Fueling AI Growth in the Golden Era of Natural Gas

We believe we are entering a new age of energy demand. Artificial intelligence and the rapid growth of data centers are driving a surge in electricity needs across the United States. And, at the heart of meeting this demand, is natural gas.

In this video, Boran Buturovic, co-Portfolio Manager for our Energy Infrastructure Equities strategies, discusses a few observations that we believe are fueling AI growth in the golden era of natural gas.

Hello,

I am Boran Buturovic, co-Portfolio Manager for the Brookfield Public Securities Group’s Energy Infrastructure Equities strategies.

Today, we are discussing a few observations that we believe are fueling AI growth in the golden era of natural gas. 

Boran:

We are entering a new age of energy demand. Artificial intelligence and the rapid growth of data centers are driving a surge in electricity needs across the United States. And at the heart of meeting this demand is natural gas.

Boran:

Natural gas has long been a critical source of power—reliable, abundant, and cleaner than other hydrocarbons. Even during years of flat overall U.S. power generation, from 2018 to 2023, natural gas grew its share of the U.S. power stack by 8%, outpacing the growth of wind and solar despite the proliferation of these technologies.

Now, electric load projections are accelerating. Utilities that once expected only modest growth are now warning regulators they’ll need an incremental 100 gigawatts of new gas capacity by 2035—a massive shift to keep up with rising demand.

Boran:

This creates a unique opportunity for publicly traded midstream companies—the operators of America’s vast natural gas gathering and transmission systems. Their infrastructure already connects supply with end-user demand, giving them a strong competitive advantage.

And because these companies dominate the existing value chain, we believe they’re well positioned to capture growth in both domestic power generation and exports of U.S. gas abroad. That means potential for long-lived assets, with long-term contracts, delivering strong value creation.

Boran:

We believe midstream companies are also better positioned to accommodate growing capital needs than they have been in the past. A decade ago, they relied heavily on debt and equity to fund growth, often stretching capital markets too thin.

Today, capital markets reliance is low and leverage levels have declined meaningfully throughout the listed midstream universe.

With improved financial flexibility, a typical midstream company can currently satisfy both its dividend and its capital backlog with internally generated free cash flow, oftentimes generating excess operating cash flow left over to reduce debt further or buy back stock. What’s more, as midstream companies continue to grow over time, we are optimistic that they can continue to de-lever organically as projects get placed into service and begin generating cash flows.

Boran:

With AI fueling electricity demand and natural gas providing the backbone of reliable power, U.S. midstream companies stand at the center of this transformation. Their incumbency, financial strength, and strategic infrastructure position them to aim to deliver attractive returns—while powering the future of energy.