US Gas Supply Surge Meets Global Price Reality as AI Boom Drives Energy Demand, RBC Says
The widening gap between US and global natural gas pricing is sharpening expectations for a long-term buildout of American LNG capacity, as permitting delays remain a critical obstacle to unlocking new supply, RBC Capital Markets strategists said in a note on Friday.With US policymakers accelerating LNG export approvals under the Trump administration's second term, RBC analysts said industry participants highlighted the strong appetite for US gas across regions. However, the scale of future supply growth remains the central uncertainty.US natural gas reserves could support substantial production growth if prices remain near $4 per million British thermal units, RBC said, with some industry participants suggesting an additional 60 billion cubic feet per day of supply could be developed and sustained for up to 30 years.The supply expansion would be needed not only to meet rising LNG export demand but also to meet surging electricity demand from artificial intelligence data centers, which are emerging as a major source of future gas demand.RBC said analysts and executives at its Global Energy Forum estimated that the early 2030s could require an additional 15-20 bcf/d of gas supply to meet combined LNG and AI-related power requirements.The bank said that the demand outlook is increasingly shaping investment decisions across the energy value chain. Though US LNG exports are expected to expand materially, speakers questioned whether global markets could absorb the volumes without a higher long-term price band.On the demand side, gas prices in the $8- $10/MMBtu range could support both long-term consumption growth and attractive returns for US exporters.In that scenario, RBC said several industry participants projected long-term global LNG demand growth of 5%-6% per year, with some suggesting the market could remain undersupplied into the 2030s despite the wave of planned export capacity additions.Meanwhile, the rapid rise in electricity demand from AI infrastructure has shifted energy policy discussions from cost alone to system-wide capacity expansion.Though natural gas remains the preferred near-term fuel source for powering data centers, technology companies, and utilities are exploring alternatives, including advanced nuclear reactors, small modular reactors, and demand-response programs.Technology companies, often referred to as hyperscalers, plan to invest heavily in grid upgrades and behind-the-meter power projects to support future growth. RBC said the Trump administration's Energy Dominance Financing program is projected to unlock capital for large-scale energy infrastructure.The initiative, backed by a $250 billion lending authority, is designed to crowd in private investment and accelerate the buildout of generation.Major projects include a joint initiative between Georgia Power and Alabama Power to provide $25.5 billion in financing for the development of 10 GW of gas-fired generation and nuclear uprates.The initiative is expected to reduce customer costs by about $7 billion over time.