New York, 23 September (Argus) -- US independent EQT is poised to retake the throne as the largest US natural gas producer by volume after rival Expand Energy took the top spot through a $7.4bn merger last year.
EQT, which produced 6.2 Bcf/d (176mn m³/d) of gas in the second quarter, has about 2.5 Bcf/d of potential growth opportunities in the form of supply agreements with electricity-intensive data centers running artificial intelligence (AI) software and new southeastern US markets accessible through EQT-owned Mountain Valley pipeline, EQT chief executive Toby Rice told Argus in an interview. This includes EQT's July agreements to supply nearly 1.5 Bcf/d to two planned natural gas-fired power plants in Pennsylvania which will serve planned AI data centers, as well as EQT's plan to flow more gas through the 2 Bcf/d Mountain Valley pipeline, which is only flowing at about 1.2-1.4 Bcf/d, Rice said. Filling up that pipeline as more transportation capacity is unlocked through downstream pipeline expansions, and well as expanding the MVP system to 2.5 Bcf/d through EQT's planned 500mn cf/d MVP Boost project, which EQT expects to enter service in 2029, comprise the other 1 Bcf/d of potential growth for EQT, he said.
This 2.5 Bcf/d of potential growth could put EQT well ahead of Expand Energy if Expand -- which took the top spot for US gas production in October 2024 through a merger between Chesapeake Energy and Southwestern Energy -- does not keep pace. Expand produced 7.2 Bcf/d of natural gas equivalent in the second quarter.
"EQT has positioned itself well to overtake Expand in the coming years," East Daley Analytics natural gas team lead Ian Heming said. "While Expand does have the opportunity to answer upcoming LNG demand with its [Arkansas-Louisiana-Texas] position, EQT has been aggressive in its dealmaking, and it looks likely EQT will surpass Expand by the end of the decade if Expand doesn't act quickly."
US bank Citi on Tuesday lifted its target stock price for EQT while trimming Expand's target price given EQT's "superior long-term growth prospects tied to regional data centers" as well as the "superior" rate at which EQT converts earnings to free cash flow. Citi said it sees EQT growing 1.75 Bcf/d by 2032.
That said, while Rice anticipates more AI data center opportunities, "say, a year from now," he added that there was "nothing right around the corner", following EQT's flurry of recently announced LNG and data center gas supply deals.
Wells Fargo in a Monday research note to clients said it had raised its forecast for US gas demand to run AI data centers to 11 Bcf/d through 2030, with 16 Bcf/d expected through 2032.
Growing its US gas output would also allow EQT to meet its goal of exposing about 10pc of its gas output to the international market, where gas sells at wide premiums to US markets: $13/mmBtu at the Dutch TTF hub over the past year compared to roughly $3/mmBtu at the US benchmark Henry Hub.
About 15pc of EQT's production is on pace for international price exposure through its 6.5mn t/yr of LNG supply deals with export terminals in Texas and Louisiana. But exploiting that 2.5 Bcf/d of growth opportunities is "a way you could see proportionally that 6mn t/yr shrink from 15pc of our volumes to about 10pc of our volumes ... [which] is the ballpark goal right now," Rice said.
'We have enemies in the West'
The US' ability to rapidly build out baseload power generation infrastructure will determine if the US wins or loses the AI race, which has serious national security implications, Rice said.
"We have enemies in the West ... we have enemies that want to take us down," he said.
But the pace at which the US is building out baseload power generation capacity -- meaning gas, coal and nuclear -- is being far outmatched by China, Rice said.
China approved 66.7 GW of new coal-fired power generation in 2024, according to the Centre for Research on Energy and Clean Air. This is more than the entire 64 GW of power generation from all energy sources that US developers plan to bring on line this year, according to the US Energy Information Administration.
"Right now, we do not have a regulatory environment that allows American energy projects to compete and move at the scale that's needed," Rice said.