Natural Gas in the AI Era: Future Prospects

AI in optimizing natural gas operations

AI is driving significant new natural gas demand, particularly for electric generation in AI operations, data centers, and cryptocurrency mining. Projections indicate AI-related demand could account for 15% of total demand by 2030, potentially adding 7 to 10 Bcf per day.

"We are also anticipating significant new natural gas demand for electric generation associated with artificial intelligence operations, cryptocurrency mining, data centers and industrial re-shoring, which would be additive to the growth discussed above," continued Dang." --- (KMI, press release, 2024/07/17)

"AI demand alone is projected at about 15% of demand in 2030. If just 40% of that AI demand is served by natural gas that would result in incremental demand of 7 to 10 Bcf a day." --- (KMI, earning call, 2024/Q1)

"We are also anticipating significant new natural gas demand for electric generation associated with artificial intelligence operations, crypto currency mining and data centers, which would be additive to the growth discussed above," continued Dang." --- (KMI, press release, 2024/04/17)

"And that doesn't include the anticipated substantial increase in gas demand from power associated with AI and data centers that Rich just mentioned, estimates we've seen range anywhere from 3 Bcf to over 10 Bcf and we've seen some estimates as high as 16 Bcf." --- (KMI, earning call, 2024/Q1)

AI-driven demand forecasting for natural gas

AI-driven demand forecasting for natural gas incorporates variables like climate policies, energy efficiency, and price responses (CVX). It also accounts for significant growth from data centers and AI demand (KMI), while considering seasonal supply, demand, and infrastructure conditions (CVX).

"These forecasts reflect estimates of long-range effects from climate change-related policy actions, such as electric vehicle and renewable fuel penetration, energy efficiency standards, and demand response to oil and natural gas prices." --- (CVX, sec filing, 2024/Q1)

"Just to get to the 20 Bcf of growth that we've been talking about before you add on top of that, what all the data center and AI demand growth numbers that we talked about." --- (KMI, earning call, 2024/Q1)

"Price changes for natural gas are also impacted by seasonal supply, demand and infrastructure conditions in regional and local markets." --- (CVX, sec filing, 2024/Q1)

Investment trends in AI for natural gas

Chevron is actively investing in AI for natural gas, focusing on developing new technologies and materials. They have committed $500 million through their Future Energy Fund III to support innovative energy businesses, potentially including AI advancements.

"What we're doing in our venture investing is trying to develop these new technologies, new materials, new novel ways to integrate AI and other kinds of technology systems to help solve some of these problems." --- (CVX, earning call, 2024/Q1)

"We have committed to investing $500 million in innovative energy businesses through Chevron Technology Ventures' Future Energy Fund III." --- (CVX, Twitter, 2024/05/01)

Regulatory changes impacting AI adoption in natural gas

Regulatory changes, including jurisdiction-specific policies, political developments, and the overturning of the Chevron doctrine, significantly impact AI adoption in the natural gas sector by affecting technological advancements, permitting processes, and compliance requirements.

"Implementation of jurisdiction-specific policies and programs can be dependent on, and can affect the pace of, technological advancements, the granting of necessary permits by governing authorities, the availability and acceptability of cost-effective, verifiable carbon credits, the availability of suppliers that can meet our sustainability-related standards, evolving regulatory or other requirements affecting ESG standards or other disclosures, and evolving standards for tracking, reporting, marketing and advertising relating to emissions and emission reductions and removals." --- (CVX, sec filing, 2024/Q1)

"Actual future results, including project plans, schedules, initial capacities, production rates, and resource recoveries could differ materially due to: changes in market conditions affecting the oil and gas industry or long-term oil and gas price levels; political or regulatory developments including obtaining necessary regulatory permits; reservoir performance; the outcome of future exploration efforts; timely completion of development and construction projects; technical or operating factors; and other factors cited under the caption 'Factors Affecting Future Results' on the Investors page of our website at exxonmobil.com and under Item 1A." --- (XOM, press release, 2024/04/12)

"compliance. And in the interim, we've got a presidential election. The overturning of the Chevron doctrine, which gave deference to regulatory agencies when the law is not clear is also a positive." --- (KMI, earning call, 2024/Q2)