One of the US’s biggest pipeline companies, Energy Transfer, is ready to capitalize on the frenzied expansion of energy-guzzling data centers. In an industry conference interview published on April 14, Energy Transfer CFO Dylan Bramhall identified the biggest key growth opportunity for the company: investments in gas infrastructure to supply US data centers. As the gas industry leans into the energy demand from the data center boom, it’s increasingly clear that the AI bubble isn’t just overheating financial markets – it will overheat the planet.
The fossil fuel industry is at a crossroads. Renewables and battery storage have become cheap enough that they are driving out gas and coal. Many oil and gas sources are increasingly difficult to extract, and oil and gas are increasingly seen with skepticism as war and geopolitics exacerbate a global affordability crisis. The extreme weather and cumulative impacts of emissions are harder to ignore every year. But Energy Transfer, like other oil and gas companies, sees data centers as a profitable new market opportunity in the face of such crises.
Data center developers have been desperate to get proposed projects approved, constructed, and operating as quickly as possible, in hopes that new advanced tech (especially generative artificial intelligence) will turn big profits and establish a first-mover advantage. That means that developers are looking for the fastest and cheapest way to deploy the energy needed to feed the power-hungry complexes. Bramhall claimed reliability and speed to market as the motivator for data center developers to partner with gas companies, despite the well-established affordability and reliability of renewables and new evidence suggesting that on-site gas may be more expensive than connecting to the grid.
The outrageous and unjustified buildout of data centers has given pipeline gas, in particular, a jolt. Despite significant grassroots resistance nationwide, massive investments continue to pour into data centers while the world waits for real evidence that new generative AI tools driving hyperscaler buildout will actually prove useful and turn a profit. As ET executive chairman Kelcy Warren is reported to have said, “the pipeline business will overbuild until the end of time.”
Energy Transfer’s data center deals – what we know
Bramhall claimed that Energy Transfer has been in conversation with data center developers in “13 or 14 states”. An investigation by Oil Change International and the Guardian showed Energy Transfer had received dozens of requests to power data centers after Trump took office in 2025. These conversations between developers, tech companies, regulators, and service providers (including energy companies) happen behind closed doors, but here are a few data center projects where Energy Transfer has secured deals to supply gas:
- Signed a 20-year deal to supply gas to Entergy (a utility company) for the Meta Hyperion data center in Richland Parish, LA. The massive project will require power from 10 new gas turbines at Entergy power plants supplied by the Tiger Pipeline with 250,000 MMBtu/d of pipeline gas, beginning in February 2028.
- Agreed to supply up to 450,000 MMBtu/d of behind-the-meter gas from the Oasis Pipeline directly to CloudBurst’s Next-Gen data center complex in central Texas, generating up to 1.2 GW of electricity for at least 10 years.
- Agreed to deliver approximately 932,400 MMBtu/d of gas to Oracle data centers through three laterals sourced from ET’s Hugh Brinson and North Texas pipelines. The first lateral is already supplying gas to the Abilene, TX complex, part of the Stargate partnership project with OpenAI, Oracle, and SoftBank.
- Signed an agreement to initially supply up to 300,000 MMBtu/d of on-site gas to Fermi America’s HyperGrid (also known as Project Matador), the huge and troubled data center project being developed in Amarillo, TX.
- Applied to route the Green Chile pipeline to supply 400,000 MMBtu/d of gas to the Stargate II Doña Ana complex, also part of OpenAI and Oracle’s Project Jupiter, which is under construction in Doña Ana County, NM.
- Announced plans to expand the Desert Southwest Pipeline, representing the biggest capital expenditure for the company in the coming 2-3 years at over $5.6 billion. Demand for gas was driven in part by new proposed data centers according to ET. East Daley Analytics reported that Arizona had announced 15 GW of data center load by 2032, which “could require as much as 950 MMcf/d of new gas supply”. ET reported the design capacity of Desert Southwest is 1,500 MMcf/d.
A bad neighbor finds new neighborhoods
On-site gas, especially from companies with poor safety records, poses not only financial risks but are liabilities for workers and the communities who live or work nearby. Greenpeace USA released an analysis that shows Energy Transfer’s network of operations has been sprinkled with oil spills, gas releases, unchecked emissions, health impacts, and disasters that have struck fear into the community members living near the company’s facilities. The most harrowing finding was how little accountability Energy Transfer faced in response to the harm they caused.
Now, Energy Transfer is eager to expand wherever data center developers present opportunities for them to supply gas. The company’s biggest presence is in Texas, the state with one of the largest demands for data center projects in the US – and a state known for industry-friendly regulations on gas projects. A report by Bloom Energy estimates that “Texas is poised to become the nation’s leading data center market” and emphasized that on-site power in particular is increasingly ingrained as a power strategy for developers given constraints for regional grids like ERCOT.
Some public officials are already rejecting ET attempts to rush the construction of gas pipelines that may serve data centers. The New Mexico State Land Office recently rejected ET’s request for authorization to route a portion of the Green Chile pipeline after it was rushed for “emergency” approval by the federal Bureau of Land Management. The initial approval from the Bureau skirted the typical process for environmental assessment under the National Environmental Policy Act as part of the emergency permitting. Numerous civil society groups are now calling on the Federal Energy Regulatory Commission to reject the pipeline’s application.
Data centers already present material climate and environmental risks: the projects are driving fossil fuel consumption (and emissions) and using unsustainable amounts of water. Expanding ET’s infrastructure to meet the growing demands of these projects would only exacerbate emissions in the Permian Basin and other areas where ET operates. For example, the 300,000 MMBtu/d of gas supplied to Fermi’s Project Matador could alone create almost 16,000 metric tons of CO2e per day (tCO2e/d) when burned, assuming an emissions factor of 0.053.
Satellite data from the Permian Basin shows ET ranked third among repeat emitters with 15 high-rate methane events in a nine-month period, and the company has been linked to numerous other “blowdowns” and unplanned releases across its network, often with little apparent regulatory action. ET’s pipelines have also seen a number of disasters with significant environmental impacts. For example, the 2022 line break at ET’s Big Cowboy pipeline released an estimated 900 tons of methane, equivalent to the annual emissions of 16,000 cars, even though the rupture lasted “little more than an hour.”
Projects that operate their own gas power provide no benefits for the climate and the health impacts of emission-related pollution. With a company like Energy Transfer behind the wheel, these risks are coupled with certain climate, safety, and health impacts. Especially when the gas distribution company has such a pronounced record of pollution, community health impacts, and disasters compared to its peers, these risks become nearly impossible to justify.
