Analysts from investment bank Tudor Pickering Holt & Co predict a significant rise in natural gas demand due to increased power consumption by AI data centers. By the decade’s end, these centers could need an additional 8.5 billion cubic feet per day to meet power requirements.
This spike is linked to the fast-paced growth of Generative AI and the strain it places on U.S. electrical systems, which have struggled to keep pace. As a result, data center operators are increasingly seeking direct deals with power producers or developing their own energy supplies.
The growing demand is reflected in the surge of power generation and energy storage project requests, which rose to 2,600 gigawatts in 2023. Natural gas prices, expected to average $4 per million British thermal units in the latter half of the decade, recently hit a three-and-a-half-year low.
Pipeline operators like Kinder Morgan, Williams, and Energy Transfer, along with gas producers such as EQT and Chesapeake Energy, are well-positioned to benefit from this trend. Current power demand from data centers, which stands at 11 gigawatts, is projected to reach 42 gigawatts by 2030, necessitating approximately 2.7 billion cubic feet per day of additional natural gas.
Featured image: Credit: Paul Hakimata
