Appalachian gas production has been hamstrung by a slowdown in pipeline construction; data center demand could change that.
A planned buildout of new, AI-specialized data centers could unlock enough energy demand across the eastern half of the US to drive up Appalachian gas production and spur expansion of the pipelines to transport it.
Appalachian gas production growth has leveled off in recent years, following a decade of sustained gains. This is largely due to constrictions in takeaway capacity – major interstate pipelines transporting Appalachian gas out of the region are maxed out. Consequently, as the pace of pipeline construction slowed, Appalachian gas production has hovered around 35 Bcf/d, following a record high of 37.7 Bcf/d in 2023.
With takeaway capacity constricted, gas demand in Appalachia continued to expand steadily over the years, driven by the replacement of coal-fired power plants with new gas-fired combined-cycle plants and efforts to spark a regional “petrochemical renaissance.” Now regional power demand is projected to spike even further, paving the way for even more gas-fired plants across Appalachia and surrounding regions.
More importantly, industry analysts at RBN Energy are already signaling that growing demand from data centers from within or near Appalachia could enable gas companies to push gas pipeline expansions and ramp up their production over the next few years. In fact, the latest load growth projections suggest new data centers could require as much as 1.47 Bcf/d by 2030. That is enough gas to power over 6.8 million typical households for a year.
What are data center load growth projections in Appalachia and surrounding areas?
Electricity in Appalachia is serviced as part of the larger Pennsylvania-New Jersey-Maryland (PJM) regional transmission system. Electricity flows across the entire region, from Ohio and eastern Kentucky to New Jersey and metropolitan DC. PJM’s latest electricity forecast projects load growth of nearly 5% annually for the next 10 years, in large part driven by data center expansion in Virginia, Pennsylvania, New Jersey, and Ohio. To put that in context, PJM’s total electricity load has not grown at all for the last 10 years, hovering between 755 and 805 million MWh per year from 2014 – 2023.
Figure 1: While projections indicate large electric load growth in coming years, PJM annual electric load was stagnant from 2014 to 2023
PJM Annual Electric Load, Historic and Projected
A May 2024 report estimated that data centers in the PJM area consumed at least 45 million MWh of electricity in 2023. Most of the data centers are in Virginia, where they consumed 34 million MWh of electricity, more than 25% of the state’s total electricity consumption. Data centers in Pennsylvania, New Jersey, and Ohio consumed a combined 11 million MWh electricity in 2023. This was 5% of total electricity consumed in New Jersey, 3% of electricity in Pennsylvania, and 1.6% of electricity in Ohio.
Data center capacity in the four states amounted to about 7.3 GW in 2023. (Capacity here means the maximum amount of electricity the data centers could draw at a given time. Most of the time they draw less electricity than their capacity, and the amount varies based on demand.) Middle of the road growth projections from the Electric Power Research Institute indicate that regional capacity could grow to at least 9.4 GW and as much as 19.4 GW by 2030. This means that, if data centers operate 70% of the time, by 2030 they would consume between 58 million MWh and 119 million MWh electricity regionally, an increase of between 30 and 165 percent in just seven years.
Figure 2: PJM Map
Source: PJM
Figure 3: Data center electricity load is expected grow between 30 and 165 percent in just seven years
How much natural gas is needed to supply electricity for a typical data center?
While data centers range greatly in size and energy demand, a hyperscale, AI-specialized data center can demand more than 100 MW of electricity. A 100 MW data center, assuming it operates at 70% max capacity over a year, will use 613,200 MWh of electricity. Producing that much electricity from natural gas will consume over 4.4 billion cubic feet of gas. This would emit roughly 275,000 metric tons of carbon, which is equivalent to the annual emissions of nearly 60,000 typical passenger cars. Some companies are building campuses of multiple, connected data centers that have more than 1 GW of capacity. For the impact of a 1 GW campus, multiply everything by a factor of 10: 6.1 million MWh electricity per year, 560,000 homes, 2.75 million tons of CO2, and 600,000 cars.
