Matthew Smith — Natural Gas: The Next Bottleneck - [Invest Like the Best, EP.483]

What It Covers

Matthew Smith, founder of Cronometer Partners, presents well-level modeling of every US natural gas asset to argue that AI data center demand plus committed LNG exports totaling 35 BCF/day will exhaust US working gas storage by 2030, creating an unprecedented structural energy crisis with unbounded upside price risk.

Key Questions Answered

• •Supply-Demand Gap: US natural gas production can realistically grow to 128–132 BCF/day maximum, but committed LNG exports alone will reach 35 BCF/day by 2030, consuming roughly 27% of total output. Adding ~5 BCF/day of credible AI compute demand at P50 probability creates a structural deficit starting in 2028 that storage cannot absorb.
• •Storage Depletion Timeline: US working gas storage sits at roughly 4 TCF total. Smith's modeling shows storage breaking below all historical ranges by mid-2028, dropping below any recorded level by 2029, and approaching near-zero by 2030. At that point, gas prices become structurally uncapped—not a weather spike but a permanent structural shortage driving electricity prices exponentially higher.
• •Equity Positioning: Expand Energy controls approximately 70% of remaining core Haynesville wells and trades at 4x forward EBITDA on a flat gas curve that ignores the coming deficit. Range Resources holds significant Appalachian upside. Solar yieldcos XPLR and Clearway Energy capture electricity price windfalls with zero incremental CapEx as gas-set marginal power prices rise.
• •Nuclear as the Only Structural Fix: Large-scale AP1000 reactors—Westinghouse's 1GW+ design, of which China is building 34—represent the only scalable solution. Cameco (49% Westinghouse owner) and BWXT are the primary equity beneficiaries. To matter by 2033–2034, government procurement commitments and loan guarantees must begin immediately to derisk supply chains and attract private capital.
• •Hyperscaler Cost Risk: Energy currently represents roughly 10% of hyperscaler operating costs, modeled on a flat ~$3.50/MCF gas forward curve. If gas doubles or triples structurally by 2029, energy becomes 20–40% of compute costs. Companies deploying gas-powered assets—fuel cells, simple-cycle turbines—should lock in physical gas supply contracts now, as counterparty risk in 2027–2028 will be severe.