Energy Transfer to Supply Texas Data Center with Natural Gas

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Researched by Industrial Info Resources (Sugar Land, Texas)--At a time when the U.S. is racing to build out power-generation capacity to meet rising demand for data centers, Energy Transfer LP (NYSE:ET) (Dallas, Texas) announced Monday it entered a long-term agreement to pipe natural gas to a data center under development in Central Texas.

Under the agreement, Energy Transfer's Oasis Pipeline would transport up to 450,000 million British thermal units (MMBtu) per day of "firm natural gas supply," the company said in a press release. Firm gas rates apply when a building burns exclusively natural gas.

The Oasis Pipeline runs from the Waha hub in the Permian Basin to Katy, Texas, outside of Houston, with about 1.2 billion cubic feet per day (Bcf/d) of throughput capacity.

The natural gas supply would be capable of generating roughly 1.2 gigawatts of direct power (power that does not flow to the power grid), for a period of 10 years beginning with the first phase of data center developer CloudBurst Data Centers' (Denver, Colorado) grassroot data center in San Marcos, Texas. According to the press release, CloudBurst expects to reach a final investment decision (FID) later this year "and in such event the facility would be operational in Q3 of 2026."

The 100,000-square-foot facility is initially expected to require 20 megawatts (MW) of power, and a subsequent Phase II equipment addition would expand the capacity by 10 MW. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can read detailed information on the Phase I and Phase II projects.

Energy Transfer said the agreement is its first commercial arrangement to supply natural gas directly to a data center. "Additionally, Energy Transfer is in discussions with a number of data center developers and expects this to be the first of many agreements to supply, store and transport natural gas to fuel data centers, electric generation facilities and other power demand customers throughout its nationwide footprint."

Industrial Info is tracking more than $20 billion worth of active and planned projects from Energy Transfer. Subscribers to the GMI Project Database can click here for a full list.

In December, Energy Transfer reached an FID on the two-phase construction of the Hugh Brinson natural gas pipeline (formerly the Warrior Pipeline), designed to carry 2.2 billion Bcf/d from the Waha hub to Maypearl, Texas, south of the Dallas/Fort Worth area. Click here to read detailed information on the projects related to the pipeline, which also is expected to serve data center growth in Texas. For more information, see December 9, 2024, article - Energy Transfer Moves Ahead with Texas Natural Gas Pipeline.

But natural gas is not the only non-grid power source expected to power data centers moving forward. For more information, see February 11, 2025, article - Explosion in Data Center Spending Requires Non-Grid Power Options.

For more information on power-generation growth needed for the buildout of data centers across the U.S., see January 29, 2025, article - AI Power Struggle--Will Power Generation Growth Keep Up with Rising Demand?.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).