US Data Center Delays Threaten Natural Gas Demand Growth
Investment firm Kimmeridge Energy Management Co. warns that up to half of planned data centers in the US may face delays or cancellation due to growing opposition from local communities and infrastructure challenges.
The concerns are driven by worries over water usage, noise, land use, and rising electricity costs, according to Ben Dell, managing partner and co-founder of Kimmeridge. He attributes the risk of delays to a mismatch between Silicon Valley's ambitions and the realities of large-scale construction projects.
Kimmeridge holds stakes in natural gas producers and Commonwealth LNG, a planned liquefied natural gas export terminal under development in Louisiana, giving it a direct financial interest in the pace of gas demand growth. The firm estimates that data centers could drive an additional 5-10 billion cubic feet per day of gas consumption, but widespread project delays could push actual AI-related demand toward the lower end of this range.
Data center developers are increasingly turning to off-grid power generation as a solution to the traditional grid's limitations. Enverus projects that around 40% of new US data center capacity additions through 2030 will be powered off-grid, requiring an estimated $5 trillion in investment and adding around 62 gigawatts of natural gas-fired generation capacity.
The growth is expected to concentrate heavily in Texas, the PJM grid region covering Pennsylvania and Ohio, and parts of the Western US. Off-grid natural gas demand from data centers could reach 1.3 billion cubic feet per day by 2030, according to Enverus.