Natural gas could be the key to powering data centres

Amid the surging demand driven by artificial intelligence, natural gas is emerging as a potential solution to the power challenges faced by data centres. Goldman Sachs has projected that the United States alone will require an additional 47 gigawatts of power generation by 2030 to meet this rising demand. While nuclear power is being considered by some data centre providers, the complex regulations surrounding it suggest that it may not be a viable short-term solution.

Data centre operators are becoming increasingly aware of this limitation. Alan Armstrong, CEO of natural gas supplier Williams Companies, recently noted that major developers are beginning to realise the challenges of extracting more power from the already strained grid. He highlighted a shift in strategy, where hyperscalers are now looking towards areas with abundant natural gas resources and favourable permitting conditions to develop the necessary infrastructure for reliable and affordable power.

This interest in natural gas is not limited to Williams Companies. Marshall McCrea, chief operating and commercial officer for Energy Transfer, another oil and gas company, mentioned that they are in discussions with data centres in several states about providing on-site power generation. The scale of these discussions is significant, with some data centres seeking up to 200,000 or 300,000 cubic feet per day (CEP) of natural gas.

The growing demand for power in data centres is expected to drive an additional 3.3 billion cubic feet per day of natural gas demand by 2030, according to Goldman Sachs. Natural gas is anticipated to supply around 60% of the incremental power required by data centres in the coming years. While McCrea did not specify the locations of these discussions, Armstrong pointed to strong interest in the Southeast and Mid-Atlantic regions of the U.S., as well as in the Rocky Mountain states, particularly Eastern Washington, Idaho, and the Salt Lake City region. Wyoming was also mentioned as a key area of focus.

These comments align with the locations of well-established data centre hubs like Northern Virginia, Atlanta, and Salt Lake City. Idaho is also gaining prominence as a data centre hub, with several facilities, including a major one from Meta, being established in the Boise area.

Natural gas appears to be positioning itself as a crucial component in addressing the power needs of data centres, especially as the demand driven by AI continues to grow. With the grid’s limitations and the regulatory hurdles of nuclear power, the industry is likely to see an increasing reliance on natural gas as a practical and immediate solution.

Touchstone Exploration Inc (LON:TXP) is a Canadian-based, international upstream oil and gas company currently active in the Republic of Trinidad and Tobago. Primera Oil and Gas is the Trinidadian subsidiary of Touchstone.

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