The end of cheap American gas

2. The LNG Export Tsunami

While domestic gas supply may fade, the US LNG industry is charging in the opposite direction. Five major Gulf Coast LNG terminals — Plaquemines, Corpus Christi Stage 3, Golden Pass, Port Arthur, and Rio Grande — are expected to add roughly 14 Bcf/d of firm export capacity between late 2024 and 2028. A further wave of projects, including Commonwealth, Lake Charles, Delfin, and Texas LNG, is widely expected to reach FID between 2025 and 2027, potentially bringing an additional 8–12 Bcf/d online by 2030–2032.

By the end of the decade, US LNG export capacity is on track to double from today’s 14 Bcf/d to about 28 Bcf/d, positioning America as the world’s leading LNG supplier.

3. The AI Power Shock

The third blow has arrived with breathtaking speed, and its implications is only now becoming apparent to most energy analysts. The launch of ChatGPT in late 2022 ignited an AI arms race that is rewriting electricity demand forecasts. Training and running AI models is staggeringly power-intensive, and the states with the highest concentration of data centres (California, Illinois, Ohio, Texas, and Virginia) have already experienced substantial increases in electricity prices.

Hyperscalers such as Microsoft, Amazon, Google, Meta, Oracle, xAI, and Anthropic are rapidly expanding power procurement, and many are building or contracting gas-fired generation at their data centre sites. Industry forecasts for data centre power demand have soared to 80 GW by 2030 – roughly eight times higher than three years ago when ChatGPT was launched.

Because data centres operate 24/7 and require near perfect reliability, intermittent renewables alone cannot meet their energy needs. Natural gas, as the cheapest and fastest-to-dispatch reliable source, will shoulder most of this growth. An 80 GW data centre load powered exclusively by gas-fired generation would require roughly 13 Bcf/d of continuous burn.

Gas Implications

Over the past fifteen years, the entire U.S. shale industry managed to grow gas production by about 40 Bcf/d. In the next five to seven years, however, gas demand is expected to surge by 27 Bcf/d (14 Bcf/d from the new wave of LNG exports and 13 Bcf/d from data centre power burn). Without another Shale oil boom to deliver fresh associated gas, the only mechanism the markets has to close this supply-demand gap is price.

Henry Hub futures have already begun to reflect this reality – front-month futures are now at $4.9/MMBtu, the highest level in three years and up from $3.40 a year earlier. More telling, US prices have decoupled from European TTF and Asian JKM benchmarks, underscoring that America now faces its own unique, structural supply-demand squeeze. 

Source: FactSet

Structurally higher gas prices will eventually ripple through the economy. Wholesale electricity prices will rise, particularly in gas-heavy regions. Petrochemical and fertilizer producers will likely face margin compression. In some scenarios, utilities may delay coal retirements or even extend older coal plants, just as happened in Australia when East Coast gas prices spiked above A$10/GJ.

America will remain an energy superpower. It will simply no longer be a cheap-energy superpower. The shale revolution gave the country fifteen golden years of gas abundance. Those years are over, and new demand drivers are now poised to outstrip supply growth in the coming years.