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Let's talk about the rise of AI fueling energy demand. Golment Sax estimating US data centers will use eight percent of total power in a country by twenty thirty, or three times the level from twenty twenty two. Will Van Low is the CEO of Quantum Capital Group, one of the largest private capital providers to the global energy industry, and will join us now.
Well, good morning, good morning.
It's good to see you, sir. The incoming president wants to unlock energy in America. Drill Baby, drill is something we heard from him repeatedly on the campaign trail. How difficult is that actually going to be?
Well, first of all, thank you for having me on this morning. It's going to be very difficult. In terms of oil and gas production. Oil in particular, we have really developed most of the resource, the shell resource plays and other than the Permian, they're all either peaking and rolling into decline or they will soon. And I think the Permian maybe we can get another million or two
million barrels a day out of it. So we produce about thirteen and a half million barrels a day right now, so maybe gets up to fourteen and a half or fifteen and a half, But that would really be the physical limitations of the permit.
Given the fact that there seems to be a long runway for anything in terms of infrastructure in the energy space, what could changes in the Trump policies next year actually do fundamentally to shift the investing landscape, to shift sort of the energy landscape from your perspective.
Right, Well, I think the biggest thing is lifting this LNG pause they've got to put on last year. You know, there were tens of billions of dollars of investment that were slated to go into the next phase of LNG build out. That's critical for our allies, that's critical for America projecting its power throughout the world to be able
to export that energy. So I think that's the biggest thing that he could do immediately, and he said, you know, first day in office that something very likely may do. But I think other than that, permitting reform is the biggest thing that we really need. And that's not only for oil and gas, but that's also forransmission. I mean, that's the big is the wind and solar build out continues.
The biggest bottle Nike is transmission. So I think having having regulatory kind of relief in terms of how long it takes to get these power lines permitted, permitting midstream pipelines so we can get that gas. America has a lot of natural gas. We have a lot more natural gas than we do oil, and so we've got to be able to build the critical infrastructure to get that power and that gas around the country.
What's been fascinating to so many people is that there is a dissonance right now to all the discussions around artificial intelligence and the energy that's required to power that, and then just how long the process is to build it out from an infrastructure process, and then the fact that policies tend to ping pong and they change change quite considerably. How do you get around that when you're investing to try to cater to what seems like a really big opportunity but has these major pitfalls.
Yeah, I mean, look, it's it's AI. A typical AI query, generative AI query takes ten times the amount of power that are regular Google search takes. Right, and so when you look at you mentioned that that power demand will literally triple for a data centers over the next kind of five to six years, that's a massive amount of power. You know, a data center, say a one gigawatt gas turbine that fires a data center could power eight hundred
thousand homes. So you think about that a data center demand for power is going to grow about fifty about fifty gigawatts over the next six years. That's enough power we're going to have to install, enough power to power forty million homes. That's a lot of power. Well.
Absolutely, when John sort off the conversation, they're talking about drill, baby, drill, I can't help but think that President Trump was elected, and then a few weeks later, Chevron is saying, actually, we're going to pull back on the Permian. Do you see more US oil producers pulling back on drilling because actually the oil right now price point is just not adventageous, that's correct.
So you look at where prices are today, the inventory that's left, it's economic at these levels. And that's why I say that you've got to be very careful projecting how much production US can actually grow. And so at these prices, no, I don't see anybody drilling more.
Do you think then the Trump administration would be more willing to either accept what the buy An administration might do on their way out, or do it themselves, which is to maybe start to hold back on Russian oil, saying instead of this price cap, we're actually going to sanction oil outright, really hurt putin. At the same time, if the prices go up, that actually might be better for US drillers.
Yeah, I mean it's difficult. I mean we had there has been sanctions in place, arguably not very good ones, and so I do think that's clearly it's been rumored to be talked about. How effect will be, I don't know, but I will say I do think that President Trump is very focused on keeping energy prices low for the American consumer, and sanctioning Russian oil would would have just the opposite effect of that.
The other thing you mentioned, of course, is gas and how the US has so much natural gas And do you think we're going to see executive orders when it comes to these LNG permits. Do you see deals growing, say for the United States and Europe because they're looking for some sort of bipartisan wedge into acquiescing themselves to the Trump administration.
Well, Europe is still buying a lot of gas from Russia. It's not talked about very much, but they have to, okay, And so that's absolutely why we need American LNG to be expanded significantly. We have the gas to supply to our allies in Europe, and so you know, I think that's going to be a very critical part of Trump's energy policy, and it's something that really needs to happen.
In the meantime, given that all these policies are sort of question marks right now, how much are you going to the share thing, which is tech companies themselves and working directly with them in order to build out energy because they need it and they need some certainty and you can probably provide that with the pool of capital that you have.
Yes, So I think a couple of things are going to happen. The problem with all the growth an AI demand for electricity is it takes still takes four to five years to go get a new gas fired power plant built, and so we have to look at the existing asset base in the US today. If you look at the roughly two hundred gas turbines that are installed generating power that are greater than five hundred megawats, those run at about a fifty five to fifty six percent
capacity factor. Okay, so there's a lot of capacity left in existing assets. It's just are the regulators going to allow the tech companies to take that excess power because that excess power is needed whenever it gets really cold or it gets really hot and demand surges, And that's going to be the real kind of tug and pull is we have it. It's going to take a lot
longer to build out the new power plants. But what's going to how is that going to play out between the consumer on one hand and the tech companies on the other hand in five to ten years.
How different is the backdrop going to look for big energy in the United States at a time where big oil has been sort of self constraint in a number of different ways from their investing programs, and you have upstarts like not only yourself, but a whole host of private investors who are trying to really get in alongside a big tech Yeah.
So I think there's a lot of capital that's been formed. You've heard about these huge partnerships over the last couple of months that are all kind of around data centers and supplying that power for data centers. If you think about it. If you spend a billion dollars on power for a data center, you're going to spend about ten billion dollars on a data center itself, another twenty billion dollars on chips. So the power component's only about three little over three percent of the total cost of a
data center. So I think there's going to be clearly the big tech companies are going to have to partner with both private and public companies to get that power. But the truth is is most of the power is controlled by big utilities, regulated utilities, and so I do think you'll see a lot more private companies coming into that space to partner with the big tech companies.
Americans doll not want European nay crisis, that's for sure. I'm wondering how much pressure that we'll be on and provide us to make coal great again. How pragmatic do you think politicians leaders in America are going to be on that issue.
Well, you know, if you look at it, the United States, we have retired a lot of our coal plants over the last couple of decades. Europe's retired even more. Just a few months ago, the UK retired their last remaining coal plant, which is an extraordinary statistic. I've had over one hundred and fifty years.
It's amazing, and I see the government leaders celebrate it all the time, and then my mum calls mad. It tells me what an electricity bill was. That's right, what a field bill was. And it's astronomical.
And what you appreciate is in every other part of the world, China uses more coal than ever. We use more coal today in the world we've ever used before, despite all the drum beat about how we massively reduced the reliance on it we have in the West, the rest of the world, India, China, you know, it's it's exploding, and so that's it's not really doesn't matter where it's burned one atmosphere, right, And that's the other thing we have to appreciate. So coal use is going to continue
to go up. I don't think it will necessarily in the US. It will in Europe whenever they get really cold or really hot and that's the only fuel they have. But in Asia in particular, you're going to continue to see massive use of coal. Why because that's the fuel that they actually have. It's about energy security, and that China uses evs, not because they love the environment, but because they can burn coal to power those evs and not have to import gasoline.
Amazing. Well it's going to see you always will. Van Low, have quant some capital, Grape and Mason of coled so oh the wrong reasons