Energy Transfer quietly becomes top gas supplier for AI data centers

Energy Transfer's rise as a key gas supplier to AI data centers reflects a broader shift: as AI compute demand surges, data center developers are bypassing an overburdened grid and turning to on-site natural gas power. This trend is benefiting pipeline companies traditionally seen as steady dividend payers, not AI plays. The company's extensive infrastructure—nearly 107,000 miles of pipelines—positions it as a preferred supplier for hyperscalers like Oracle and Meta (via Entergy).

The deals are substantial in volume and duration, such as the 20-year Entergy contract and the Oracle agreements for 900,000 Mcf/d to three data centers. These projects require minimal capital for laterals but also enable larger investments like the $2.7 billion Hugh Brinson and up to $5.6 billion Desert Southwest pipelines. While growth is robust, risks remain—a permitting issue is delaying one Oracle-linked pipeline by six months, and local opposition could slow future projects. Still, the push for speed favors gas over grid connections, supporting Energy Transfer's outlook for 17.5% EBITDA growth and a steadily rising distribution.