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Bloomberg reported over the summer that businesses and households served by the largest US power grid will spend a record sixteen point one billion to ensure electricity supplies amid a massive artificial intelligence driven demand search. We are talking about this a lot, and having said that, we just talked about what Nvidia's doing with open Ai and their spend. That price increase though prompted calls from utilities and energy groups to build more generations. So we want to see
what our next guest has to say about it. He is in the midst of it, Toby Rice, his president CEO of EQT, the nearly thirty one billion dollar market cap vertically integrated energy company obviously specializing in net gas. Toby, good to have you here. I want to start big on broad the macro. How would you describe it right now for you?
Well, business natural gas markets.
In one word, I would say it's going to be very vautal in the short term, and one word for the long term, I'd say incredibly exciting when you look at the three major themes that are that are hitting energy right now.
The desire to continue to evolve our.
Energy systems, replacing coal with natural gas major theme ais what everybody's talking about right now. That's a major that's going to be a major source of demand. And then providing energy security to our allies is still a thing and that's going to be playing on the energy. You step back and you add it all up, we're talking about a twenty to forty percent increase and natural gas demand in this country.
Well, let me just ask you because before that, let's go back.
That's longer term.
But I know our BI people have put some research and they talked about North American gases at an inflection, and they talked about AI data centers and adding to domestic demand near Appalachians supply, will energy exports sustained global?
But so tell us about the shorter term.
Is there a little bit of an inflection point for you?
I'd say the next the next three to five years, data centers and fueling the AI revolution is going to be a very big focus. But keep in mind we're going to be doubling US LG exports over the next five years. So we're doing both of these at once. And the good news is that we've got the natural resource in this country. It's just going to come down to how fast we can actually get this infrastructure built.
Focusing specifically on the power demand side of things. When you step back and look at electrify everything, not just AI, we're looking at a ten to eighteen Bcfi day natural gas demand to meet that. That's a ten to eighteen percent increase in demand and about four to six about forty percent of that is going to be for data centers, so it's going to be this can be really big. We're seeing these opportunities happen in our backyard.
EQT. We signed up over one and a half Bcfi day of natural gas fee ad for those and.
This is a market that's about one hundred bcf a day just to make the numbers ballpark, So one and a half Bcfi day of natural gas supply for these data centers in Pennsylvania. This is going to generate enough power to almost power to New York cities. So these are major league infrastructure projects in a grid that desperately needs more power generation.
The tech companies to talk about nuclear power generation powering their data centers. The President likes to talk about the promise of nuclear power, and I say promise of it because we know how to do it, but it just takes a long time and it's very expensive. How do you view the increased interest in recent years in nuclear power as a threat to your business?
I think that natural gas is the clear winner right now. This has been a big question that people have been asking over the last call it eighteen months. What is going to power this AI revolution? What was originally thought to be renewable is going to pick this up? Then people went to nuclear and realize it's going to take too long to get it done. Comes back to natural gas. Why, because we have the track record of scale and speed. If you look over the last ten years, we've seen
natural gas power demand increase fourteen bcfday. So think about how much we're planning on doing. We've done that with natural gas. Now, longer term, we think nuclear is going to be a great option. But understand this, natural gas has a vehicle to become zero carbon, and that's why we're spending a little bit of money today on carbon capture that will enable natural gas to be the first reliable affordable zero carbon energy solution.
The world does not have that today, you know.
Just like there's a big spend in AI and data centers, there seems to be a big spend and that energy to support it and what's needed. You have announced multiple long term sales and purchase agreements, I think just in the last few months. Some are fearing an oversupply to be in twenty twenty seven twenty twenty nine. What are you hearing from LERG buyers about kind of your demand
visibility window and how confident are you. It sounds like you're pretty confident on a longer term pull for LERG or us LG specifically.
Yeah, on the energy front, we certainly wouldn't disagree. We do see a little bit of an oversupply situation globally for energy that could lead to software prices in that twenty seven to twenty nine time frame that you mentioned. And you say, well, Tob, why did you just go and sign up for a massive amount of energy. It's because our contracts are going to be starting. We're going to be getting that exposure in twenty thirty, so this oversupply will pass and then we're back to a tight
situation and that's where energy is hitting the market. When you want to talk about demand, just step back and look at this world. For a world that's going to continue to care about climate and emissions, replacing the coal in this world is going to require an additional one hundred and seventy BCF a day of natural gas. If you care about the people living on this planet, it's going to take an additional one hundred and twenty BC other day.
Sure are you that people care about that? We are certainly feeling this year a pushback well when it comes to concerns about carbon emissions and climate. Yeah, there's not from everyone, and I have to be very careful because there's a lot of folks that are working really hard on this area.
Yeah, but how Yeah, the confident and comfortable are on the energy transition.
There's a ton of people that are passionate about this, and that passion is not going to go away with just one election. But I think what is happening now is people are stepping back and they're looking at the plans they put in place, and they're looking at the results of those plans. And what we're seeing is that Americans energy bills are up over thirty five percent. Now,
renewables is not to blame for all of that. We've had a massive infrastructure cancelation movement that's prevented us from getting energy infrastructure built. That's the root cause of this issue. But when you step back and look at how much, how big of an impact this has had. We spent over two trillion dollars on renewables last year, and put that in perspective, we spent over one point three billion dollars in oil and gas the energy solution that provides again, yeah,
two trillion dollars in renewables. Who what do you mean?
