TC Energy Reports Surging Natural Gas Demand, Driven by Data Centers and Electricity Growth

TC Energy reports record natural gas deliveries in Q1 2024, driven by soaring electricity demand across North America. The company's natural gas segments in Canada, the US, and Mexico reached $2.37 billion in comparable earnings, a significant increase from last year.

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TC Energy Reports Surging Natural Gas Demand, Driven by Data Centers and Electricity Growth

TC Energy Reports Surging Natural Gas Demand, Driven by Data Centers and Electricity Growth

TC Energy Corp., a Canadian pipeline operator, has announced record natural gas deliveries in the first quarter of 2024, driven by the soaring electricity demand across North America. The company's comparable earnings from its natural gas segments in Canada, the United States, and Mexico reached $2.37 billion, a significant increase from $2.18 billion in the same period last year.

Why this matters: The growing demand for natural gas has significant implications for the energy sector, as it highlights the ongoing shift towards cleaner-burning fuels and the increasing reliance on natural gas infrastructure to power the digital economy. As data centers continue to proliferate, the demand for natural gas is likely to drive investment in infrastructure and shape the future of energy production and consumption.

TC Energy's NGTL system achieved remarkable milestones, delivering an average of 15.3 billion cubic feet per day (Bcf/d), an increase of 0.7 Bcf/d compared to the first quarter. The system also set a new single-day delivery record of 17.3 Bcf/d. In the United States, TC Energy's natural gas pipelines witnessed daily average flows of 30 Bcf/d, representing more than 5% year-over-year growth. Significantly, natural gas deliveries to U.S. power generators surged by 11% year-over-year, setting a new quarterly record. power generators surged by 11% year-over-year, setting a new quarterly record.

François Poirier, CEO of TC Energy, emphasized the ongoing growth in natural gas demand, stating, "Natural gas demand growth is continuing in powering the U.S. as electricity demand grows... 2023 was a record year for power burn across the U.S. and that strength is continuing into 2024." This trend is in line with the U.S. natural gas consumption reaching an all-time high of 89.1 billion cubic feet per day in 2023, and an average annual increase of 4% since 2018.

A report by McKinsey & Co. A report by McKinsey & Co. projects that global natural gas demand will increase by 10-15% beyond 2030 before declining during the progression of the energy transition. The growth is attributed to the shift from coal to cleaner-burning natural gas and the rising demand for natural gas-fired power driven by the electrification of buildings, transportation, and heavy industry.

TC Energy anticipates significant natural gas growth driven by the emerging demand from data centers. McKinsey & Co. forecasts that power consumption by U.S. data centers will increase by 10% until 2030. Stanley Chapman, TC Energy's Chief Operating Officer for Natural Gas Pipelines, highlighted the potential, stating, "We do see a meaningful load and growth opportunity from increased demand in coming years stemming from data centres... Reliability requirements associated with data centres are also driving increased appreciation for the role that natural gas is going to play in supporting those loads as well."

In other developments, TC Energy has announced a deal to sell its Portland Natural Gas Transmission System to BlackRock and investment funds managed by Morgan Stanley Infrastructure Partners. The company has also reached an agreement to sell its Prince Rupert Gas Transmission project to the Nisga'a Nation and its partner, Western LNG. Additionally, TC Energy is progressing towards spinning off its crude oil pipeline business into a separate entity called South Bow Corp., with shareholders set to vote on the proposed spinoff at the company's annual general meeting on June 4.

Demand for electricity continues to surge, driven by factors such as the proliferation of power-hungry data centers, and natural gas is expected to play a vital role in meeting these energy needs. TC Energy's record deliveries and optimistic projections highlight the growing importance of natural gas infrastructure in powering North America's digital transformation.

Key Takeaways

  • TC Energy reports record natural gas deliveries in Q1 2024, driven by soaring electricity demand.
  • Natural gas demand grows 11% year-over-year in the US, setting a new quarterly record.
  • Global natural gas demand expected to increase 10-15% beyond 2030, driven by energy transition.
  • Data centers to drive natural gas growth, with US power consumption expected to increase 10% until 2030.
  • TC Energy to spin off crude oil pipeline business, focusing on natural gas infrastructure.