As AI continues to grow exponentially, TC Energy executives expect data centers in Wisconsin and Virginia to drive as much as 8 Bcf/d of natural gas demand for power generation. (Source: Shutterstock)
TC Energy is reinforcing its gas midstream network in parts of the country projected to handle a growing number of power-hungry data centers.
Driven by the explosive growth in the artificial intelligence sector (AI), many in the energy sector believe gas-driven power plants will generate the electricity needed to handle the extra load.
“When we look and do the math, we think somewhere between 6 Bcf/d to 8 Bcf/d of increased gas demand between now and 2030 is more than reasonable,” said Stan Chapman, TC Energy’s executive vice president and COO for natural gas pipelines, speaking during the company’s first-quarter earnings call on May 3.
One of the advantages for TC Energy is that many future data centers are expected to be built in Virginia and Wisconsin, states where the company already has a strong presence.
Chapman said the future data centers will demand more natural gas through local distribution companies (LDCs) instead of connecting directly to the mainline pipes of a major midstream network. TC Energy connects to about 10 of the largest LDCs in the U.S.
The projected data center demand increase dovetails with the company’s overall strategy to increase its connectivity with the local networks, specifically in Virginia and Wisconsin. Chapman said the company has announced a “disproportionate amount of the projects … over the past couple of quarters” in the two states.
U.S. electrical demand for data centers is expected to grow by 20%, according to an April report by Wells Fargo analysts. The corresponding demand for natural gas could reach 45 Bcf/d, over the current 35 Bcf/d used for power generation.
TC Energy’s system first-quarter 2024 throughput reached an average of 30 Bcf/d, up 5% over the same period last year. The company’s deliveries to power generators set a first-quarter record with average flows of 2.9 Bcf/d, up by about 11% year-over-year.
The company continued to grow its network in other parts of the U.S. as well.
The CA$410 million (US$300 million) Gillis Access Project, a greenfield pipe network connecting natural gas in the Haynesville Shale’s Gillis hub to markets in Southeast Louisiana, began service in March, said Francois Poirier, TC Energy president and CEO. Overall, the company has placed about CA$1 billion (US$730 million) of projects into service so far this year.
For the quarter, TC Energy reported a comparable EBITDA of $3.09 billion (US$2.26 billion), an 11% increase over first-quarter 2023. The company’s overall revenues also rose by more than CA$300 million (US$219 million) compared with the same period last year, to CA$4.2 billion (US$3.07 billion.)
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