Fueling the Future: How Natural Gas Is Powering America’s AI Revolution | EQT

Yeah, that's right. So EQT has been around for over a hundred years. It started as a natural gas provider to the city of Pittsburgh, was an integrated energy business providing downstream services on the gas utility side, pipelines, and then the upstream business. I sold my business, Rice Energy, to EQT in 2017. And the combination of Rice Energy and EQT is what created America's largest natural gas producer. I came back about a year later to become the CEO of EQT after a proxy contest, and ever since then we've been working to realize the full potential of EQT: quality culture, quality cost structure, quality asset base, quality balance sheet, to set the table for where we're at now, which is bringing quality growth to this organization. And we could not be in a better time than right now when we see such a tremendous demand for natural gas in this world.

The way we break all this down: our employees every day, the 1,600 employees we have and our 30,000 contractors, I want them waking up thinking about one thing: how we can make great energy even greater. That means what can we do to make the energy we produce cheaper, more reliable, and cleaner. Those are the attributes of energy. Those are the attributes that we should be building our energy systems of the future with, the best combination of those characteristics. And we've had a really fantastic run the last six years, but I'm even more excited about the new challenges that we have in front of us today.

Yeah. It's really an extension of what we've done in this country. You know, over the last 20 years, people need to understand that America was in a very similar situation that Europe is today. We were energy dependent, and it was a really scary thing for us. We were spending over $700 billion a year importing energy into our country. But then something amazing happened: drill, baby, drill. We cracked the code on shale and transformed America from energy dependent to an energy powerhouse on the world stage. We've achieved our energy independence. And this is playing out right now. We see this in Iran, where international gas prices have gone from 10 to 25. Okay? They've increased two and a half times. In the United States, natural gas prices have been down 20% since this conflict. What does that tell you? That speaks to the value of our energy independence. And that is a tremendous thing. And it's not the case for all forms of energy, but for natural gas, we've successfully protected Americans from these geopolitical price shocks.

Now, where do we go from here? This administration is saying, 'Hey, independence is not good enough. We need to be energy dominant.' I actually think I would use a slightly different word: we need to move to energy abundance. And what does that mean? Really, there's a few things. This is what we're playing for. These are the benefits of abundance. Energy abundance means that America, our families, our businesses, and our communities have access to affordable, reliable energy. That is our advantage. And as I said, natural gas prices are 25 compared to $3 here in the states. That's an energy advantage. But Americans' energy bills are up over 40% over the last five years. So that means we need to do a lot more work.

The second benefit of abundance is we need to defend and extend our technological leadership. That means things like we win the race for AI and we have all the energy needs to meet the massive power generation needs for AI. We see that as a 20% increase in natural gas demand in this country. A tremendous amount of work to win the AI race. It also extends into advanced manufacturing. The third benefit of energy abundance is providing energy security to the world. You know, we're seeing this play out in the Middle East right now. The energy security of the world is crippled. But one thing everybody should understand is global energy security is national security. Every country is feeling the impacts of this energy insecurity, of these price shocks that are happening in the world, and America can help on that front. Global energy security is our energy security, and there is a world where there are a lot of bad actors that have weaponized energy, like what Russia has done to Europe, or they translate their energy sales into bombs, terror, or tyranny, like what we're seeing play out in Venezuela or Iran. What energy abundance allows us to do is to replace that influence with the energy and influence of America. And that's going to lead to a more peaceful, prosperous world.

The last part of abundance, which everybody needs to keep in perspective, really is that we believe that energy abundance is going to be the pathway for us to end poverty. We know that energy creates wealth. There's a very high correlation there. And there are billions in this world, and specifically there are three billion people living in this world with less electricity than it takes to run a fridge. You know, only really a billion of us are able to sit in rooms like this and have these type of conversations. There are billions that are living in energy poverty. To lift these people up, the amount of energy that we need to create to eliminate poverty, we would need to triple the amount of energy that's produced and consumed in this world. And that would translate to a level of wealth that would give, you know, everybody, you know, $50,000 GDP per capita. Triple the amount of energy that's produced and consumed in this world. And that's all forms of energy. That's natural gas, that's coal, that's oil, that's nuclear, that's solar, wind. All forms are going to be needed to make this happen. And if we can do that, the amount of wealth that we're going to create in this world will increase global GDP five times over, in addition to the moral benefits of lifting billions out of poverty. So whether you care about energy, you care about business, or you care about making the world a better place, you should care about bringing energy abundance into this world. And our role as America's natural gas champion at EQT is to help push that ball forward.

