With soaring
projected electricity demand for the first time in decades, expanding LNG
exports, growing demand projections for industry, steady demand for heating,
and more growth as a share of power grids, natural gas is also poised for a
strong infrastructure buildout. This has been well underway through 2025 and
before. Statista reports that there were 25 natural gas pipeline projects under
construction as of July 2025, and 57 natural gas pipeline projects in the
pre-construction phase.
For natural gas, the U.S. has
an adequate supply. We can maintain and probably increase our output over the
next decade or two, but most of our fields either are plateauing in production,
will peak soon, or are in decline. They won’t last forever. U.S. natural gas
output is expected to increase by 15-25% by 2030 as LNG exports double from
2024 levels and power demand continues to increase.
Gas Storage Projects
Since data centers require
high levels of reliability of service, there are risks to relying only on
pipelines for gas storage. An article in Fortune by Jordan Blum notes that
there have been few to no gas storage facilities built in the past decade or
so. He does cite one project, Gulf Coast Midstream Partners’ major salt cavern
gas storage project near Houston, slated to come online by the end of 2030.
Inadequate storage may affect consumer prices.
“Electricity and gas heating costs already are on the
rise because of higher gas demand, and the lack of storage is expected to add
to the volatility and rising utility bills going forward, according to energy
analysts and developers.”
He notes that Enbridge is
leading in gas storage projects through expanding its salt cavern storage in
Texas and Louisiana. Storage is expected to be an important part of creating a
data center distribution grid.
“Energy analyst Jack Weixel, of East Daley Analytics,
said there around more than a dozen gas storage projects underway—with a couple
recently completed—but some will fall short of the necessary financing to break
ground, and others may not be completed for another five years.”
Gas power plant buildout is
already behind due to gas turbine manufacturing inadequacies. These are
expected to get better in a year or two, but they are another slowdown factor.
Thus, the AI power draw may have some delays.
Weixel says there is 300BCF
of storage in the works, but that we will need twice that amount to keep the
gas grid strong and flexible.
Financing gas storage is
challenging due to the slow pace of projects and the slow payout periods. In
salt dome storage, especially, there is a time-consuming period where wells are
drilled into the salt domes, and water is pumped into and out of them to make
the caverns by dissolving the salt. That process alone takes about four years.
Trinity Gas Storage built a
new facility in East Texas, which came online this past January. I posted about it. It is a 24 BCF facility
storing gas in a depleted reservoir. They plan to add another 13 BCF by late
summer 2026.
“Trinity CEO Jim Goetz told Fortune that more storage
built quickly is critical to keep up with the pace of the data center boom,
especially because so many of them require building their own temporary
gas-fired power before they can be connected to the power grid. The storage
provides necessary redundancies for any gas or power disruptions, he said.”
Pipeline Projects
As noted, Statista reported on 2025 U.S. pipeline projects by status.
EIA Data from
2024 show that about 6.5 BCF/day of natural gas pipeline capacity was added.
This occurred mainly in the Appalachian, Haynesville, Eagleford, and Permian
Basin regions, the major gas-producing regions. In addition to that, another
8.5 BCF/day of capacity to support liquefied natural gas (LNG) export terminals
was built, along with 800MMCF/ day of smaller projects. This report is from
March 2025, and more projects have been announced since then. However, the
buildout for pipelines is not growing beyond normal additions so far.
Ramping up Peaker Plants for Continuous Energy to Power AI
is not an Adequate Solution
From a public health
perspective, the current administration’s plans to delay planned gas and
petroleum oil peaking plant retirements to assist AI buildout are certainly not
an ideal solution, and there are significant reasons not to adopt this approach
too much. Does Big Tech really want to become Big Pollute? Gas and oil peaking
units were designed for limited use, especially in terms of their lack of
pollution control systems and lower smokestack heights. It is true, however,
that they can be operated at much higher utilization rates, which would reduce
the wear-and-tear of frequent starts and stops associated with being used to
respond to demand peaks. They would also become more profitable for their
owners. More demand spikes mean higher utilization rates, which equals higher
profit. In a way, that provides an incentive to pollute. A Reuters article by
Laila Kearney explains:
“There are a ton of peaker plants that could operate
more,” U.S. Energy Secretary Chris Wright told Reuters in an interview in
September, adding that clean air regulations have kept more from running more
frequently. “The biggest targets are spare capacity on the grid today.”
