Energy Transfer Secures Natural Gas Supply Deal with CloudBurst for Texas Data Center
(Reuters) — U.S. pipeline operator Energy Transfer on Monday entered into a long-term natural gas supply agreement with private, Denver-based company CloudBurst Data Centers for its development in Central Texas.
Shares of the Dallas, Texas-based company rose 2.1% in morning trade.
With rising power demands from AI and slow grid advancements, data centers are bypassing traditional utilities to secure energy directly from producers or establish their own supplies, which could significantly boost natural gas consumption later in the decade.
Energy Transfer will provide up to 450,000 million British thermal units per day of firm natural gas through its Oasis Pipeline to CloudBurst's campus outside of San Marcos, Texas, contingent upon the data center operator reaching a final investment decision (FID) with its customer.
The natural gas supply will generate up to nearly 1.2 gigawatts of direct electric power for a period of at least 10 years starting with Phase 1 of the data center facilities, the pipeline operator said.
The company also said the agreement marks its first commercial arrangement to supply natural gas directly to a data center.
"While Energy Transfer did not provide project costs or returns, we view the announcement favorably as a concrete example of how midstream players can directly participate in the AI/datacenter thematic," said RBC Capital Markets analyst Elvira Scotto.
CloudBurst expects to reach FID later this year and the facility could be operational in the third quarter of 2026.
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