Matthew Smith — How America Runs Out of Natural Gas by 2030 - [Invest Like the Best, EP.483]
Matthew Smith argues that the U.S. faces an impending natural gas crisis by 2028-2030 driven by AI data center demand and LNG exports, which will exhaust working gas storage and cause electricity prices to spike dramatically. The problem stems from infrastructure constraints in production, processing, and pipeline capacity rather than resource scarcity, requiring urgent investment in nuclear energy and pipeline infrastructure to prevent economic disruption.
Summary
Matthew Smith, founder and CIO of Chronometer Partners, presents a detailed analysis of the U.S. natural gas market based on 16+ months of modeling every major well, pipeline, and processing asset in the country. His central thesis is that beginning in 2028, combined demand from AI data centers and liquefied natural gas (LNG) exports will exceed domestic production and delivery capacity, causing the U.S. to deplete its working gas storage by 2030 and potentially creating an energy crisis.
Smith explains that the problem was set in motion well before AI arrived. Starting in 2010 when shale gas became abundant, the U.S. shifted from importing to exporting natural gas. Current export capacity stands at 15 billion cubic feet per day (BCF/day), with plans to reach 35 BCF/day by 2030. The U.S. can add approximately 20 BCF/day of production from existing acreage, but this matches almost exactly with planned LNG export growth. AI compute demand adds 5 BCF/day in the base case (P50 probability), potentially doubling to 12-15 BCF/day in extreme scenarios.
The fundamental issue isn't the quantity of gas in the ground—America has substantial reserves—but rather the infrastructure to extract, process, and deliver it. Smith identifies three critical bottlenecks: processing facilities (which require 2-3 years to build and currently lack sufficient capacity), gathering systems (small diameter pipes from wellheads to pipelines), and the interstate pipeline network (where only one major pipeline, Mountain Valley Pipeline, has been built in the past decade due to regulatory barriers).
Smith projects that if current trends continue unabated, working gas storage will decline below all historical levels by late 2028, become critically depleted in 2029, and approach dangerous lows by 2030. This would force natural gas prices from current levels around $3.50-3.60 to potentially $8-10+ per MCF during shortage periods, though he hesitates to put precise price targets on truly convex scenarios. Higher electricity prices would result because natural gas serves as the marginal fuel setting prices across most U.S. power markets.
Smith identifies clear winners and losers in this scenario. Among upstream producers, Expand Energy (controlling 70% of remaining Haynesville wells) and Range Resources (strong Appalachian position) would benefit significantly from higher gas prices. Solar companies like Brookfield Renewable Partners (XIFR/NextEra Yield) would see margin expansion without additional capital investment, as electricity prices rise while solar's fuel cost remains zero. Surprisingly, residential solar becomes economically compelling even without tax incentives when peak electricity prices spike.
Loosers include the U.S. consumer facing higher electricity bills, hyperscalers whose energy costs could rise from 10% to 20-30% of total computing costs, and manufacturers of distributed generation like Caterpillar and Bloom Energy, whose assets may become uneconomic to operate if natural gas prices double or triple. Engineering and construction firms building gas plants also face headwinds if new deployments become uneconomical.
Smith's proposed solutions center on nuclear energy as the only viable long-term fix. He advocates for the U.S. government to fully fund and build 2-4 AP1000 reactors to de-risk the supply chain and demonstrate commitment, which would encourage private investment in additional reactors. He dismisses small modular reactors (SMRs) as still largely experimental and unlikely to scale sufficiently for the problem's magnitude. He also recommends expanding Canadian natural gas imports via new pipelines to the U.S. Midwest, incentivizing residential solar installation, and maintaining LNG exports despite the crisis due to contractual obligations and geopolitical importance to U.S. allies.
Smith emphasizes that complacency pervades the market because natural gas has been abundant for 15 years. The forward curve remains flat and depressed because investors don't believe the structural tightness he describes will occur. Financial hedging and long-term contracting for physical gas supply is nearly absent, despite the risk. He expresses surprise that despite tens of billions flowing into distributed generation projects, few companies have contracted for long-term gas supply, creating counterparty risk similar to the memory shortage experienced in semiconductor markets.
