The U.S. Energy Information Administration (EIA) said Feb. 11 that the agency had seen enough bullish news to raise its 2025 forecast for the average natural spot gas by $0.65 to $3.80/MMBtu at the Henry Hub — an increase of nearly 21%.

The move follows a colder-than-average January, jumps in natural gas demand as two LNG liquefication projects ramp up production and the announcement of several AI developments.

The Henry Hub spot price for natural gas averaged $4.13/MMBtu in January and reached a daily high of $9.86/MMBtu on Jan. 17, immediately before an arctic cold snap blew through much of the U.S.

“Higher natural gas consumption led to above-average inventory withdrawals, and EIA now expects the benchmark Henry Hub spot price to average $3.80 per million British thermal units in 2025, about 20% higher than previously forecast,” the agency said on its website. The forecast for 2026 is $4.20/MMBtu.

The EIA forecast for other commodities, such as crude oil, remained largely unchanged.

Besides the cold weather, other factors affected the natural gas marketplace.

Venture Global’s Plaquemines LNG project in Louisiana received permission from the FERC in January to commission its seventh block. The plant began LNG production in November and has brought more trains online since. The FERC approved the start of Block 8 on Feb. 10. Each block has two trains and draws 150 MMcf/d of natural gas at capacity.

EIA chart natural gas price forecast
(Source: Energy Information Administration)

AI projects lining up

At the start of 2025, the predicted growth in natural gas demand to power AI data centers also started to take a solid form, thanks to three announcements.

“New natural gas demand is coming into focus to feed AI and data centers, and the Permian Basin looks to play a leading role,” said Ethan Warrick, the data center analyst for East Daley Analytics.  

After taking office, President Donald Trump announced the $500 billion Stargate Project to build AI infrastructure across the U.S., starting with a center in Abilene, Texas. The site is located near natural gas pipelines stretching from the Permian Basin to networks near the Dallas-Fort Worth area.

“Stargate’s Abilene data center project is expected to scale from 1.2 GW [gigawatts] to 5 GW, making it one of the largest power-intensive AI clusters in the world,” Warrick said.

On Jan. 28, Chevron (CVX) revealed plans for a partnership with Engine No. 1 and GE Vernova to build up to 4 GW of gas-fired generation to power AI throughout the U.S.

While site locations have not been released, it’s likely that Chevron’s plans will help support the Stargate project, according to East Daley.

Warrick said Energy Transfer (ET) will most likely also provide natural gas to the StarGate project. Its most recently announced pipeline, the Hugh Brinson line, will follow a route from the Permian Basin through a corridor close to Abilene.

Energy Transfer also announced an AI-power partnership with CloudBurst Data Centers Inc. on Feb. 10. CloudBurst is building a data center development near San Marcos, Texas, located between Austin and San Antonio. ET is contracted to provide up to 450 MMBtu/d to the project.

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