Data centers are foundational to the artificial intelligence (AI) ecosystem, providing the computational power necessary to train complex algorithms and manage massive data flows. The surge in data center construction across the United States is estimated to require an additional 47 gigawatts of power capacity by 2030.

Notably, approximately 60 percent of this U.S. demand is expected to be met by natural gas, creating significant growth opportunities for oil and gas suppliers. Globally, the demand for natural gas is projected to rise substantially, with some analysts forecasting up to 50 percent market growth over the next five years.

Oil companies, which historically produced electricity solely to support their own operations, are now poised to enter the broader power market amidst surging demand. This increased demand is driven in part by the rapid growth of technologies such as generative AI, which is expected to push U.S. electricity consumption to unprecedented levels in 2025 following two decades of stagnation.

In response to this growing need for power, the U.S. energy sector has invested heavily in new natural gas infrastructure and advocated for delaying the retirement of fossil-fuel power plants.

For major oil companies, this presents a promising opportunity. Some oil giants have already emphasized that the future of AI will depend as much on natural gas production from areas like the Southwest’s Permian Basin as it will on technological innovation in Silicon Valley. While data center developers have historically demonstrated a strong interest in using renewable energy sources, the intermittent nature of renewables and the slow pace of their buildout pose significant challenges. As a result, developers – particularly those constructing hyperscale data centers– are increasingly prioritizing energy solutions that offer speed and reliability.

This shift presents substantial growth opportunities for midstream natural gas transmission companies, which possess extensive pipeline networks capable of delivering consistent and efficient energy to meet the demands of large-scale data centers. By leveraging these established infrastructure assets, midstream companies are well-positioned to address the pressing energy needs of the rapidly expanding data center industry, even as the sector continues to explore pathways toward long-term sustainability.

Key Applications

One key area of impact is the advancement of battery technologies. These innovations can store surplus energy from renewable sources and provide reliable backup power during outages. Additionally, the industry’s knowledge of optimizing energy transmission networks can minimize energy losses and ensure maximum power delivery to data centers. Through strategic partnerships with technology companies, the energy sector is playing an essential role in creating more sustainable and efficient AI data centers.

Another critical contribution is the application of carbon capture and storage (CCS) technologies to reduce AI data centers’ environmental footprint. These facilities, which support large-scale AI models and applications, consume vast amounts of energy and contribute to greenhouse gas emissions. By implementing CCS solutions, energy companies can capture and store CO2 emissions generated by data centers, significantly reducing their carbon footprint. This approach aligns with the broader goals of both industries to lower environmental impact and transition toward cleaner energy solutions.

The intensifying competition for electricity has also led some major technology companies to reconsider their climate-focused commitments, which previously emphasized reliance exclusively on renewable energy sources, such as wind and solar, for powering energy-intensive AI data centers. This shift underscores the tension between the rising energy demands of emerging technologies and efforts to achieve sustainability goals.

Building an AI data center facility is a complex and capital-intensive endeavor that requires careful planning and working with trusted collaborators in multiple areas, including infrastructure, power, cooling, networking, tax considerations, security, and compliance. Site selection considerations include choosing a location with access to reliable power, cooling, and minimal risk of natural disasters that close to research hubs, cloud regions, or high-tech industries. Government incentives, raising capital, tax breaks and local data protection laws are also factors that play into data center growth and expansion.

Takeaways

The collaboration between the energy and technology sectors offers mutual benefits. The energy industry’s expertise in infrastructure, energy management, and renewable technologies can optimize AI data center operations, drive cost efficiencies, and support the shift toward greener energy. Simultaneously, technology companies can achieve more sustainable and energy-efficient facilities, advancing their environmental objectives. This partnership not only fosters innovation, but also contributes to a more sustainable future in both the energy and technology landscapes.