The Energy Infrastructure Newsletter • Summer 2024

As an investment advisor, you have been subscribed to the Energy Infrastructure Newsletter so that you and your clients can stay abreast of this powerful emerging subsector. Formerly the MLP Newsletter, the Energy Infrastructure Newsletter is published in partnership with the Energy Infrastructure Council, a nonprofit trade association dedicated to advancing the interests of companies that develop and operate energy infrastructure. EIC addresses core public policy issues critical to investment in America’s energy infrastructure.

US Natural Gas Demand Is About to Take Off  

Advisor Access spoke with Michael J. Blum, a managing director at Wells Fargo Securities.

Advisor Access: There are so many articles and news features about the growth of Artificial Intelligence (AI) and the coming boom in datacenter growth. What does this have to do with energy stocks?

Michael J. Blum: The launch of ChatGPT by OpenAI in November 2022 marked a significant leap forward in the field of artificial intelligence (AI). ChatGPT and other AI applications are large language models that train on vast amounts of text, images, and data so that when a user asks the AI interface a question or tasked AI to generate a report or an image, it can do so almost instantaneously. This new generation of AI requires significant computing power. The graphical processing units or GPU chips made by Nvidia and others are the engine that makes AI go and these new chips are power hungry! And they are only getting more power hungry. For example, Nvidia’s latest GPU consumes 30% more power than its predecessor AND each server has more GPUs than the previous generation.

Our analysis suggests that the buildout of AI data centers will drive a step change in U.S. power growth. We calculate AI will require almost 700 TWhs [terawatt-hours] of incremental power by 2030E on an unconstrained basis. To put that in perspective, the U.S. power market today consumes about 4,000 TWhs of electricity. Over the past 15 years, U.S. power demand has been relatively flat. But AI datacenters and other trends (e.g., EVs, reshoring) could increase demand by 20% through 2030, or at a 3% compound annual growth rate (and keep growing beyond that).

Source: Wells Fargo Securities, LLC Estimates

AA: That all sounds great but I’ve read that the hyperscalers building this next generation AI want to use “green” power exclusively for these new data centers. How does this impact natural gas demand?

MB: It’s true that Google, Microsoft, Amazon and the like have made public statements about their desire to power their new AI data centers exclusively with green electrons. But we believe this is mostly aspirational. The reality is that renewables will likely not be able to keep pace given permitting and regulatory hurdles (for example, the wait time to connect new renewable projects to the existing electric grid is five years). Then there’s also the challenge of intermittency. AI data centers will require 24/7 power, whereas wind and solar, even with battery storage, can only provide power when the wind is blowing and the sun is shining. So, while we do expect the renewable industry to capture a sizable share of AI datacenter growth, we think natural gas will make up most of the difference.

AA: How much incremental natural gas demand are we talking about?

MB: Of the 700 TWh of incremental power demand we forecast through 2030, we assume 40% of incremental demand is met by natural gas, 30% by wind and 30% by solar. This translates into +7 billion cubic feet/day (Bcf/d) of incremental gross natural gas demand, +31 GWs gigawatts [GWs) of annual solar installments and +21 GWs of annual wind. For context, the U.S. market today consumes ~106 Bcf/d of natural gas and of that amount, ~35 Bcf/d is consumed in the power sector. Therefore, datacenter demand alone represents 20% growth potential.

AA: Are there any other changes to U.S. natural gas markets we should focus on?

MB: Yes! The AI datacenter buildout is just one driver of the rapid growth in natural gas demand we project. There are several other drivers of accelerating U.S. natural gas demand over the next five+ years. First and foremost is liquefied natural gas (LNG) (which represents demand to export natural gas from a U.S. demand perspective). Based on projects that are definitely moving forward (i.e., have reached final investment decision), we project 13 Bcf/d of incremental LNG demand by 2030. The reshoring of manufacturing to U.S. shores, electrification trends, and the growing adoption of electric vehicles will also contribute to higher natural gas demand. We estimate these trends will add 3 Bcf/d of natural gas demand by 2030. Taken together, that’s 23 Bcf/d of incremental natural gas demand on a base of 106 Bcf/d (or 22% growth!).