About this episode
My guest today is Matthew Smith. Matthew is the founder and CIO of Chronometer Partners, which invests in energy, industrials, materials, power and utilities, and related infrastructure. For the last 18 months he and his team have modeled nearly every natural gas well, pipeline, and processing asset in the United States. He's reached a conclusion most of the market doesn't share. Starting in 2028, AI data centers and LNG exports will need more gas than the country can produce and deliver. By his math, the US could exhaust its working natural gas storage by 2030. In his words, the upside risk to prices becomes unbounded and convex. We talk about why this was set in motion long before AI arrived, why the US can't just turn off exports, who wins and loses among producers, nuclear, solar, and the hyperscalers, and what he sees as the only long-term solution. Please enjoy my conversation with Matthew Smith. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- In June, Matthew wrote a letter to a small group of confidants laying out the full case behind his natural gas forecast. He has allowed us to publish it. You can read the full letter here. ----- Become a Colossus member to get our quarterly print magazine and private audio experience, including exclusive profiles and early access to select episodes. Subscribe at colossus.com/subscribe. ----- Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to ramp.com/invest to sign up for free and get a $250 welcome bonus. ----- Trusted by thousands of businesses, Vanta continuously monitors your security posture and streamlines audits so you can win enterprise deals and build customer trust without the traditional overhead. Invest Like the Best listeners get a special offer of $1,000 off Vanta when you go to vanta.com/invest. ----- WorkOS is the infrastructure B2B and AI-native companies use to sell to enterprise. It covers everything enterprise security requires: SSO, SCIM, RBAC, Audit Logs, AI governance, and more. Trusted by 2,000+ fast-growing companies, including OpenAI, Anthropic, Cursor, and Vercel. ----- Rogo is the AI platform for finance. They're building agents for Wall Street that are trained to understand how bankers and investors actually do work: from diligence and modeling, to turning analysis into deliverables. To learn more, visit rogo.ai/invest. ----- Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Visit ridgeline.ai. ----- Editing and post-production work for this episode was provided by The Podcast Consultant. Timestamps: (00:00:00) Welcome to Invest Like the Best (00:02:02) Episode Intro: Matt Smith (00:03:33) The Conclusion After 18 Months (00:04:56) The Die Was Cast Before AI (00:07:24) Sizing AI's Gas Demand (00:09:33) Why Not Just Stop Exporting? (00:11:38) Is the Gas Even There? (00:13:53) The Timing Problem, Not Supply (00:15:15) Flow Versus Stock (00:19:10) What Slows Gas to Market (00:22:21) If Nothing Changes by 2030 (00:26:11) Could Prices Hit Twenty Dollars? (00:27:00) Gas Producers Poised to Win (00:28:54) Utility-Scale Solar's Windfall (00:30:08) What About Nuclear? (00:32:40) SMRs (00:34:29) The US Consumer Pays (00:36:37) Turbine Makers Building Too Late (00:37:57) Are Hyperscalers Exposed Too? (00:44:25) Kickstarting the Nuclear Build (00:46:20) Put Solar on Every Roof (00:46:52) Implications for the World (00:49:26) No One's Securing Supply (00:52:57) The Challenge for Energy CEOs
Key Insights
- Smith argues that U.S. natural gas exports are scheduled to double from 15 to 35 BCF/day by 2030, consuming virtually all incremental production capacity before AI demand is even considered.
- The problem is not resource scarcity underground but rather infrastructure bottlenecks: processing facilities lack capacity, gathering systems need investment, and interstate pipeline construction has stalled due to regulatory barriers.
- Smith claims that by 2028-2030, the U.S. will draw working gas storage below all historical levels, potentially forcing natural gas prices to $8-10+ per MCF during shortage periods with convex upside risk.
- Smith contends that market participants universally underestimate the crisis because natural gas has been abundant for 15 years, the forward curve is flat and depressed, and financial hedging for 2028-2030 delivery is minimal.
- Smith argues that natural gas serves as the marginal fuel setting electricity prices across most U.S. power markets, meaning gas price spikes directly translate to widespread electricity price increases affecting consumers.
- Smith identifies Expand Energy as the biggest upstream winner due to controlling 70% of remaining Haynesville wells with known, favorable geology, yet the stock has plummeted due to CEO transition unrelated to asset quality.
- Smith claims that distributed generation manufacturers like Caterpillar and Bloom Energy are over-investing in assets that may become uneconomic by 2029-2030 when gas prices spike, similar to overbuilding in the early 2000s.
- Smith argues that large-scale AP1000 nuclear reactors are the only viable long-term solution rather than small modular reactors, which he describes as still experimental and unable to scale sufficiently for the problem's magnitude.
Topics
Transcript
I know firsthand how complex the tech stack is for asset management firms. And seemingly every new tool and data source makes the problem even worse, adding more complexity, more headcount, and more risk. Ridgeline offers a better way forward. One unified platform that automates away the complexity across portfolio accounting, reconciliation, reporting, trading, compliance, and more, all at scale. Ridgeline is revolutionizing investment management, helping ambitious firms scale faster, operate smarter, and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule a demo at ridgeline.ai. Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help…
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