Invest Like the Best · Podcast summary
Matthew Smith — Natural Gas: The Next Bottleneck - [Invest Like the Best, EP.483]
Matthew Smith, founder and CIO of Corriente Partners, discusses the impending natural gas crisis in the US, driven by increased demand from AI data centers and LNG exports, and the potential for skyrocketing energy prices.
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Listen on the show ↗Key takeaways
- ⚠️By 2028, the US will face a historic deficit in natural gas supply due to surging demand from AI data centers and LNG exports, leading to potential energy crisis.04:08
- 🚢The US is scheduled to export up to 35 BCF per day of LNG by 2030, a significant increase from current levels, with projects already financially committed and difficult to reverse.06:23
- 💡AI compute demand is projected to add 5 BCF per day of natural gas demand in the base case, with potential for 12-15 BCF per day if all proposed projects materialize.08:53
- 🚧The problem is not a lack of gas in the ground, but rather insufficient processing, gathering, and interstate pipeline infrastructure to deliver it to market.12:55
- 😴Market complacency, driven by past abundance, has led to underinvestment in natural gas production and infrastructure, despite clear signals of future tightness.23:44
- 📉By 2029, US working natural gas storage levels could fall below all historical lows, leading to a "knife fight" for physical gas and skyrocketing prices.24:55
Chapters
- 4:04Introduction to the Natural Gas Crisis
- 5:17The Role of LNG Exports in US Natural Gas Supply
- 11:40The Impact of AI Compute Demand on Natural Gas
- 20:22Resource Availability vs. Infrastructure Constraints
- 38:08The Problem of Complacency and Price Implications
- 45:00Winners and Losers in the Impending Crisis
- 50:41The Long-Term Solution: Nuclear Power
- 55:11Addressing the Crisis: Policy Recommendations
- 1:30:55Conclusion and Call to Action
The digest
Matthew Smith, founder and CIO of Corriente Partners, returns to the podcast to discuss a looming energy crisis in the United States. Smith, who has spent two decades working in energy markets, has meticulously analyzed the US natural gas supply chain, from individual wells to pipelines and processing assets. His conclusion, which he believes most of the market does not yet share, is stark: by 2028, the demand for natural gas from AI data centers and LNG exports will outstrip the country's ability to produce and deliver it, potentially leading to a severe energy crisis with "unbounded and convex" price increases.
The Looming Natural Gas Deficit
Smith's analysis indicates that the US is headed for a historic deficit in natural gas supply. Natural gas currently accounts for over 40% of US power generation and is poised to become the most important fuel in the country, surpassing petroleum. While the supply appears adequate through 2026-2027, the situation drastically changes by 2028. The primary drivers of this impending shortage are the rapid expansion of AI data centers and the increasing demand for Liquefied Natural Gas (LNG) exports.
Keep reading in The Digest
The full 5-minute article, 6 more sections, and every new episode from Invest Like the Best and the creators you follow.
- The Role of LNG Exports
- The Surge in AI Compute Demand
- Constraints Beyond Resource Availability
- The Complacency Problem and Price Implications
- Potential Winners and Losers
- The Path Forward
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