Energy Transfer's AI-Fueled Natural Gas Opportunity

Energy Transfer LP (NYSE: ET) is taking its first step to capitalize on the growing demand for natural gas driven by the artificial intelligence (AI) boom. The company recently announced a long-term agreement with CloudBurst Data Centers, Inc. to provide natural gas directly to their AI-focused data center development in Central Texas. This strategic partnership positions Energy Transfer to benefit from the increasing power demand from AI and data centers, which is expected to reshape the global energy landscape.



Artificial intelligence is driving transformative changes across industries, with its impact on energy demand being particularly significant. AI data centers, essential for powering machine learning models and storing vast amounts of data, require continuous power supply. Bank of America's global commodities research projects that power demand for data centers will grow 10%-15% annually through 2030, with AI data centers alone consuming up to 5% of global power by then. Natural gas, with its efficiency and scalability, is favored as a key enabler of this AI-driven energy revolution.

Natural gas prices are expected to rise in 2025, driven by increased exports and AI-related power demand. S&P Global Commodity Insights forecasts that Henry Hub prices will exceed $4.00/MMBtu in 2025, marking a significant increase compared to recent years. This trend underscores the importance of natural gas as the 'fuel of the future' in a rapidly evolving energy system.



Energy Transfer's vast natural gas pipeline network and storage capacity position it to capitalize on this growing demand. The company's Oasis Pipeline, LP will provide up to 450,000 MMBtu per day of firm natural gas supply to CloudBurst's Next-Gen Data Center campus outside of San Marcos, Texas. This supply is sufficient to generate up to approximately 1.2 gigawatts of direct, or 'behind-the-meter' electric power for a period of at least 10 years starting with Phase 1 of the data center facilities.

CloudBurst expects to reach a final investment decision (FID) later this year, with the facility becoming operational in the third quarter of 2026. This represents Energy Transfer's first commercial arrangement to supply natural gas directly to a data center, with the company expecting this to be the first of many such agreements.



Energy Transfer's strategic pipeline network and storage capacity, combined with its proximity to data centers and growing demand opportunities, position it to capitalize on the increasing natural gas demand from AI data centers and other power demand customers. The company's partnership with CloudBurst Data Centers, Inc. is a significant step in this direction, opening up new revenue streams and diversifying its customer base.

As AI continues to drive power demand, natural gas will play a critical role in enabling this transformation. Energy Transfer, with its extensive pipeline network and storage capacity, is well-positioned to benefit from this trend. Investors looking to capitalize on the AI-driven energy revolution may want to consider Energy Transfer as a potential investment opportunity.