By 2035, data centers in the US could increase their natural gas consumption for electricity generation to a level that exceeds the current total gas usage of most countries worldwide. This forecast was released by BloombergNEF. The firm estimates that over the decade leading up to 2035, demand for gas to power data centers will grow by 15 billion cubic feet per day. This projection already accounts for the likelihood that many planned projects will not be completed.
According to the US Energy Information Administration, this increase exceeds the current natural gas consumption of every country except China, Russia, Iran, and the US itself. Meanwhile, the new BloombergNEF forecast is more than double its previous estimate of 6.9 billion cubic feet per day, released in December.
The new estimates show how the development of artificial intelligence is tied to burning significant amounts of fossil fuels, linking the plans of tech giants with the outlook for the oil and gas industry. The high availability and low production costs of gas in the US, combined with the ability of gas-fired power plants to quickly ramp generation up or down to meet the needs of 24/7 data centers, are the primary reasons why BloombergNEF projects natural gas will provide 69% of the electricity for new facilities connected to the grid.
Rising demand and challenges for the gas industry
The wave of new AI-related projects will make the power sector the second-largest source of gas demand growth in the US by 2035. It will trail only new liquefied natural gas (LNG) export terminals coming online along the Gulf of Mexico coast.
BloombergNEF projects that gas consumption in the power sector will rise to 54 billion cubic feet per day in 2035—an increase of 18 billion cubic feet compared to 2025. Meanwhile, demand for gas for LNG exports will grow by 21 billion cubic feet per day.
Henry Eaton, a gas market analyst at BloombergNEF and lead author of the report, noted that due to uncertainty regarding the AI boom, the margin of error for the forecast is “quite large—both to the upside and the downside.” He added that the electricity demand estimates are “certainly not low, but they are not the highest in the market either.”
The simultaneous growth in needs from data centers and LNG export facilities creates “a complex challenge for domestic gas producers.” BloombergNEF projects that between 2025 and 2035, they will increase production by 35 billion cubic feet per day, but they will need an additional 11 billion cubic feet per day to meet projected demand.
The BloombergNEF forecast adds to positive expectations for the prospects of American natural gas amid the growth of data centers and LNG export infrastructure. At the same time, there are concerns that some of the highest-quality sections of major US gas fields could be depleted due to more intensive drilling.
In July, the analytics firm Wood Mackenzie stated that “the decade of cheap Henry Hub gas is coming to an end.” This refers to the trading hub in Louisiana, which serves as the price benchmark for the American natural gas market. Wood Mackenzie predicts that by the mid-2030s, gas demand in the power sector will grow by 17 billion cubic feet per day—nearly the same amount projected by BloombergNEF.
This forecast followed a high-profile interview with Chronometer Holdings LLC founder Matthew Smith, who stated that a “fierce battle for natural gas security” could begin by the end of the decade. In a video posted on the social network X, which garnered 1.6 million views, Smith said he believes American consumers will suffer the most. His forecast sparked a heated industry debate.
Ben Dell, managing partner and co-founder of the investment firm Kimmeridge Energy Management Co., disagreed with that forecast. He noted that while the American gas market will face “significant demand growth” from LNG exports and data centers, the vast amounts of undeveloped acreage in US gas fields explain how the industry has managed to consistently meet demand while lowering costs on an inflation-adjusted basis.
Source: Bloomberg
