Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 2: Tim Steneveek on Bloomberg Radio.
Speaker 3: Bloomberg reported over the summer that businesses and households served
Speaker 3: by the largest US power grid will spend a record
Speaker 3: sixteen point one billion to ensure electricity supplies amid a
Speaker 3: massive artificial intelligence driven demand search. We are talking about
Speaker 3: this a lot, and having said that, we just talked
Speaker 3: about what Nvidia's doing with open Ai and their spend.
Speaker 3: That price increase though prompted calls from utilities and energy
Speaker 3: groups to build more generations. So we want to see
Speaker 3: what our next guest has to say about it. He
Speaker 3: is in the midst of it, Toby Rice, his president
Speaker 3: CEO of EQT, the nearly thirty one billion dollar market
Speaker 3: cap vertically integrated energy company obviously specializing in net gas. Toby,
Speaker 3: good to have you here. I want to start big
Speaker 3: on broad the macro. How would you describe it right
Speaker 3: now for you?
Speaker 2: Well, business natural gas markets.
Speaker 4: In one word, I would say it's going to be
Speaker 4: very vautal in the short term, and one word for
Speaker 4: the long term, I'd say incredibly exciting when you look
Speaker 4: at the three major themes that are that are hitting
Speaker 4: energy right now.
Speaker 2: The desire to continue to evolve our.
Speaker 4: Energy systems, replacing coal with natural gas major theme ais
Speaker 4: what everybody's talking about right now. That's a major that's
Speaker 4: going to be a major source of demand. And then
Speaker 4: providing energy security to our allies is still a thing
Speaker 4: and that's going to be playing on the energy. You
Speaker 4: step back and you add it all up, we're talking
Speaker 4: about a twenty to forty percent increase and natural gas
Speaker 4: demand in this country.
Speaker 3: Well, let me just ask you because before that, let's
Speaker 3: go back.
Speaker 2: That's longer term.
Speaker 3: But I know our BI people have put some research
Speaker 3: and they talked about North American gases at an inflection,
Speaker 3: and they talked about AI data centers and adding to
Speaker 3: domestic demand near Appalachians supply, will energy exports sustained global?
Speaker 2: But so tell us about the shorter term.
Speaker 3: Is there a little bit of an inflection point for you?
Speaker 4: I'd say the next the next three to five years,
Speaker 4: data centers and fueling the AI revolution is going to
Speaker 4: be a very big focus. But keep in mind we're
Speaker 4: going to be doubling US LG exports over the next
Speaker 4: five years. So we're doing both of these at once.
Speaker 4: And the good news is that we've got the natural
Speaker 4: resource in this country. It's just going to come down
Speaker 4: to how fast we can actually get this infrastructure built.
Speaker 4: Focusing specifically on the power demand side of things. When
Speaker 4: you step back and look at electrify everything, not just AI,
Speaker 4: we're looking at a ten to eighteen Bcfi day natural
Speaker 4: gas demand to meet that. That's a ten to eighteen
Speaker 4: percent increase in demand and about four to six about
Speaker 4: forty percent of that is going to be for data centers,
Speaker 4: so it's going to be this can be really big.
Speaker 4: We're seeing these opportunities happen in our backyard.
Speaker 2: EQT. We signed up over one and a half Bcfi
Speaker 2: day of natural gas fee ad for those and.
Speaker 4: This is a market that's about one hundred bcf a
Speaker 4: day just to make the numbers ballpark, So one and
Speaker 4: a half Bcfi day of natural gas supply for these
Speaker 4: data centers in Pennsylvania. This is going to generate enough
Speaker 4: power to almost power to New York cities. So these
Speaker 4: are major league infrastructure projects in a grid that desperately
Speaker 4: needs more power generation.
Speaker 1: The tech companies to talk about nuclear power generation powering
Speaker 1: their data centers. The President likes to talk about the
Speaker 1: promise of nuclear power, and I say promise of it
Speaker 1: because we know how to do it, but it just
Speaker 1: takes a long time and it's very expensive. How do
Speaker 1: you view the increased interest in recent years in nuclear
Speaker 1: power as a threat to your business?
