The growth of data centers could be a boon for natural gas companies, with natural gas firms recently detailing their plans to meet the demand growth.
In May 2024, Goldman Sachs said that U.S. utilities will need to invest around $50 billion in new generation capacity just to support data centers alone.
“In addition, our analysts expect incremental data center power consumption in the U.S. will drive around 3.3 billion cubic feet per day of new natural gas demand by 2030, which will require new pipeline capacity to be built,” Goldman Sachs said.
In a Q2 2024 earnings conference call with investors, Energy Transfer Co-CEO Marshall McCrea said that “We’re in four, five different states in discussions with multiple data centers of different sizes. Many of them want to put generation onsite” that would be supplied with natural gas. “It’s an enormous opportunity for us,” he said.
Texas-based Energy Transfer has more than 130,000 miles of pipeline and associated energy infrastructure. Energy Transfer’s strategic network spans 44 states with assets in all of the major U.S. production basins.
In a Q2 2024 earnings conference call in August, Alan Armstrong, President, Chief Executive Officer & Inside Director, for The Williams Cos., said that in terms of the data center load, “we are right in the throes of that. We have a very long backlog of projects. And I will tell you that particularly in the Southeast and the Mid-Atlantic, those expansion opportunities that we have, we frankly are kind of overwhelmed with the number of requests that we're dealing with, and we are trying to make sense of those projects.”
Williams uses its 33,000-mile pipeline infrastructure to move a third of the nation’s natural gas.
“As we sit here today, there’s around 300 or so data centers that are currently under construction or contemplated in the U.S.,” an official with natural gas company TC Energy said during an Aug. 1 conference call with investors.
“When you look at where they’re being built, more than sixty percent of them are being built” in close proximity to “our pipes, which really uniquely situates us to compete for and win this load.”
He added, “If you think of an average data center as consuming about 150 megawatts of power…these 300 new data centers are going to need somewhere around 45 to 50 gigawatts of power to operate – and then if you apply just an average heat rate to that – that’s how we get this notion of around 6 to 8 Bcf a day of capacity that’s going to be needed to serve them.”
The TC Energy official said that in the company’s talks with “various entities, what we’re learning is that while power costs represent a relatively small portion of the overall cost to operate a data center, the access to reliable power could be a roadblock towards” the timely buildout of data centers.
“Given that, we’re seeing a shift in siting preferences from regions where big telecom infrastructure is in place to regions where energy and supply infrastructure is in place. And as an alternative to siting these data centers behind LDCs, we’re now seeing a much greater potential for data center operators to seek laterals off of our mainline and to use that gas supply to fuel onsite power generation that they would build and/or own themselves.”
Kinder Morgan Executive Director Richard Kinder in July said that a consensus is developing that electricity demand “will increase dramatically by the end of the decade, driven in large part by AI and new data centers. I’m a firm believer in anecdotal evidence –- particularly when it comes from the actual users of that power and the utilities who will supply it and from the regulators who have to make sure that the need gets satisfied.”
He made his remarks in a July conference call related to Q2 2024 earnings results.
Another Kinder Morgan executive participating in the conference call said that “given the reliability of natural gas, it is going to play – we believe – a key role in supplying energy to these data centers.”
