjusted core profit estimates due to high-than-expected export volumes that worked to counteract falling natural gas prices. 

Back in January, Cheniere predicted that China’s demand for LNG exports could double over the next decade, as reported by the South China Morning Post (SCMP). 

In the U.S., electricity demand is expected to soar by up to 20% by 2030, based on April data from Wells Fargo, with natural gas demand potentially increasing by 10 billion cubic feet per day as a result. 

Additionally, Goldman Sachs predicts that natural gas will account for 60% of new electricity demand from data centers, compared to estimated 40% market share for renewables, with gas pipeline operators to benefit significantly.

By Charles Kennedy for Oilprice.com

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