Energy Transfer to Supply Natural Gas to AI Data Center in Texas

Pipeline operator Energy Transfer LP will provide natural gas directly to CloudBurst Data Centers, Inc. as companies prepare for an expected boom in power demand from artificial intelligence.

Energy Transfer’s Oasis Pipeline, LP, will provide as much as 450,000 million British thermal units per day of natural gas to supply CloudBurst’s data center campus outside of San Marcos, Texas, Energy Transfer said Monday in a statement. The pipeline will send power directly to the data center, bypassing existing transmission grids.

Gas plant operators, producers and pipeline companies are vying for opportunities to fuel an AI-focused deluge of energy demand. Gas-fired plants have emerged as the most competitive power solution because they’re far cheaper and faster to build than reactors and, unlike wind and solar, can operate around the clock.

The deal represents Energy Transfer’s first long-term partnership to supply natural gas directly to a data center as the company plans to fuel more sites, the company said in the statement.

Energy Transfer shares rose 2% at 10:29 a.m. in New York.

The gas supply would be enough to generate as much as 1.2 gigawatts of electric power for at least 10 years, according to the statement. That’s typically enough to power about 240,000 homes on the state grid. The companies expect the facility to be operational in the third quarter of 2026.

CloudBurst designs, builds and operates energy infrastructure for artificial intelligence.