The AI boom is expected to lift US natural gas demand because new power plants are needed to supply electricity for AI operations. But Kimmeridge Energy Management Co. warns that this forecast is now vulnerable, estimating that as many as half of all planned data-center projects across the US might be postponed or scrapped.
Kimmeridge's analysis sees these delays as a serious threat to the data-center buildout. The projected rise in gas demand is a central part of the AI energy story, making this risk pivotal to the firm's outlook.
Kimmeridge co-founder and managing partner Ben Dell discussed these issues Wednesday in New York. "The sort of Silicon Valley model is running into a real-world infrastructure constraint," he said during the conversation.
Opposition to data centers is becoming bipartisan and is growing in states such as Pennsylvania, Texas, and Ohio. Local communities and legal challenges are creating resistance, raising the chance that projects will be postponed or canceled. The issue is also emerging as a political flashpoint ahead of US midterm elections, with data centers quickly becoming a campaign topic.
US gas demand growth is closely tied to AI, since new power plants would be needed to supply electricity.
Dell said an expected 30 billion cubic feet per day of growth in US gas demand would be tied mainly to liquefied natural gas exports, with data centers possibly adding 5 billion to 10 billion cubic feet per day. If delays happen, AI-related gas use could come in at the bottom of that estimate. That 30 Bcf/d figure covers the total expected increase in US gas demand, so the industry's fortunes are tied to data-center completion.
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US gas producers have long hoped AI would boost consumption. That optimism comes after natural gas sold at relatively low domestic prices throughout much of the past decade because fracking supply overwhelmed demand. Low prices have been a persistent feature of the market, and AI was viewed as a possible turning point.
Still, investor doubts about Big Tech's spending and public resistance to data centers are creating more headwinds for gas bulls. The cheap-gas environment has defined the US market for years.
Kimmeridge's portfolio includes natural gas producers and Commonwealth LNG, a proposed export terminal in Louisiana. That gives the firm a direct interest in whether data-center projects move forward.
Dell said the ideal data-center proposal would have "zero impact," meaning no net change in water use, land, emissions, or power prices.
The risk that half of the planned data-center projects could be delayed or dropped is a direct challenge to the AI-fueled energy boom. If projects slip or are canceled, natural-gas demand growth would likely shrink significantly. Political opposition, local lawsuits, and construction complexity are all feeding that uncertainty.
For the energy industry, the fate of these data centers has become a key variable. Kimmeridge's warning is being closely watched as the sector waits to see how the AI buildout unfolds.