Locator: 48719LNG.
Remember, this is the these: the AI revolution is an energy story, specifically a natural gas story.
This blog begins its focus on LNG, but LNG is just a part of the much larger natural gas story.
"From a US point of view, most US projects don’t have price exposure, so as long as their offtakers pay the liquefaction fees even if they cancel cargoes, they will be fine.
We saw this in 2020 when we had many cancellations -- the year of the Covid-19 lockdown.
Over time, demand growth will absorb any length so [one] would expect that cancellations would be limited in duration.
The market will ultimately sort out who wins and who loses. The reality is that although the sector has been revitalized by Trump's position on LNG projects, a more favorable regulatory environment alone won't alter the underlying economics, and in fact, many projects will not advance beyond the filing stage. [I've heard that before.]
The chart:
- When you look at the chart, the first question to ask: so, when did the AI revolution begin?
So, does the chart help? When did the AI revolution begin? Well, that's a bit difficult to say; the revolution evolved over time. There was no "shot heard 'round the world" like the shots heard "round the world" on April 19, 1775.
But the graph above suggests the AI revolution began in 2019. The following year, 2020, is an outlier due to the Covid-19 shutdown. But 2019, 2021, 2023 certainly suggest the "revolution" began in 2019. Or the LNG folks saw it coming. Or geopolitical issues in Europe / China drove the growth, regardless of AI, in 2019. Who knows.
Can that be corroborated? I don't know, but let's explore. What would be the next proxy after LNG demand?
Yes, demand for "blades."
And one gets this proxy, Nvidia:
So, it's hard to say.
Perhaps geo-political events in Europe / China drove the early spike (2019) but then the AI revolution sustained LNG demand.
2019 looks like the year to consider. Ask ChatGPT "what was Jensen Huang / Nvidia doing in 2019?"
Answer:
- In 2019, Jensen Huang, co-founder and CEO of Nvidia, was focused on expanding the company's leadership in AI, data centers, and graphic processing while steering through a challenging but transitional year. Bullets:
- recovery after the crypto slump
- stabilized revenue from gaming GPUs
- doubling down on AI and data centers
- Huang emphasized moving from "just a GPU company" to a full-stack AI computing company
- laid the foundation for Nvidia's future dominance in accelerated computing which would explode during the AI boom of 2023 -2024
- in addition to specific Nvidia launches, Nvidia also acquired Mellanox Technologies in March, 2019, a $7-billion acquisition -- a company that specialized in high-performance networking (InfiniBand, Etheret)
So,
- 2019: Huang lit the fuze for the shot that would be heard 'round the world
- 2023 - 2024: the cannon was fired -- to continue the analogy
But let's keep going. Let's ask ChatGP, what drove the explosion in US LNG export terminals in 2019?
The answer -- a combination of market dynamics, technological advances, policy support (the Biden autopen), and global demand trends. Specifically:
- surging global demad for LNG (Asia and Europe)
- US shale gas boom: large surplus of cheap gas
- LNG technology improvements (liquefaction and transport)
- first movers showed success (Cheniere Energy's Sabine Pass: first major US export terminal began exporting in 2016
- US regulatory and policy support (Biden's auto-pen): DOE and FERC streamlined approvals
- strong project economics and contracts (long-term offtake agreements with foreign buyers)
- shift in global LNG market structure: spot trading and portfolio contracts rather than rigid long-term deals; US could be flexible
Key projects in 2019
- Sabine Pass, Cheniere
- Corpus Christi, Chenieere
- Freeport LNG
- Cameron LNG, Sempra
- Elba Island, Kinder Morgan
- Golden Pass (FID 2019), XOM/Qatar Energy
So, if asked in the future, I will argue that the AI revolution began:
- when the fuse was lit in 2019: Nvidia's leadership but specifically Mellanox Technologies; and,
- the gun went off in 2023, with the phrase, “the magnificent seven”:
- phrase first used by Michael Harnett, BofA, May, 2023,
- but popularized by Jim Cramer on June 1, 2023, during the mid-year tech rally.
Acquiring Mellanox Technologies? Brilliant. Huang may have "bet the farm" on that deal.