We spent the world invested over two trillion dollars.
In renewables built out and yeah, and then for comparison, oil and gas investments that provides over eighty percent of the world's energy, we invested over one point three trillion dollars.
So this has been a very big theme. But it's coming out.
Show to you that people are this is the future's renewables. That's where they're spending money. Is that what you're saying?
If you went by where people were spending money, that does not necessarily mean what's going to be the future. The future of energy is going to be the energy solution that is affordable, reliable, and clean and has all three of those attu in check. I think the energy
transition maybe has prioritized the clean aspects of energy. But as we're seeing right now, Americans are scratching their heads looking to see the record amounts of energy investments that we're making and the record amounts of energy production in this country, and their energy bills are up thirty five percent. They're scratching their heads. Why is this happening. It's because the solutions that we're putting on the field need to be the right solutions, and that is natural gas.
But it's also because, as you said, the demand has gone up. For years, it was kind of flat, it was stable, and then we saw this huge increase in demand for power here in the US. So demand has a lot to do with it too.
Well. Demand hasn't really started to pick up just yet. We're coming out of it. I think we're looking at massive growth prospects. But this really is a repercussion from all of the not under investment in reliable infrastructure over the past decade now this country, in America, since twenty eighteen, it's become almost impossible to get a pipeline built in this country. We own an asset called Mountain Valley Pipeline. Took an Act of Congress to get that pipeline built.
So infrastructure has been incredibly challenged, and that is really strained markets and really put some stress on the system.
So let's talk about those challenges. Are you having constructive conversations or are you having any conversations with the Trump administration representatives from the Trump administration to try to ease those regulatory delays.
So this administration truly understands how important affordable and reliable is in the energy equation. You know, Secretary right fabulous really understands energy, all forms of energy. So I think we're going to have some practical approach towards energy solutions that we put in place. But that being said, the executive branch is not going to dictate the types of
energy that we put in this country. We're going to need Congress to act to pass meaningful permit reform so we can get back to letting the most cost effective, reliable, cleanest form of energy.
Do you consider wind power a form of energy?
Absolutely?
It doesn't seem like this administration supports that.
Yeah, I mean, was that a mistake, Well, I would say it's as a as a sponsor of a pipeline, mount value pipeline has been subjective to tremendous political force. This is a situation where I think we would be in a much better place if we would let market forces dictate the energy that makes its way to the playing field, let political force take the back seat. Unfortunately, we are going to need some help from our leaders in Washington, DC. I hope they notice that we've got
a massive demand surge coming. We do not have the right infrastructure set up right now. We need to do a massive build out. And just for people to understand the race that we're in right now, this is a national security threat for US. We have got to win the race for AI. And right now, how we're faring in the US where we put in six gigawatts of reliable power generation this last year China put over sixty of gigawatts of reliable power gen most of that call,
so we are not keeping pace. We need to do a lot more.
Just want to go back to.
Cost just because it's cheap, and I understand there's other parameters that you're putting in there. I mean, there are net gas, there are leaks and so on and so forth that do impact the environment. So it's not the cleanest and purest. There are problems with it. And I just wonder if we're always constantly chasing the cheapest thing
out there that's not necessarily a good thing. And just bring up all the manufacturing that we've put outside the United States just because it was a cheaper good that we're finding maybe that wasn't such a good strategy. So I just want to bring that back to the energy sector that maybe sometimes things have to be expensive to get to a really, really smart solution.
I think we need to take a holistic approach when we're looking at energy, and we need to look at the balance between cost, reliability, and the carbon footprint associated with that energy. That's why when we look at those attributes for natural gas, that's why we believe that this is the energy solution of the future. When you look at regions that ignore and just over prioritize the clean aspects of energy, you have situations like Europe, and we've seen what's happened there.
It's been a crisis.
Thank goodness for American America and the energy that we've been able to provide them to get them through this with our LERG.
So it's got to be a balanced approach.
It's not all going to be about cost, it's not all going to be about reliability or carbon footprint. It's got to be a healthy balance of three. Right now, we need to get back to the affordable, reliable.
Speaking of balance, and I just want to go to your balance sheet because there is a spend right everybody's doing it because they are chasing this AI spend and trying to be there in terms of support. You guys have talked about working down to a twenty twenty six year in debt target of five billion. I think that was after the Equatransdale tell us about what you're considering to help prop up your balanchet and just got about thirty seconds, three.
Seconds out thirty thirty thirty seconds. I'll tell you what our priority, What our priorities are right now. Insure the reliable production of energy. Right now, we produce a little bit over a million barrels a day of energy.
So anything that you need to do to meet that, We're not worried about the spend.
For maintenance volumes levels.
We're going to be reliably providing the future by signing up these growth contracts, both on energy and the data sat to build out and from a cleanliness perspective. We've already made the investments and we've already slashed our methane emissions. We've got one of the best environmental programs that.
Sounds like the spend and the Debt's okay for now. Yes, I'm going to leave with there. Toby Rice, Presidents CE of Equal e q T
MHM