Data Center Energy Demand Drives New Midstream Deals

AI and AI investing have been the big story this year in the stock market, responsible for a major part of overall market growth. While many investors entered 2025 heavily exposed to tech already, that hasn’t stopped markets from identifying other opportunities created by the need for AI computing power, like data centers. That data center energy demand has in turn created major new opportunities in natural gas and midstream categories, with some key deals in recent weeks.

WMB’s investment of $3.1 billion in two additional power innovation projects takes its total committed capital to power projects to just about $5 billion.

10-year, primarily fixed-price power purchase agreements with an unnamed large, investment-grade counterparty back the two projects. The projects are expected to be completed in the first half of 2027. Furthermore, WMB raised its 2025 growth capex guidance range by $875 million to a midpoint of $3.6 billion. WMB expects a 5x build multiple for the project, which implies a 20% return. WMB is also developing the Socrates power project in Ohio for Meta, which is expected online in 3Q26. 

ET, one of the largest MLPs, recently made an agreement with FRMI, an energy technology company developing a massive private grid and data center complex, to provide natural gas supply to FRMI’s HyperGrid AI data center campus near Amarillo, TX. This is another demonstration that the energy needs of data centers are creating a valuable new market for natural gas-focused companies. Less than a week after the FRMI deal was announced, VoltaGrid, which is developing its own dedicated power infrastructure in Texas, announced a 2.3 GW agreement to supply Oracle (ORCL) data centers with electricity generated from ET’s natural gas.  

PPL is nearing a deal with META to serve a potential new data center in western Canada, per The Logic. Rumor also involves data center company Beacon AI. The data center would use natural gas-fired electricity from the Greenlight Electricity Centre (GLEC). The GLEC is a partnership between Pembina and power generation company Kinecticor. It is expected to reach a final investment decision in the first half of 2026. Per expectations, it will have up to 1.8 gigawatts (GW) of capacity. This corresponds to 320 million cubic feet per day (MMcf/d) of natural gas demand. Pembina may expand its Alliance natural gas pipeline to supply the facility. 

Following the media reports, PPL confirmed that a 0.9 GW grid allocation for GLEC was secured by a “potential customer”. Expectations place GLEC starting up as early as 2030.

Key Players in Data Center Demand

For investors looking to gain exposure to growth in natural gas demand, midstream energy infrastructure offers a compelling option. Many of the key players at the forefront of this theme, including WMB, ET, and PPL CN, are top-10 constituents of the Alerian Energy Infrastructure ETF (AMLP), which tracks the Alerian Midstream Energy Select Index (AMEI). Approximately 70% of AMEI by weighting primarily focuses on natural gas infrastructure as of October 16.

For more on how midstream is benefitting from rising natural gas demand, register to join our webcast “MLP Spotlight: Energy Transfer on Natural Gas Opportunities and More” on Wednesday, November 12, at 12:30 p.m. ET.

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