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Natural Gas: More Than Just a Bridge Fuel?
03/24/2025
Natural gas continues to take center stage at CERAWeek in Houston
At this year’s CERAWeek in Houston, energy leaders shared a strong and unified message: natural gas has evolved beyond being “just a bridge fuel.” Once viewed primarily as a transitional source between coal and renewables, natural gas is now seen as a long-term solution to meet growing global power needs.
“That has completely changed the last two days — and for good reason,” said Michael Smith, CEO of Freeport LNG, referring to the shift in discussion toward gas at the event.
Natural Gas: From Transition to Baseload
The growth of artificial intelligence and global electrification is increasing the demand for stable, around-the-clock energy — a role natural gas is increasingly filling.
“There's a recognition within the industry that the energy transition is not going to be using natural gas just as a bridge fuel,” Smith said. “It's the baseload fuel that is necessary for us to create the electrons necessary for AI and for 7 billion people who, as (Department of Energy) Secretary (Chris) Wright said, don't have our lifestyle and want a piece of our pie.”
Major energy companies are adjusting strategies to reflect this shift. Firms like BP and Equinor have scaled back renewables spending while maintaining fossil fuel investments to ensure reliability and meet demand.
LNG Market Outlook
According to experts, the global LNG market is tightening, with growing demand far outpacing supply growth.
“LNG markets are very tight,” said Smith. He also addressed oversupply concerns raised by the IEA in its 2024 World Energy Outlook: “Other than the Covid summer, we've been selling every molecule we produce because demand exceeded the forecast,” he said. “I see the same thing happening right now.”
Global LNG demand is forecast to grow 40% in the next five years, while U.S. LNG exports are expected to double.
Rising Demand and Global Growth
Electricity demand is not only being driven by AI but also by expanding middle classes around the world.
“Happily, there's a growing global middle class that's going to continue to gentrify and improve their standard of living,” said Michael Sabel, CEO of Venture Global. “They're going to need a lot more electricity. And happily, there's a lot of gas globally to supply that. The US is going to be a part of it.”
Infrastructure and Permitting Remain Key Challenges
Despite the strong outlook, infrastructure remains a major concern. Executives voiced frustration over delays in building pipelines and other midstream assets.
Toby Rice, CEO of EQT, highlighted the years-long challenges faced by the Mountain Valley Pipeline, which came online in mid-2024 after extensive delays and legal challenges.
“This is the first time in this country that the environmental movement has actually found a way to shut down energy development,” Rice said.
“This pipeline cancellation movement that has taken place in this country has effectively shut down our ability to get energy moved in this country. After eight years of this, our pipeline systems, our energy infrastructure is maxed out.”
Michael Sabel also spoke to the importance of having infrastructure in place to support growing LNG exports.
“The sites, the capital, the teams, the companies, I think, are already arrayed that can provide the export capacity,” he said. “I would say permit support for pipes, state and federal, is critical.”
Permitting Costs and Risks
For many in the pipeline business, the permitting process — not construction — has become the biggest challenge.
Alan Armstrong, CEO of Williams, described how regulatory costs are rising.
“So when people talk about tariffs and, ‘Gosh, isn't that kind of ruining your space,’ we'd be glad to pay the 25% tariff as long as we could get our permits done,” he said. “There is so much value to be had for our country in getting our permitting lined out in a way that we don't wind up in courts and we don't wind up with the risk dollars.”
European Perspective
Much of Freeport LNG’s cargo currently goes to Europe, and Smith noted that European policymakers are showing increased willingness to make long-term gas commitments.
“I just met with the EU yesterday … They told me to my face, 2050 net carbon zero does not mean no natural gas, (but) that in 2050 you're going to have to be able to balance it so that you are net zero with other sources that aren't, (such as) carbon sequestration and other technologies,” Smith said.
Although he did not mention any specific election or party, Sabel commented on broader shifts in Europe’s energy landscape.
“I think they have approximately 20,000 megawatts of need just to stabilise the intermittency in the grid today, but they have significant demands also coming for AI as well,” Sabel said.
“They need to signal to domestic industries that there's a long-term plan to provide stable, predictable energy prices in order to retain the capital investments in their industries. We expect other countries in Europe to follow that as well. The UK, I think, is not going to be too far behind as well.”
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