“While peaker plants contribute about 3% of the
country’s power, they have the total capacity to produce 19%, according to a
report by the U.S. Government Accountability Office.”
“Tapping into that spare capacity, however, could mean
more harmful emissions being spewed into neighborhoods that are often already
overburdened with environmental hazards.”
The older plants are often
the most polluting. Single-cycle gas combustions, whether turbines or
reciprocal motors, run much less efficiently than combined-cycle gas plants.
Are people expected to be OK
with the ideas of AI making their electricity costs higher, taking their jobs,
and polluting them? Will they be paying to be polluted and unemployed? I am
guessing there could be some backlash.
The article explains the
situation at Fisk Coal Station in Chicago, which has no running coal units but
runs eight petroleum fuel units and operated as a peaking plant. The plant is
located in Chicago’s working-class Pilsen neighborhood. The area has one data
center operating, and others are planned. These peaking units were scheduled to
retire next year.
"We believe there's an economic case to keep them
around, so we withdrew the retirement notice,” said Matt Pistner, senior vice
president of generation at NRG, of Fisk’s eight power-generating units.
Does that economic case
involve higher utilization due to data center demands? As I also like to point
out, cryptocurrency mining also involves data centers and high power
consumption. Thus, it is increasing power demand as well. Is it just a
recognition of profit at the expense of extending the air pollution exposure
time of local residents. Fuel oil units emit high amounts of particulate matter
and several other pollutants. They emit significantly more pollution than natural
gas peaker plants.
As Kearney notes below,
studies are confirming that peaking plant pollution is recognized as a
concerning environmental justice issue in several areas.
“The country's roughly 1,000 peaker plants are
disproportionately located in low-income communities of color, according to
academic and federal government research, meaning that extending the plants’
lives could leave vulnerable Americans to bear the brunt of more pollution.”
“A 2022 study of formerly “redlined” U.S. communities,
which were cut off from financial services like mortgages for being
predominantly Black or immigrant, found that residents were 53% more likely to
have had a peaker plant built nearby since the year 2000 than in non-redlined
areas.”
“If you were a redlined neighborhood, you were more
likely to have a fossil fuel power plant built nearby, and we saw that
relationship was even stronger for peaker plants,” said UCLA professor of
environmental health sciences Lara Cushing, who led the study.
She cites another study that
noted natural gas peaker plants emit 1.6 times more sulfur dioxide for each
unit of electricity produced on a median basis compared to non-peaker plants.
However, these amounts are much less than what coal plants produce. She reports
that so far this year, the DOE has ordered eleven peaking plants to delay
retirement, out of 13 plants total. At least two of those are oil-burning
plants, both in major cities with environmental justice concerns.
References:
Little-known
underground salt caverns could slow the AI boom and its thirst for power. Jordan
Blum. Fortune. December 23, 2025. Little-known
underground salt caverns could slow the AI boom and its thirst for power
AI
data centers are forcing dirty 'peaker' power plants back into service. Laila
Kearney. Reuters.
December 23, 2025. AI
data centers are forcing dirty 'peaker' power plants back into service
U.S.
natural gas pipeline project completions increase takeaway capacity in
producing regions. Gas Processing & LNG. March 17, 2025. U.S.
natural gas pipeline project completions increase takeaway capacity in
producing regions | Gas Processing & LNG
Number
of natural gas pipeline projects in the United States as of July 2025, by
status. Doris Dokua Sasu. Statista. November 27, 2025. US:
number of natural gas pipeline projects 2025| Statista
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