US natural gas pipeline operator Energy Transfer has agreed to supply artificial intelligence (AI) developer Oracle with approximately 900mn cf/d (25mn m³/d) of natural gas to run three data centers, two of which are in Texas.
Houston, Texas-based Energy Transfer in October said it planned to use its vast gas pipeline system to support Houston-based power company VoltaGrid in its effort to deploy 2.3GW of power infrastructure to run Oracle's data centers.
Oracle, among other large AI-focused US tech firms, have sought out gas-fired power supply to quickly power new data centers that cannot rely solely on intermittent renewable generation sources nor wait the number of years it takes to build new conventional nuclear reactors.
Energy Transfer is also looking at additional data center deals, including in Oklahoma and Texas that it is "very close" to finalizing, co-chief executive Mackie McCrea told analysts on 5 November. Data center counterparties in some of those potential deals have already secured intermittent power supply from renewable sources, he said, but are still "willing to pay large demand charges" to be able to pull gas from Energy Transfer's system in the event that existing power supply is interrupted.
While Energy Transfer executives "would love to talk about" its recent data center deals in further detail, those data centers customers, "especially the hyperscalers, are very confidential," co-chief executive Thomas Long said. "We can't really talk about it."
Asked whether Energy Transfer would ever get directly into the power generation business itself, McCrea said that while he would not rule it out, the opportunities the company have seen are mostly low double-digit or high single-digit rates of return, which they consider too low.
Energy Transfer is also expanding its gas storage capacity from 233 Bcf to 240 Bcf, which the company believes will be critical to reliably serving data centers in the event of so-called "freeze-offs" in Oklahoma or the Permian basin, which occur when cold weather causes losses in natural gas output.
Energy Transfer on 4 November said it had agreed to provide gas transportation capacity, including initial flow volumes of 250mn cf/d, to electric utility Entergy to fuel Facebook-parent Meta's massive planned AI data center in Louisiana from 2028-2048. Energy Transfer in February also said it had agreed to supply 450mn cf/d of gas to Denver, Colorado-based CloudBurst Data Center's planned data center campus near San Marcos, Texas, for at least 10 years.