Speaker 4: I think that natural gas is the clear winner right now.
Speaker 4: This has been a big question that people have been
Speaker 4: asking over the last call it eighteen months. What is
Speaker 4: going to power this AI revolution? What was originally thought
Speaker 4: to be renewable is going to pick this up? Then
Speaker 4: people went to nuclear and realize it's going to take
Speaker 4: too long to get it done. Comes back to natural gas. Why,
Speaker 4: because we have the track record of scale and speed.
Speaker 4: If you look over the last ten years, we've seen
Speaker 4: natural gas power demand increase fourteen bcfday. So think about
Speaker 4: how much we're planning on doing. We've done that with
Speaker 4: natural gas. Now, longer term, we think nuclear is going
Speaker 4: to be a great option. But understand this, natural gas
Speaker 4: has a vehicle to become zero carbon, and that's why
Speaker 4: we're spending a little bit of money today on carbon
Speaker 4: capture that will enable natural gas to be the first
Speaker 4: reliable affordable zero carbon energy solution.
Speaker 2: The world does not have that today, you know.
Speaker 3: Just like there's a big spend in AI and data centers,
Speaker 3: there seems to be a big spend and that energy
Speaker 3: to support it and what's needed. You have announced multiple
Speaker 3: long term sales and purchase agreements, I think just in
Speaker 3: the last few months. Some are fearing an oversupply to
Speaker 3: be in twenty twenty seven twenty twenty nine. What are
Speaker 3: you hearing from LERG buyers about kind of your demand
Speaker 3: visibility window and how confident are you. It sounds like
Speaker 3: you're pretty confident on a longer term pull for LERG
Speaker 3: or us LG specifically.
Speaker 4: Yeah, on the energy front, we certainly wouldn't disagree. We
Speaker 4: do see a little bit of an oversupply situation globally
Speaker 4: for energy that could lead to software prices in that
Speaker 4: twenty seven to twenty nine time frame that you mentioned.
Speaker 4: And you say, well, Tob, why did you just go
Speaker 4: and sign up for a massive amount of energy. It's
Speaker 4: because our contracts are going to be starting. We're going
Speaker 4: to be getting that exposure in twenty thirty, so this
Speaker 4: oversupply will pass and then we're back to a tight
Speaker 4: situation and that's where energy is hitting the market. When
Speaker 4: you want to talk about demand, just step back and
Speaker 4: look at this world. For a world that's going to
Speaker 4: continue to care about climate and emissions, replacing the coal
Speaker 4: in this world is going to require an additional one
Speaker 4: hundred and seventy BCF a day of natural gas. If
Speaker 4: you care about the people living on this planet, it's
Speaker 4: going to take an additional one hundred and twenty BC
Speaker 4: other day.
Speaker 3: Sure are you that people care about that? We are
Speaker 3: certainly feeling this year a pushback well when it comes
Speaker 3: to concerns about carbon emissions and climate. Yeah, there's not
Speaker 3: from everyone, and I have to be very careful because
Speaker 3: there's a lot of folks that are working really hard
Speaker 3: on this area.
Speaker 2: Yeah, but how Yeah, the confident and comfortable are on
Speaker 2: the energy transition.
Speaker 4: There's a ton of people that are passionate about this,
Speaker 4: and that passion is not going to go away with
Speaker 4: just one election. But I think what is happening now
Speaker 4: is people are stepping back and they're looking at the
Speaker 4: plans they put in place, and they're looking at the
Speaker 4: results of those plans. And what we're seeing is that
Speaker 4: Americans energy bills are up over thirty five percent. Now,
Speaker 4: renewables is not to blame for all of that. We've
Speaker 4: had a massive infrastructure cancelation movement that's prevented us from
Speaker 4: getting energy infrastructure built. That's the root cause of this issue.
