Pipeline companies are increasingly working with data center operators seeking direct pipeline connections for onsite natural gas generation.
Facing grid connection delays and competition for power, some data center operators plan to build onsite natural gas-fired generation. With some utilities reporting five- to seven-year wait times for a grid hookup, co-locating power generation and data centers could provide a much quicker and potentially cheaper solution.
Kinder Morgan, which serves about 20% of the power demand across the U.S., is having ongoing commercial discussions totaling over 5 billion cubic feet per day (Bcf/d) related to power demand.
1.6 out of the 5 Bcf is related to data center demand, according to the pipeline giant. Other factors include population migration, onshoring of manufacturing and coal-to-gas conversions in states like Kentucky and Tennessee, Kinder Morgan CEO Kimberly Dang said at the Barclays CEO Energy-Power Conference in early September.
A Kinder Morgan spokesperson declined to comment, referring us back to the company’s recent earnings reports and the Barclays conference for more details.
Williams Co., which moves one-third of the nation’s natural gas and operates the country’s largest natural gas transmission pipeline, said co-locating power plants and data centers “has gained significant traction.”
“We’ve seen demand for incremental natural gas to power data centers increase dramatically in the past six months and not just centered in legacy data center areas such as Virginia and Ohio, but across our footprint,” said Jaclyn Presnal, Vice President of Williams’ New Energy Ventures.
Energy Transfer, another large pipeline company, is currently in discussions to serve power plants with new connections that could potentially consume over 5 Bcf/d of gas, according to the company’s Q2 Earnings Presentation from August 7.
Current discussions with data centers include more than 3 Bcf/d of potential new demand, Energy Transfer reported.
The company did not respond to a request for comment this week.
Technology giants like Microsoft, Google and Amazon are driving significant electricity demand, primarily through rapidly expanding data center operations. These data centers are essential for supporting cloud services, AI development and other digital operations. The facilities require vast amounts of power to run servers, cooling systems and other infrastructure needed to store and process massive amounts of data.
According to a study published by EPRI in May, data centers could consume up to 9% of U.S. electricity generation by 2030 — more than double the amount currently used.
Exactly quantifying AI-driven demand is difficult and there is a vast range of early forecasts as analysts grapple with how to account for AI-related future impacts, said Presnal.
“If combined-cycle gas-fired generation provided 100% of the electricity behind the vast range of forecasts we’re seeing, it could translate into incremental U.S. gas demand for power generation ranging from approximately 1.7 to 12 billion cubic feet per day when looking at forecaster base cases 2023-2030,” she was quoted in a statement sent to Power Engineering.
Data centers aren’t the only electricity demand driver in the U.S. Other factors include electrification and new manufacturing.