So EQT is right now a domestic player. You know, we produce a little bit over a million barrels a day worth of energy in natural gas form. We're in a unique period of time where natural gas is evolving from being a regionally constrained commodity, you know, constrained by the pipelines to connect supply and demand. Now with LNG, natural gas is becoming a more global commodity. And this is going to give us access to more markets where we can start addressing energy affordability, energy reliability, security of supply. And so we're really excited to announce this deal yesterday with the country of Lithuania to supply them LNG that's going to be coming into their country starting in the next year for the next 10 years. You know, our vision for LNG really is to build a bigger LNG ecosystem. The energy security that comes along with US LNG is unmatched. You know, this was able to help Europe get off of Russian gas. It's produced by, you know, a lot of players. It's not just one person or dictator that's determining how much we produce. Hundreds of companies are feeding this ecosystem, driven by market forces, not political force. And on top of that, from a reliability perspective, you can't ignore the fact that American LNG is backed by the strongest military in the world. And it's actually remarkable when we were listening to a presentation yesterday: these Europeans are thinking about not only getting the energy infrastructure built, but making sure this energy infrastructure is bulletproof, because we see how energy infrastructure is now being targeted in these conflicts. So the security of your supply is really important.

Why should we make this bigger? Right now, for perspective, the LNG market is around 60 BCF a day, and when the bombs dropped in Ukraine it was about 50 BCF a day. We can see the benefits of a larger ecosystem already playing out right now. And that gives a sense of where we want to set the ultimate target for this. So when the conflict in Ukraine started happening, natural gas prices internationally spiked to $80, and they averaged about $40 for the year. That's a 50 BCF a day LNG ecosystem. America exported 10 BCF a day. So a big role. But fast forward to today. In the Ukraine situation, I might add, 10 BCF a day of supply was taken off the market. In this Iran situation, same amount of natural gas taken off the market. 10 BCF a day of natural gas supply has been constrained. And what happened? We saw prices go up to not 80, not 40, 25. Okay, what's the difference? Now this is a bigger LNG ecosystem. The LNG ecosystem is 60 BCF a day, and America is playing a much larger role. We're exporting 20 BCF a day. Where do we want to take this? We believe our ability to withstand these geopolitical supply disruptions will be muted significantly if we can get this LNG ecosystem up to, say, 100 BCF a day. It's hard to imagine a supply shock bigger than, you know, Russia pulling out its gas or this conflict that's happening in Iran. So, you know, 10 BCF a day of supply disruption with a 100 BCF a day ecosystem, we're going to be able to weather that storm.

And then one of the best, most underappreciated aspects of LNG is the fact that this isn't a fixed pipeline where you're going to have to commit to that partner for decades. LNG is mobile, and we can redirect flows to where the energy is needed most. And that flexibility is going to give customers the ability to go big on their alternative energy solutions if they want to have an expanded renewables buildup, for example. But if that doesn't work, then that LNG can be routed to the parts of the world, to the billions that are living in energy poverty. There's always going to be a market for reliable, affordable energy.

What the United States can do, thanks to the shale revolution, we have discovered an amount of natural gas resource that would allow us to increase our natural gas production in this country by over 60 BCF a day. The US is about a 110 BCF a day market. So we can create a 60 BCF a day surplus of natural gas. Now, we can use that domestically for data centers, and that would be maybe between 10 and 20 BCF a day. Or we can use that to provide energy security to the world. What would that cost? We can put that natural gas on the doorstep of the world for a price of $10. 60 BCF a day, just for perspective, is the energy equivalent of adding over 10 million barrels a day of clean energy to the world stage. So this is like adding a Saudi Arabia worth of energy. That is a tremendous amount of energy. And from a cost perspective, $10 natural gas is the energy equivalent of $60 oil. And we know that you can build some pretty awesome economies with a reliable, steady stream of $60 oil-priced energy. So this is one of the biggest opportunities that we have in the country, not only to provide energy security for Americans, but to provide energy security for our allies. And because we're here at Climate Week, we've got to talk about the emissions benefits. This is going to be one of the biggest green initiatives on the planet, because that amount of natural gas is going to replace coal, which is the biggest form of emissions, responsible for over half the emissions on this planet. So you have another billion ton per annum of CO2 abatement by providing the world a better solution than higher-emitting forms of energy like coal.