Speaker 4: But when you step back and look at how much,
Speaker 4: how big of an impact this has had. We spent
Speaker 4: over two trillion dollars on renewables last year, and put
Speaker 4: that in perspective, we spent over one point three billion
Speaker 4: dollars in oil and gas the energy solution that provides again, yeah,
Speaker 4: two trillion dollars in renewables. Who what do you mean?
Speaker 2: We spent the world invested over two trillion dollars.
Speaker 4: In renewables built out and yeah, and then for comparison,
Speaker 4: oil and gas investments that provides over eighty percent of
Speaker 4: the world's energy, we invested over one point three trillion dollars.
Speaker 2: So this has been a very big theme. But it's
Speaker 2: coming out.
Speaker 3: Show to you that people are this is the future's renewables.
Speaker 3: That's where they're spending money. Is that what you're saying?
Speaker 4: If you went by where people were spending money, that
Speaker 4: does not necessarily mean what's going to be the future.
Speaker 4: The future of energy is going to be the energy
Speaker 4: solution that is affordable, reliable, and clean and has all
Speaker 4: three of those attu in check. I think the energy
Speaker 4: transition maybe has prioritized the clean aspects of energy. But
Speaker 4: as we're seeing right now, Americans are scratching their heads
Speaker 4: looking to see the record amounts of energy investments that
Speaker 4: we're making and the record amounts of energy production in
Speaker 4: this country, and their energy bills are up thirty five percent.
Speaker 4: They're scratching their heads. Why is this happening. It's because
Speaker 4: the solutions that we're putting on the field need to
Speaker 4: be the right solutions, and that is natural gas.
Speaker 1: But it's also because, as you said, the demand has
Speaker 1: gone up. For years, it was kind of flat, it
Speaker 1: was stable, and then we saw this huge increase in
Speaker 1: demand for power here in the US. So demand has
Speaker 1: a lot to do with it too.
Speaker 4: Well. Demand hasn't really started to pick up just yet.
Speaker 4: We're coming out of it. I think we're looking at
Speaker 4: massive growth prospects. But this really is a repercussion from
Speaker 4: all of the not under investment in reliable infrastructure over
Speaker 4: the past decade now this country, in America, since twenty eighteen,
Speaker 4: it's become almost impossible to get a pipeline built in
Speaker 4: this country. We own an asset called Mountain Valley Pipeline.
Speaker 4: Took an Act of Congress to get that pipeline built.
Speaker 4: So infrastructure has been incredibly challenged, and that is really
Speaker 4: strained markets and really put some stress on the system.
Speaker 1: So let's talk about those challenges. Are you having constructive
Speaker 1: conversations or are you having any conversations with the Trump
Speaker 1: administration representatives from the Trump administration to try to ease
Speaker 1: those regulatory delays.
Speaker 4: So this administration truly understands how important affordable and reliable
Speaker 4: is in the energy equation. You know, Secretary right fabulous
Speaker 4: really understands energy, all forms of energy. So I think
Speaker 4: we're going to have some practical approach towards energy solutions
Speaker 4: that we put in place. But that being said, the
Speaker 4: executive branch is not going to dictate the types of
Speaker 4: energy that we put in this country. We're going to
Speaker 4: need Congress to act to pass meaningful permit reform so
Speaker 4: we can get back to letting the most cost effective, reliable,
Speaker 4: cleanest form of energy.
Speaker 1: Do you consider wind power a form of energy?
Speaker 2: Absolutely?
Speaker 1: It doesn't seem like this administration supports that.
Speaker 4: Yeah, I mean, was that a mistake, Well, I would
Speaker 4: say it's as a as a sponsor of a pipeline,
Speaker 4: mount value pipeline has been subjective to tremendous political force.
