Two Fossil Fuel Companies Are Betting Big on Data Centers

Two major American oil and gas companies, Williams and Chevron, are investing heavily in data centers, seeing potential in this emerging market. Data centers are increasingly driving demand for natural gas and electricity in the United States, according to Ashish Sethia, a global commodities and energy expert at BloombergNEF. The companies anticipate a need to increase US natural gas production by 36 percent by mid-2030s to meet the demand, which could have significant environmental implications.

Williams and Chevron are presenting data centers as a significant growth area for their businesses. Williams, a leading US oil and gas infrastructure firm, is building power plants and pipeline infrastructure specifically for data centers, including six behind-the-meter gas plants across the country. These facilities could emit up to 9.6 million tons of greenhouse gases per year, equivalent to the emissions of more than 22 typical natural gas plants.

The company claims its emissions will be "well below permitted limits," but its own modeling suggests they could be up to two-thirds lower.

Chevron, another major player, is also investing in data center power. In June, the company signed a 20-year power purchase agreement with Microsoft for a 2.67-gigawatt project in Texas. This project is expected to emit over 11.5 million tons of carbon-dioxide-equivalent emissions annually. Both companies expect to expand their data center-related projects in the future, with Williams planning to build more behind-the-meter gas plants.

Sethia, the BloombergNEF expert, believes that multiple companies stand to gain from building pipeline infrastructure for data centers, as these announcements are clustering around areas with existing gas pipelines.