- Natural gas is poised to play a key role in meeting rising power demand from data centers
- The U.S. is expected to be a leading producer of natural gas
- Energy providers across the country say talks are heating up as data centers hunt for power to fuel their AI-driven expansions
Nuclear generation may be a long-term solution for the data center energy crunch, but in the short term renewables and natural gas are poised to be king. For those playing in this space, that means the race is on to lock down hyperscaler contracts and stake a claim in the energy land grab.
“As far as data centers, we call it kind of the gold rush,” Energy Transfer’s Co-CEO Mackie McCrea said during the company’s earnings call this week.
According to a recent report from the International Energy Agency, data centers are expected to drive 10% of global electricity demand growth through 2030, but 20% in advanced economies. To help meet this rising tide, natural gas generation is expected to grow by anywhere from 175TWh to 290TWh, with production mostly concentrated in the U.S.
Judging from their earnings calls, domestic companies are already getting into the growth mindset.
What natural gas providers are saying
Take Energy Transfer, for example. The energy provider has assets in 44 U.S. states. Its natural gas pipelines are clustered in Texas, Oklahoma, Louisiana and Arkansas but stretch from Arizona in the West to Michigan, Ohio and Western Pennsylvania in the East.
McCrea said on its earnings call the company has identified approximately 150 data center opportunities in Texas alone and expects to make some deal announcements in the next four to six weeks. He also called out demand in “a couple” other unnamed states where it expects to strike deals in the coming months and highlighted “Arizona as a very significant growth area for data centers, really a growth area for natural gas demand.”
But it’s not taking the opportunity in front of it for granted. Co-CEO Tom Long noted competition for the wave of data center-related projects has been fierce.
Then there’s Williams and Company, which has natural gas lines running through Colorado, Utah, Idaho, Oregon and Washington in the West and from Texas to New York in the central and eastern U.S.
Even with supply chain constraints, incoming CEO Chad Zamarin said on the company’s earnings call that it is “certainly reasonable” the company will be able to bring around a gigawatt worth of power online for data center use by the end of 2027.
“The Salt Lake area and the Idaho area are getting pretty hot in terms of power demands for data centers in those markets, and we absolutely are going to be a part of providing those solutions,” Zamarin said.
EQT, which draws its natural gas from the Marcellus Shale basin in Ohio, Pennsylvania and West Virginia, similarly said it is focused on data center deals. It is particularly looking at in-basin opportunities following the cancellation of the Atlantic Coast Pipeline project, which would have allowed it to transport natural gas down to Virginia and North Carolina.
"Without that pipeline, people that want that power are going to move back closer into our basin," EQT Toby Rice said. "So, I mean that's the high-level theme that's taking place....We've got a lot of shots on goal. So we've got a lot of conversations that are taking place right now."
Indeed, Fierce has previously pinpointed Ohio as one of several secondary data center hubs that are emerging as primary hubs running low on space and power for new builds. Western Pennsylvania, specifically the area around Pittsburgh, is also an increasingly popular focal point for new construction.
Meanwhile, Steven Ridge, the CFO of Virginia’s Dominion Energy, reiterated on its call that the company already has around 40 gigawatts of data center capacity in various stages of contracting. Dominion Energy notably serves the U.S. data center capital of Northern Virginia.
Ridge concluded “we have not observed any evidence of slowing demand from data center customers across our service area.”
Buckle up, folks. Things are about to start moving fast.