Speaker 4: This is a situation where I think we would be
Speaker 4: in a much better place if we would let market
Speaker 4: forces dictate the energy that makes its way to the
Speaker 4: playing field, let political force take the back seat. Unfortunately,
Speaker 4: we are going to need some help from our leaders
Speaker 4: in Washington, DC. I hope they notice that we've got
Speaker 4: a massive demand surge coming. We do not have the
Speaker 4: right infrastructure set up right now. We need to do
Speaker 4: a massive build out. And just for people to understand
Speaker 4: the race that we're in right now, this is a
Speaker 4: national security threat for US. We have got to win
Speaker 4: the race for AI. And right now, how we're faring
Speaker 4: in the US where we put in six gigawatts of
Speaker 4: reliable power generation this last year China put over sixty
Speaker 4: of gigawatts of reliable power gen most of that call,
Speaker 4: so we are not keeping pace. We need to do
Speaker 4: a lot more.
Speaker 2: Just want to go back to.
Speaker 3: Cost just because it's cheap, and I understand there's other
Speaker 3: parameters that you're putting in there. I mean, there are
Speaker 3: net gas, there are leaks and so on and so
Speaker 3: forth that do impact the environment. So it's not the
Speaker 3: cleanest and purest. There are problems with it. And I
Speaker 3: just wonder if we're always constantly chasing the cheapest thing
Speaker 3: out there that's not necessarily a good thing. And just
Speaker 3: bring up all the manufacturing that we've put outside the
Speaker 3: United States just because it was a cheaper good that
Speaker 3: we're finding maybe that wasn't such a good strategy. So
Speaker 3: I just want to bring that back to the energy
Speaker 3: sector that maybe sometimes things have to be expensive to
Speaker 3: get to a really, really smart solution.
Speaker 4: I think we need to take a holistic approach when
Speaker 4: we're looking at energy, and we need to look at
Speaker 4: the balance between cost, reliability, and the carbon footprint associated
Speaker 4: with that energy. That's why when we look at those
Speaker 4: attributes for natural gas, that's why we believe that this
Speaker 4: is the energy solution of the future. When you look
Speaker 4: at regions that ignore and just over prioritize the clean
Speaker 4: aspects of energy, you have situations like Europe, and we've
Speaker 4: seen what's happened there.
Speaker 2: It's been a crisis.
Speaker 4: Thank goodness for American America and the energy that we've
Speaker 4: been able to provide them to get them through this
Speaker 4: with our LERG.
Speaker 2: So it's got to be a balanced approach.
Speaker 4: It's not all going to be about cost, it's not
Speaker 4: all going to be about reliability or carbon footprint. It's
Speaker 4: got to be a healthy balance of three. Right now,
Speaker 4: we need to get back to the affordable, reliable.
Speaker 3: Speaking of balance, and I just want to go to
Speaker 3: your balance sheet because there is a spend right everybody's
Speaker 3: doing it because they are chasing this AI spend and
Speaker 3: trying to be there in terms of support. You guys
Speaker 3: have talked about working down to a twenty twenty six
Speaker 3: year in debt target of five billion. I think that
Speaker 3: was after the Equatransdale tell us about what you're considering
Speaker 3: to help prop up your balanchet and just got about
Speaker 3: thirty seconds, three.
Speaker 4: Seconds out thirty thirty thirty seconds. I'll tell you what
Speaker 4: our priority, What our priorities are right now. Insure the
Speaker 4: reliable production of energy. Right now, we produce a little
Speaker 4: bit over a million barrels a day of energy.
Speaker 3: So anything that you need to do to meet that,
Speaker 3: We're not worried about the spend.
Speaker 2: For maintenance volumes levels.
Speaker 4: We're going to be reliably providing the future by signing
Speaker 4: up these growth contracts, both on energy and the data
Speaker 4: sat to build out and from a cleanliness perspective. We've
Speaker 4: already made the investments and we've already slashed our methane emissions.
Speaker 4: We've got one of the best environmental programs that.
Speaker 3: Sounds like the spend and the Debt's okay for now. Yes,
Speaker 3: I'm going to leave with there. Toby Rice, Presidents CE
Speaker 3: of Equal e q T
Speaker 4: MHM