Data Centers Are About To Burn More US Natural Gas Than Almost Every Country On Earth
American data centers are on track to consume more natural gas than nearly every country in the world within the next decade as the artificial intelligence boom drives electricity demand higher, according to a new BloombergNEF outlook.
American data centers are on track to consume more natural gas than nearly every country in the world within the next decade as the artificial intelligence boom drives electricity demand higher, according to a new BloombergNEF outlook.
Natural gas consumption used to generate electricity for U.S. data centers is projected to increase by 15 billion cubic feet per day through 2035, according to BloombergNEF. The projection accounts for the possibility that many data center projects currently planned across the country will never be built.
“In short, the resource base and producer response are sufficient, but the mix would shift toward higher-cost dry-gas drilling, supporting moderately higher gas and electricity prices than a high-oil-price, high-associated-gas world,” Stuart Turley, president and CEO of the Sandstone Group and host of the Energy News Beat podcast, told the Daily Caller News Foundation.
The additional demand alone would exceed the amount of natural gas currently consumed by every country except China, Russia, Iran and the United States, according to data from the U.S. Energy Information Administration (EIA).
BloombergNEF’s latest estimate is also more than twice its December forecast, which projected data centers would require an additional 6.9 billion cubic feet of natural gas per day, according to a report citing the firm’s latest outlook.
Natural gas is expected to provide 69% of the electricity needed by new grid-connected facilities under BloombergNEF’s forecast. Power-sector gas consumption is projected to climb from roughly 36 billion cubic feet per day in 2025 to 54 billion by 2035, according to the report.
BloombergNEF did not immediately respond to the Daily Caller News Foundation’s request for comment.
The projected surge comes as grid operators are already confronting rapidly rising electricity demand from data centers. Data center load growth is the primary driver of PJM Interconnection’s recent and expected tight supply-demand balance and high capacity prices.
PJM, the nation’s largest power grid operator, has warned that the power sector is shifting from an era of managing excess electricity supply to one of managing scarcity as data centers come online. Building new natural gas generation can take at least four years even under optimistic assumptions, while permitting and transmission constraints can further delay bringing new power supplies online, according to a May memo from PJM.
The strain is not limited to PJM. The North American Electric Reliability Corporation has warned that electricity demand is growing faster than supply in several regions as data centers and other large loads connect to the grid, increasing reliability risks as power demand rises.
Meeting the new demand may also require substantial investments beyond simply building more power plants. The estimated cost of a transmission project intended in part to accommodate Northern Virginia’s booming data center industry nearly doubled, raising concerns that consumers could ultimately shoulder some of the costs.
The buildout has continued despite mounting concerns about electricity costs and local opposition. Data center construction spending jumped 57% year over year in July as companies continued pouring money into artificial intelligence infrastructure.
A reduction in associated gas would require producers to rely more heavily on higher-cost drilling specifically targeting natural gas to meet growing demand, according to Turley. That shift could put upward pressure on natural gas and electricity prices.
The surge in electricity consumption is only one source of growing competition for American natural gas. New liquefied natural gas export terminals are expected to be the largest source of additional U.S. gas demand through 2035, while the power sector ranks second, according to BloombergNEF.
The combination could put pressure on American producers to increase output substantially. U.S. producers are projected to increase natural gas production by about 35 billion cubic feet per day between 2025 and 2035 but would need to produce an additional roughly 11 billion cubic feet per day to meet forecast demand, pet the outlet.
A significant share of U.S. natural gas is produced alongside oil, particularly in the Permian Basin, meaning oil-market conditions can also influence the amount of gas reaching the market. If oil prices fall below roughly $70 per barrel, new Permian drilling could slow substantially and limit growth in associated natural gas production, Turley, told the DCNF.
“If there is money to make, the great U.S. oil and gas producers can get it done,” he noted.
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