Energy Transfer LP (ET) has entered into a long-term agreement to supply natural gas to a Texas data center. This is a notable update, as midstream companies look to capitalize on natural gas growth opportunities.

Energy Transfer on February 10 announced it struck a deal with CloudBurst Data Centers, representing its first commercial arrangement to supply natural gas directly to a data center. As part of the deal, Energy Transfer will provide natural gas to CloudBurst’s flagship AI-focused data center development in Central Texas.

The midstream company would use its Oasis pipeline to provide up to 450,000 MMBtu per day of natural gas supply to CloudBurst’s Next-Generation Data Center campus outside of San Marcos, Texas. The contracted supply would be able to generate up to approximately 1.2 gigawatts of electric power for at least 10 years starting with Phase 1 of the data center facilities.

The agreement is subject to CloudBurst reaching financial investment decision (FID). CloudBurst expects to reach FID later this year, which means the facility would be operational in Q3 of 2026. 

Additionally, Energy Transfer said it is in discussions with a number of data center developers. The company expects this to be the first of many agreements to supply, store, and transport natural gas to fuel data centers.

See more: DeepSeek Hits Midstream; AI = Wildcard for Gas Demand

Another Midstream Company Provides Updates on Data Center Opportunities

Williams Companies (WMB) said during its earnings call on February 13 it is seeing a series of data center opportunities continue to build out over time. Additionally, the midstream company said the most mature markets for increased power demand and data centers are in Virginia, Pennsylvania, and Ohio. 

The firm’s data center projects are moving at a very fast pace, Williams said, with the counterparty for its most mature project being in full support of Williams ordering all of the major equipment and long lead items. Furthermore, the company expects similar returns to the high value transmission projects it has been executing along its system.

See more: Midstream’s Natural Gas Outlook Continues to Strengthen

Energy Transfer and Williams are holdings in the Alerian Energy Infrastructure ETF (ENFR). The fund provides exposure to the Alerian Midstream Energy Select Index (AMEI). The index comprises North American midstream energy infrastructure companies, which includes MLPs (25%) and corporations (75%).

For more news, information, and analysis, visit the Energy Infrastructure Channel.

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