Exxon Enters The AI Trade

Over the past 2 years, a huge disconnect has emerged between energy, in the conventional sense of power and electricity, and energy stocks, mostly associated with oil explorers and refiners. The former has exploded, as part of the “picks and shovles” thesis – after all, someone has to energize all those data centers – sending utilities, gas names, nuclear and uranium stocks to multi-year highs, while the latter have flatlined if not stagnated as the price of oil has continued to plumb new lows. 

But one US supermajor may be about to change all that. 

On Friday, Exxon CEO Darren Woods said he is holding advanced talks with power providers and technology companies to cut the emissions of AI data centers that rely on natural gas by deploying carbon capture technology.

“I’m hopeful that many of these hyperscalers are sincere when they talk about the desire to have low emission facilities, because certainly in the near to medium term we’re probably the only realistic game in town to accomplish that,” Woods said on Exxon’s earnings call.

Exxon, which is the largest US oil producer and refiner, and which went through its own personal hell as part of the ESG lunacy of the past 5 years, aims to capture 90% of the carbon dioxide emissions emitted by natural gas plants that power data centers, Woods said.

The oil major is talking with power companies to decarbonize their plants, he said adding that “we’re pretty advanced in the conversations.”

According to CNBC, the tech sector has mostly secured renewable energy to offset the emissions from their data centers, though they are now making major investments in nuclear power as well.

Separately, some companies are turning to natural gas as well as they search for reliable power. Meta, for example, signed an agreement with the utility Entergy in Louisiana to power a data center campus with natural gas.

“We secured locations. We’ve got the existing infrastructure, certainly have the know-how in terms of the technology of capturing, transporting and storing [carbon dioxide],” Woods said.