Texas Data Center Permit Freeze Hits Natural Gas Demand Growth

Texas Governor Greg Abbott has put data center permits on hold pending a grid audit, further stifling natural gas demand growth that producers and pipelines are counting on. The halt is part of a wave of state-level blows to this buildout.

The Texas Commission on Environmental Quality (TCEQ) permit freeze is tied to an ERCOT audit, which aims to ensure the reliability of the grid. In Virginia, regulators have introduced legislation to cap on-site gas generation at 20% of a facility's total power output. As a result, natural gas demand growth in the region has slowed.

The Waha hub price stood at $1.770 amid the permit freeze. Natural gas producers and pipelines are counting on increasing demand from data centers, but regulatory hurdles and concerns over grid reliability are complicating this prospect.