The biggest question we get is if we export all of our natural gas, what is that going to do to domestic prices? And right now, just for everybody's perspective, the US is exporting 20 BCF a day. We're the world's largest LNG exporter. We have an international price signal of over $25. Prices in the US are less than $3. Okay, this is the energy equivalent of less than 50 cents per gallon of gasoline. So for the people that are concerned that our exports are going to cause us to have higher prices domestically, that concern is playing out right now. We also have a lot of empirical evidence over the last 10 years. You can see that even as we've increased our exports, we've been able to keep natural gas prices low. So we have a tremendous amount of data. We have a really good example right now of how we've insulated. And actually, I say that exports represent surplus, and surplus is the key to abundance and lower prices. This LNG ecosystem is a reason for us to get more energy out of the ground, flowing above ground, within reach for Americans. That is a safety net. We saw this safety net get utilized this last winter. Winter Storm Uri, I don't know if you guys were living here in New England when this hit. Extreme weather in late January, early February. We saw domestic natural gas prices increase over $7 per MCF. What happened? We paired back about 5 BCF a day of our LNG exports and kept that gas domestically, and that helped keep prices in check.

So the big thing that people need to understand is we have all the resources needed to unleash US LNG, to unleash AI, and win the AI race. How this translates to price, though, is not dependent on the resource we have. It's dependent on the infrastructure it takes to connect supply with demand. And how can you have a situation where this country can be the world's largest oil and gas producer, but Americans' energy bills are still up 40%? It's a signal that something's broken. Something's disconnected from where we're producing it and where it's getting consumed. And that's the inability to get infrastructure built. Simply put, political force has overridden market forces, and it's become incredibly difficult to get the energy infrastructure built, like pipelines. If we can get back to building things in this country, we can meet this demand in all forms, provide energy security to our allies, and keep prices low domestically. But it's going to take permit reform, and this is why it's so important. And we want to get back to a place where market forces rule, market forces drive the cheapest, most reliable, cleanest forms of energy to the marketplace. Unfortunately, those disruptions have been put in place, and they are easily fixable.

So I spent a lot of time in DC, and you know, it's really funny because where people feel like they're on opposite sides of the issue, we're actually in violent agreement on this. Every politician I've met, Republican, Democrat, wherever you come from in this country, we all agree on a few things. Every politician I've met wants more affordable energy. They all want more reliable energy, and they all want cleaner energy. And so the thing is, people need to understand, you've heard industry has been complaining about regulation probably forever. And so I think some of this is like the boy who cried wolf, and we say if we don't get this infrastructure built, bad things are going to happen. Well, you know, we cracked the code on shale. We're an energy powerhouse, and we've been able to prevent those issues from happening. But this pipeline cancellation movement is different. We had massive industrial pushback when hydraulic fracturing, the transformative technology that is responsible for us ascending to the world's largest energy producer, there was a lot of pushback there. We still were able to deal with those concerns and continue to leverage that technology and get the results for the American people. Pipeline cancellation movement is different. They've actually figured out a way to shut down our ability to get energy built. And there's no greater example of that than what happens in Appalachia, where we operate. You can see in this basin, this is the biggest gas field in the world. From relatively no production to over a third of the country's natural gas production. We saw this ascent, and then you just see a flatline. We can be doing a lot more, and what stopped us from producing more is market access, and the pipeline cancellations have done this.

Now this has translated to really remarkable things, like the highest gas prices in the world outside of this conflict. The highest natural gas prices in this world are not going to be paid in Germany or Japan. The highest natural gas prices in the world in the winter is going to be paid by New England. How can that happen when New England is a couple hundred miles away from the biggest natural gas field in the world? It's gotten to a point where we've been able to withstand at a high level. We've seen our gas demand grow 50%, but the infrastructure to support that demand has only grown 25%. And how can you keep the lights on? Well, we've just been leveraging all the excess capacity that we've built up in the decades prior, but we're at our limits right now. And you're seeing the cracks in the system in the form of higher energy bills, and we need to get back to building to solve this.