An interesting piece from the IEA:

Electricity consumption from data centres, artificial intelligence (AI) and the cryptocurrency sector could double by 2026. Data centres are significant drivers of growth in electricity demand in many regions. After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centres' total electricity consumption could reach more than 1 000 TWh in 2026. This demand is roughly equivalent to the electricity consumption of Japan. Updated regulations and technological improvements, including on efficiency, will be crucial to moderate the surge in energy consumption from data centres.

We wonder where all that extra electricity is going to come from? Even if the IEA is only half right, a bucket load more electricity will be required.

Data centres require a consistent supply of electricity, so forget solar and wind. Nuclear power plants run at full capacity most of the time and it takes 10 years or so to build a nuclear power plant. So that only leaves natural gas and coal with realistic spare capacity.

Perhaps the biggest winners of the AI revolution will be the companies supplying the commodities to produce all the extra electricity that will be required.

The Deepwater Boom

Stuff we already knew about, but just a reminder how offshore is coming back into vogue.

A 12-year high in capex:

Next year, capital expenditure (capex) on new deepwater drilling is set to jump to the highest level in 12 years in 2025, Rystad Energy reckons. At the same time, capex on all-new and existing deepwater fields could surge by 30% in 2027 compared to 2023, to $130.7 billion, per the consultancy's estimates cited by Reuters.

We don't see "12-year highs" in offshore oil focused service companies (yet). We reckon that the crowd hasn't woken up to the genuine long-term boom in offshore oil and gas that is coming.

The crowd probably also doesn't appreciate how decimated offshore service companies were from 2018 to 2022. Most went bankrupt or had massive equity capital injections to stave off bankruptcy. Helix and Oceaneering were two companies that emerged from the devastation of the sector with their capital structure intact, so there is some meaning in looking at their long-term charts. The point of discussing this is the lack of capacity that offshore oil and gas service companies have to deliver services compared to 10 years ago.