Natural Gas Midstream Players Draw Attention as Data Center Power Demand Grows

Two of the largest natural gas infrastructure operators in the United States — Energy Transfer and Williams Companies — are being closely watched as electricity demand from artificial intelligence data centers accelerates across the country. Both companies sit in the midstream segment of the natural gas value chain, meaning they own and operate the pipelines and processing assets that move gas from producing basins to end users, including power plants.

The connection is straightforward: gas-fired generation is expected to play a significant role in meeting the load growth associated with data center expansion, and pipeline operators with takeaway capacity in key power markets stand to benefit from higher throughput. Analyst commentary and investor discussion have increasingly framed the two companies as comparable ways to gain exposure to that trend, given their overlapping footprints and large, fee-based contract structures.

In trading on Monday, shares of Energy Transfer (ET) rose 0.84% to $21.68, up from a prior close of $21.50, giving the Dallas-based partnership a market capitalization of roughly $74.7 billion. Energy Transfer operates an extensive network of natural gas, natural gas liquids, and crude pipelines, alongside processing and export facilities, making it one of the more diversified midstream operators in the sector.

Williams Companies, headquartered in Tulsa, Oklahoma, centers its business on the Transco pipeline system, which runs from Texas to the Northeast and serves some of the same Eastern power markets where data center construction has been most concentrated. The company’s exposure to gas-fired power demand growth has made it a frequent comparison point for investors tracking the buildout.

Broader natural gas equities also moved higher in the session. Natural Gas Services Group (NGS), which provides rental compression equipment to producers, gained 2.15% to close at $37.72, versus a previous close of $36.93, with a market cap near $486.6 million.

Neither company has publicly attributed recent operating results to data center demand specifically, and the pace of generation additions — and the fuel mix that supports them — remains subject to state-level planning and utility procurement decisions.

What to watch

• Upcoming quarterly earnings reports from both Energy Transfer and Williams Companies, including commentary on power-related pipeline project interest
• Announcements of new or expanded pipeline capacity serving data center corridors
• Regional transmission organization forecasts for electricity load growth in gas-dependent markets

Source: original release