U.S. data center boom puts natural gas on a much steeper climb

The AI buildout is changing the gas math

Within ten years, U.S. data centers are on track to use more natural gas than most countries, according to a new BloombergNEF outlook. The firm now expects electricity generation for data centers to lift gas demand by about 15 bcf/d through 2035, more than double its December call of 6.9 bcf/d. Even after factoring in that many proposed projects will not make it to construction, that increase would top the current total gas consumption of every nation except China, Russia, Iran and the U.S.

Why gas gets the nod for power

AI's growth is colliding with the reality that U.S. natural gas is abundant, relatively cheap to produce, and well suited to power plants that must ramp up and down to serve always‑on computing loads. BloombergNEF expects gas to deliver 69% of the electricity for new grid‑connected data center facilities in its forecast. The surge of AI‑related projects makes the power sector the second‑largest source of U.S. gas demand growth through 2035, trailing only new LNG export terminals coming online along the Gulf Coast.

BloombergNEF projects power‑sector gas consumption to reach about 54 bcf/d in 2035, an increase of 18 bcf/d from 2025 levels, while LNG export demand rises by another 21 bcf/d. The firm stresses the uncertainty around the AI trajectory is significant in both directions. As Henry Eaton, a BloombergNEF gas market analyst who led the report, put it: "Our power demand estimates are definitely not low, but they're not the highest on the Street."

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Supply, strain, and the bullish drumbeat

Meeting the simultaneous needs of AI data centers and new LNG plants is "a complex challenge for domestic gas producers," BloombergNEF writes. Producers are currently set to lift output by around 35 bcf/d from 2025 to 2035, but the outlook says they would still need roughly 11 bcf/d beyond that to cover expected demand. This fuels a growing bullish narrative for U.S. gas while also stirring worries that operators could draw down top tier acreage in major U.S. gas fields more quickly as drilling accelerates.

The momentum is not unique to one firm's view. In July, Wood Mackenzie said "the decade of cheap Henry Hub gas is coming to an end," referring to the Louisiana hub that sets the U.S. benchmark price. Wood Mackenzie sees power‑sector gas demand rising by 17 bcf/d "by the mid‑2030s," nearly matching BloombergNEF's 18 bcf/d increase from 2025.

The debate gets louder

After Wood Mackenzie's call, a viral interview clip featuring Chronometer Holdings LLC founder Matthew Smith racked up 1.6 million views on X. Smith forecast that as the decade closes, "you're going to start to see a knife fight to secure natural gas." That view sparked pushback. "I couldn't disagree more with Matt's view," wrote Ben Dell, managing partner and co‑founder of Kimmeridge Energy Management Co. He agreed that LNG and data centers point to "considerable demand growth," but argued the industry "has consistently met the demand while lowering costs on an inflation adjusted basis."

What this means for your money

If these buildouts unfold as outlined, expect bigger volumes of gas moving through the system and tighter choices for producers about where and how fast to drill. That backdrop can translate into choppier headlines around power reliability, LNG exports, and gas pricing. For everyday portfolios, it is the scale that stands out: about 15 bcf/d tied to data centers, roughly 21 bcf/d from LNG growth, and production that may need to stretch beyond an already sizable 35 bcf/d increase to keep up.

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