Kinder Morgan and Liberty Energy reported their 1st quarter 2024 earnings yesterday, April 17th, after the market closed. Kinder Morgan’s analyst conference call was held right after the market closed while Liberty Energy’s analyst conference call was done today, April 18th. Kinder Morgan is a pipeline and storage operator while Liberty Energy is a fracking service provider.
Kinder Morgan
Kinder Morgan talked a lot about the long-term future macro environment of natural gas demand. Like what other companies have been proclaiming recently, Kinder Morgan mentioned the potential for large natural gas demand increases coming from very significant increases in power demand due to the explosion of new AI related data centers. To quote the CEO, “put another way, data centers used about 2.5% of U.S. electricity in 2022 and are projected to use about 20% by 2030. AI demand alone is projected at about 15% of demand in 2030. If just 40% of that AI demand is served by natural gas, that would result in incremental demand of 7 to 10 Bcf a day”.
There has been a lot of buzz and hype from energy CEOs around the potential for an explosion of power demand from AI demand centers, which in turn would lead to an explosion in natural gas demand as renewables would only be able to serve a fraction of that new demand by 2030. There is potentially a lot of hype around AI demand center growth, and we will write an article in more detail about this within the next few weeks.
Kinder Morgan expects to see a doubling of US LNG exports by the year 2030 along with an additional 50% increase in natural gas exports to Mexico by 2030. Incremental demand growth from Lower 48 LNG exports is expected to commence in early 2025. The company doesn’t think that the LNG export project pause from the Biden administration will have any impact on projects that are expected to come online by 2030.
Liberty Energy
Liberty Energy also spoke about the increasing demand for reliable energy sources due to AI data centers and manufacturing reshoring. The company believes that oil and gas are still in a positive cycle for fracking services, especially on the oil side. The company is seeing a shift towards lower emission, capital-efficient technologies powered by natural gas. The move towards electric fracking continues unabated. They expect low double-digit sequential growth in revenue on stable pricing, increased efficiency, and corresponding improvement in profitability for the second quarter of 2024.
