The growing demand for power, including for artificial intelligence (AI) data centers, is driving a major shift in the U.S. natural gas landscape. New natural gas pipeline projects a few years ago were concentrated in Texas and driven by rising supply. However, natural gas infrastructure is now expanding nationwide to meet growing demand.
Data centers’ power demands require a level of reliability that renewable sources alone struggle to provide. Consequently, natural gas has emerged as an essential bridge to meet the massive electricity needs.
One example is the recently announced 20-year agreement between Energy Transfer (ET) and Entergy Louisiana to supply gas to Meta’s massive Hyperion data center project. ET will initially provide 250,000 million British thermal unit (MMBtu) per day of firm transportation service starting in February 2028.
See more: “Energy Transfer Seizes Data Center Growth Opportunities”
During a recent webcast, Stacey Morris, head of energy research at VettaFi, said that the long-term demand for natural gas is a bright spot for midstream companies. Current natural gas pipeline projects now span every major U.S. region to support this utility and industrial power demand growth. Highlights include:
- In the Southwest region, ET is adding 2.3 billion cubic feet per day (Bcf/d) of natural gas capacity in late 2029.
- DT Midstream (DTM) and TC Energy (TRP) each have expansions coming online by 2029, serving the Midwest.
- Williams (WMB), Enbridge (ENB), and TRP are each expanding their reach in the Northeast (read more).
- In the Southeast region, WMB and Kinder Morgan (KMI) have capacity coming online beginning in 2027 through 2029.
- In Texas, ET is adding capacity to support power plant and data center growth in the following year. Meanwhile, KMI is working on a project to meet liquefied natural gas (LNG) demand next year.
ETF Exposure to the Natural Gas Companies Capitalizing on AI Energy Demands
The Alerian Energy Infrastructure ETF (ENFR ) offers meaningful exposure to U.S. and Canadian midstream companies primarily focused on natural gas infrastructure, which represent nearly 70% of the portfolio by weighting.
ENFR tracks the Alerian Midstream Energy Select Index AMEI, which is a composite of North American midstream energy infrastructure companies. AMEI is yielding 5.5% as of January 14.
To watch the webcast on demand, click here
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for ENFR, for which it receives an index licensing fee. However, ENFR is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of ENFR.
