US natural gas market stakeholders are confident that rising data center-driven electricity demand will translate into material gas demand growth in the years ahead as the marketplace contemplates various scenarios for how developers will meet their power needs.

Computing efficiency gains and penetration of non-fossil generating sources are seen to be among the major contingencies that could ultimately limit gas' share of power demand growth, but gas producers and at least one federal regulator insist that gas will be the resource to prevail because of its abundance and firm, dispatchable characteristics.

In an appearance at the CERAWeek by S&P Global energy conference in Houston, US Federal Energy Regulatory Commission Chairman Mark Christie said that with the timing and economic constraints associated with building nuclear plants and the aversion to new coal, there are no alternatives to gas-fired generation to meet rising power demand from planned data centers.

"If we're going to serve what's coming -- it's already here in Virginia -- we have to have the generating resources to serve it, and that's going to mean combined-cycle gas because were not going to be building ... a Vogtle every month," Christie said March 13, referring to Southern Company's Plant Vogtle nuclear generating station in Georgia. "We have to [build more gas generation], there's just no other way to do it."

Demand projections

US data center power demand grew to nearly 46 GW in the third quarter of 2024, according to S&P Global Market Intelligence 451 Research. By 2029, 451 Research projects the expansion of artificial intelligence and cloud computing will drive 59 GW of new data center power demand.

Toby Rice, CEO of Appalachian shale gas producer and midstream operator EQT, said project developers that he communicates with want firm supply deals with counterparties that can provide gas and power.

"With the tech crowd, whether we're talking about powering rockets or data centers, the energy portion of that bill is so small," Rice said in a March 12 interview. "Unfortunately, it's the bottleneck, which means they're going to do what it takes to make sure they get security there, and it's going to create opportunities for us."

EQT believes that new data center power demand could range 50-80 GW and that gas will assume the largest share.

"The big decision that we're seeing right now isn't what type of energy source we're going to use," Rice continued. "It's going to be, are we going to do it on-grid or are we going do it off-grid?"

Gordon Huddleston, president of Haynesville Shale producer Aethon Energy, said predicting the rate of gas demand growth for data center power is difficult, but he said he envisions it possibly adding a couple Bcf/d per year in demand beginning around 2026-2027 and the five or so years thereafter.

"It's really hard to forecast, but that's all on top of an existing tight market where we've got LNG growth," Huddleston told Platts March 10.

Resource competition

Some large players to recently announce data center projects will utilize gas-fired power. Facebook parent Meta's planned artificial intelligence data center megasite in Louisiana, a partnership with utility Entergy, involves construction of three combined-cycle combustion turbines with total capacity of nearly 2.3 GW.

At the same time, project developers are also engaging in nuclear restarts and seeking out non-fossil resources. At CERAWeek, Ruth Porat, chief investment officer of Google and parent Alphabet, said 64% of the tech giant's data centers are running on carbon-free energy.

Porat also referred to Google's agreement with advanced nuclear technology developer Kairos Power providing for the deployment of 500 MW of advanced nuclear projects beginning in 2030 to power company data centers.

NextEra CEO John Ketchum, speaking alongside Porat on the CERAWeek stage March 10, said rising labor and material costs are major constraints for new gas-fired generation. The utility's most recently completed gas-fired plant, which went commercial in 2022, cost $785/KW to build but would be $2400/KW today, he said.

In the near term, building renewable generation "is cheaper and it's available right now -- unless you have a turbine on order that's already been permitted," Ketchum said.