More midstream names have provided updates on natural gas growth opportunities driven by AI and data centers.
Pembina Pipeline Corporation (PPL CN) and Williams Companies (WMB) are the latest midstream players to announce deals to supply natural gas to data centers.
Pembina announced on February 27 it entered into agreements for a 50% interest in the Greenlight Electricity Center LP. Greenlight LP is developing a natural gas combined cycle power generation facility in Alberta for data center customers.
The project will be constructed in 450 MW phases with up to 1800 MW capacity. Greenlight LP could place a facility into service as early as 2029.
See more: Examining Midstream EBITDA Guidance for 2025 and Beyond
Additionally, effective February 28, Williams entered an agreement to provide on-site natural gas and power generation infrastructure for an unnamed large, investment-grade company.
Williams will invest $1.6 billion to provide committed power generation and associated gas pipeline infrastructure. The project will likely complete in the second half of 2026. Williams’ expected build multiple of approximately 5x EBITDA implies a roughly 20% return on the project.
The project is backed by a 10-year fixed-price power purchase agreement, with an option for extension. Notably, this is Williams’ first deal of its kind.
See more: Williams CFO Describes 3 Growth Opportunities in Natural Gas
Other Midstream Names Offer Details on AI & Data Center Opportunities
Earlier in February, Energy Transfer (ET) announced it had struck a deal with CloudBurst Data Centers, representing its first commercial arrangement to supply natural gas directly to a data center. Energy Transfer will provide natural gas to CloudBurst’s flagship AI-focused data center development in Central Texas.
Additionally, Kinder Morgan (KMI) said in February it is forecasting a 3 billion cubic feet per day (Bcf/d) increase in natural-gas-fired power demand by 2030. The increase in demand stems from growing residential and commercial demand, coal-to-gas conversations, industrial reshoring, renewable energy backup, as well as data center demand.
ETF Exposure to Data Center Growth Opportunities for Midstream
Pembina, Williams, Energy Transfer, and Kinder Morgan are holdings in the Alerian Energy Infrastructure ETF (ENFR ). The ETF offers exposure to the Alerian Midstream Energy Select Index. The index is a composite of North American midstream energy infrastructure companies.
ENFR includes corporations and MLPs engaged in the pipeline transportation, storage, as well as processing of energy commodities. Furthermore, companies primarily focused on natural gas pipeline transportation represent 39.7% of the fund by weight as of March 5.
For more news, information, and analysis, visit the Energy Infrastructure Channel.
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