The surge in electricity consumption from data centers is projected to drive a significant increase in natural gas demand in the U.S. by 2030. This shift is expected to result in a substantial increase of 3.3 billion cubic feet per day, which would mark a 10% rise from the current daily consumption of 35 bc/d for electric power generation. According to Goldman Sachs, this increased demand presents a lucrative opportunity for pipeline operators to expand their infrastructure and capitalize on the growing market needs.
Among the key players set to benefit from the data center boom are Kinder Morgan and Williams Companies. These pipeline operators are well-positioned to take advantage of the escalating demand for natural gas driven by the proliferation of data centers. Goldman Sachs highlights that the projected $7.4 billion investment in pipeline infrastructure to boost capacity by 6.1 bcf/d through 2030 is expected to fuel the growth of these companies. With a strong presence and strategic positioning in key regions, Kinder Morgan and Williams Companies are poised to capitalize on the evolving landscape.
Goldman Sachs predicts a positive outlook for Kinder Morgan and Williams Companies, projecting a 2% earnings upside over the current estimates through 2027. Leveraging their scale and geographic advantages, these pipeline operators are expected to secure a significant share of the new pipeline capacity additions. Kinder Morgan’s leading market share of 40% in natural gas pipelines and substantial presence in Texas positions it as a frontrunner in the data center market. On the other hand, Williams Companies with a 33% market share and strong foothold in the Southeast, including Northern Virginia, are poised for substantial growth opportunities.
In addition to pipeline operators, companies like EQT Corp. are well-positioned to capitalize on the increased gas demand driven by data centers. As the largest natural gas producer in the U.S., EQT Corp. holds a significant market share of about 6% of total production. Goldman Sachs emphasizes the company’s cost advantages and inventory as key factors that will enable it to capture a meaningful share of the growing gas demand. With projections indicating a rise in power demand and subsequent load growth, EQT Corp. stands to benefit from its competitive positioning in the U.S. market.
Goldman Sachs rates Kinder Morgan as a buy with a stock price target of $20, implying an 8% upside from the previous close. On the other hand, Williams Companies is rated as neutral with a price target of $37, suggesting a 4% downside from the last closing price. EQT Corp. emerges as a buy recommendation with a stock price target of $43, indicating approximately 7% upside potential. The investment bank’s analysis indicates favorable prospects for these companies in light of the impending data center boom and the resulting increase in natural gas demand.
Overall, the data center boom presents a promising opportunity for pipeline operators and natural gas producers to capitalize on the evolving market dynamics. With strategic investments in infrastructure and a proactive approach to meet the growing demand, companies like Kinder Morgan, Williams Companies, and EQT Corp. are well-positioned to benefit from the changing landscape of energy consumption driven by the digital age.