EIC Sponsors in the News

Archrock (NYSE: AROC) Reports First Quarter 2024 Results

Energy Transfer (NYSE: ET) Reports Strong First Quarter 2024 Results

Enterprise Products Partners (NYSE: EPD) Reports First Quarter 2024 Earnings

Natural Resource Partners (NYSE: NRP) Reports First Quarter 2024 Results

ONEOK (NYSE: OKE) Announces First Quarter 2024 Earnings

Williams (NYSE: WMB) Delivers Strong First-Quarter Results

AA: What’s the best way to invest in this theme? 

MB: We see the large natural gas midstream and pipeline operators as best positioned to benefit from this trend. Growing natural gas demand from new power generation should spur incremental opportunities to expand pipeline networks over time. Companies that gather natural gas in the primary gas basins that will experience growth in supply (which includes the Marcellus share in the northeast United States and the Haynesville share in North Louisiana) should also benefit via higher utilization of assets. We expect natural gas midstream stocks to see multiple expansion (expanding valuations) as the market begins to recognize the long-term staying power of natural gas that will be required for decades. 

AA: Why shouldn’t I just buy natural gas producers? Won’t all this new demand cause prices to increase?

MB: While it’s quite possible that all this new natural gas demand will lead to higher prices, it’s also possible that it won’t. That’s because the U.S. has abundant supplies of natural gas. So incremental demand will certainly spur new drilling activity causing volumes to rise but because the U.S. can meet the new demand with abundant supply, the price of natural gas might not rise that steeply. What we do know is that this incremental supply will flow on pipelines to end markets, boosting the profits for natural gas pipeline companies.

AA: Any last thoughts on the topic before we go?

MB: Our last thought to leave you with is that we still think we’re in the early innings of a multi-year investment theme. Natural gas pipeline stocks have slightly outperformed the overall midstream sector this year, driven, in part, by the themes we’ve been discussing but we think there’s plenty more room for additional outperformance over the coming years. Investors are just starting to appreciate the transformation taking place in the natural gas market with growing domestic demand likely to provide midstream gas assets with years of secular tailwinds.

AA: Thank you for your insights.

Michael J. Blum is a managing director at Wells Fargo Securities covering the Midstream & Clean Energy sectors. Michael’s been ranked in the II Equity Research All America Poll in the Midstream and Natural Gas sector for 13 years including a No. 1 rank in Midstream for five years in a row (2015-19). He won the Ammy, an award recognizing excellence in the Midstream industry in 2015-2020 for best macro research and was elected to the Ammy Hall of Fame, a recognition for lifetime contributions to the midstream industry, in 2020. Michael graduated magna cum laude from the University of Pennsylvania with a BA in English literature and a minor in economics.
Michael Blum is a Senior Equity Research analyst at Wells Fargo Securities, LLC, covering the Midstream & Clean Energy sectors. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, Wells Fargo Securities Canada, Ltd., a member of IIROC and CIPF, Wells Fargo Bank, N.A. and Wells Fargo Securities International Limited, authorized and regulated by the Financial Conduct Authority. For additional information please visit


The material, information and facts discussed in this report are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. This is not an offer or solicitation of the securities discussed. Advisor-Access LLC and/or its employees, contractors and owners, may purchase or sell the securities mentioned in this report from time to time. Any opinions or estimates in this report are subject to change without notice. This report contains forward-looking statements. This information may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. The securities discussed may involve a high degree of risk and may not be suitable for all investors. The author had final approval of the content and is wholly responsible for the validity of the statements and opinions.
The EIC Newsletter for Advisors is solely distributed by Advisor Access. The Advisor Access full disclaimer is to be read and fully understood before using our site. By viewing our website, you are agreeing to our full disclaimer which can be read at:
The EIC is a registered trademark of the Energy Infrastructure Council and information provided by the EIC in this newsletter or on the website may not be used without the written consent of the EIC. Contact the EIC directly for said permission:
Newsletter Sponsors have paid Advisor Access a fee to include their corporate logos in this newsletter and as such their logos are to be considered advertising. Sponsor logos are the trademarks and property of the individual companies.


Advisor-Access LLC was designed to bring compelling investment ideas to investors in the form of in-depth interviews with company management and the latest fact sheets and corporate presentations, in a concise format: the critical pieces of information an investor needs to make an informed investment decision.