According to the Securities Times app, the CEO of the largest fossil fuel producer in the USA, eqt corp (EQT.US), mentioned that in the coming years, ai datacenters will be the major growth point for natural gas demand in the USA.

Over the past 10 years, consumption in the USA has significantly increased. After generators replaced the more polluting coal, natural gas has become the primary fuel for power plants. The start of export facilities along the Gulf of Mexico has also brought new major customers outside the USA.

However, ai may bring a more sudden and dramatic impact to the USA energy market. The massive electrical power required by datacenters for training or executing ai capabilities has become a major topic in the energy and technology industry this year. Last week, microsoft reached an unprecedented 20-year agreement to purchase electricity from the restarted Three Mile Island nuclear power plant in Pennsylvania, highlighting the significant demand from tech companies.

CEO Toby Rice of eqt corp stated on Tuesday that in the short term, the electricity demand related to ai is expected to convert to 6 to 13 billion cubic feet of natural gas per day. In comparison, the current total consumption in the USA is just over 100 billion cubic feet per day.

Rice mentioned that eqt corp can develop new customers in Virginia, the hottest datacenter market in the USA. The company's Valley Pipeline started earlier this year, transporting natural gas from the Marcellus Shale Basin to the state, a location favored by tech companies like amazon.

He sees similar opportunities in the southeast USA and added that tech companies are also looking for locations closer to eqt corp's hometown of Pittsburgh, as well as in Ohio and West Virginia. The region already has infrastructure related to electricity.

During the interview in New York, Rice said, "People are looking for gigawatt-scale footprints." "We have a lot of retired coal facilities, and the existing power infrastructure has already been built. You just need to build a power plant and switch from coal to natural gas, which may be a faster opportunity."

Although the discussions around artificial intelligence and energy are groundbreaking, the natural gas prices in the United States have been low for the past two years. The current benchmark natural gas futures trading price is around $2.5 per million British thermal units.

Rice stated that due to excess supply caused by mild weather last winter, prices may remain in the range of $2 to $3 in the short term. He said that if temperatures return to normal next winter, it will take about six months to absorb the excess.

The boss of EQT Group warned that if prices really rise, a spike similar to 2022 may occur, when the invasion of Ukraine caused turmoil in the global energy market, leading futures prices to exceed $10.

One reason he holds this view is the change in the American power supply structure. In the past, when natural gas prices soared, many power plants could switch to coal-fired power generation. However, in recent years, many of these facilities have permanently shifted to natural gas.

Rice stated that this means gasoline prices, originally capped at $5, may now rebound from $2 to $9, forcing factories and other industrial users to reduce operations. He added that regional differences may be more extreme, with natural gas prices in New York or Boston being restricted by pipelines, reaching as high as $20. Rice said: "Be prepared for fluctuations."

If this rebound truly becomes a reality, natural gas traders will closely watch EQT Group. To cope with the recent price plunge, the company has actively cut production, but if needed, it can resume production within hours. Rice estimates that the daily natural gas production in the United States is approximately 101 billion cubic feet, with 1 billion to 2 billion cubic feet that can be quickly restored. He said that EQT's reduced production is about 1 billion cubic feet.

Rice stated that the marginal cost of bringing online new U.S. products at the benchmark Henry Hub delivery point is approximately $3.5 per million BTU. It appears that, due to next year's futures prices being lower than 2025 levels, producers may want to curb some activities in 2025.

EQT's break-even point is $2, which Rice describes as a situation that allows the company to cover drilling and operating costs while still generating free cash flow. He adds that such a low break-even will minimize hedging demand.