In the Low Growth scenario, electricity consumption will increase by 13 million MWh. In the High Growth scenario, consumption will increase by 74 million MWh. If these new data centers in the PJM region are powered entirely by natural gas, they would consume between 94 and 537 billion cubic feet of gas per year, or between 0.26 and 1.47 Bcf/d. At the high end, that is over 4% of Appalachia’s existing gas production. Burning this gas would emit between 5.8 and 33.4 million metric tons of carbon dioxide per year.
In the PJM region alone, a 1.47 Bcf/d increase in gas consumption could justify pipeline infrastructure expansions that could provide the margin for natural gas companies to stay in business longer, further delaying transition. While it is true that some of the electricity that powers these data centers comes from new wind or solar generation, the scale of the planned natural gas plant expansion makes it clear that natural gas will be a primary energy source.
Case in point: in its Integrated Resource Plan filed in 2024, Dominion Energy–an electric and gas utility servicing much of Virginia, North Carolina, and South Carolina–referenced higher-than-anticipated load growth from data centers as the rationale for leaving in place existing fossil-fuel generation and pursuing an “all of the above” energy strategy moving forward.
New pipelines proposed to fuel “power-hungry” data centers
Earlier this year, we discussed several pipeline projects underway along Williams’s Transco pipeline–the biggest interstate pipeline in the US–designed to increase the flow of Appalachian gas to key markets across the Atlantic Seaboard. Many of these projects focus on increasing capacity north and south of Compressor Station 165 in Pittsylvania County, VA, an area that has bottlenecked Appalachian gas flow for years. Four of these projects are already online, and the expansions have not eased up. Just the opposite, the unprecedented demand from data centers is proving to be a windfall to gas companies, justifying a new wave of pipeline construction designed to increase takeaway capacity out of Appalachia.
Just last month, Transco announced yet another new project dubbed the “Power Express,” a 950 MMcf/d pipeline running along existing rights of way from Station 165 to northern Virginia, right into the heart of “Data Center Alley.” The small region in northern Virginia earned the moniker thanks to its status as the world’s biggest concentration of existing and planned data centers. Over 70 percent of the world’s internet traffic flows through this region alone.
There’s no question about how important the Mountain Valley Pipeline (MVP) has been in paving the way for the latest slate of expansions. The 2 Bcf/d pipeline provides a direct route from Appalachian gas fields to Transco’s Station 165, an important gateway to growing markets up and down the Eastern Seaboard. One of the biggest Transco-related projects—the Southeast Supply Enhancement, which will add a whopping 1.6 Bcf/d along existing rights of way—is now in the initial stages of pre-filing with FERC.
Also targeting the growing demand center of northern Virginia is the Capital Area Project, designed to increase the transport capacity of the existing Eastern Gas Transmission system by 67.5 MMcf/d between the Transco-Leidy Station in Clinton County, PA and Loudoun County, VA. As of November 2024, the Loudoun County Board of Supervisors has approved 200 data centers, with another 117 in the pipeline.
Meanwhile, major construction is underway on TC Energy’s Virginia Reliability Project, which will increase capacity along the Columbia Gas Transmission system in northern Virginia by 100 MMcf/d.
Following years of delay, TC Energy, which owns and operates the extensive Columbia Gas Transmission system that runs throughout Appalachia, finally broke ground on the Eastern Panhandle Expansion Project which will expand the transmission system in Morgan County, WV. The new capacity is set to enter service later this month.
Further north, the Tioga Pathway Project targets a section of National Fuel’s interstate pipeline in north-central Pennsylvania and would boost gas flows to the growing data center hotspot of Buffalo, NY.
Data center demand and an aggressively pro-fossil fuel administration are even driving gas companies to revive long-dormant projects. Williams said it has asked FERC to reinstate its certificate of public convenience and necessity for the Northeast Supply Enhancement, a 400 MMcf/d expansion of Transco that had been sidelined by years of litigation. Williams is also in talks with state environmental regulators in New Jersey, Pennsylvania and New York to once again advance the Constitution Pipeline project. Originally proposed over a decade ago, the 121-mile pipeline would transport 650 MMcf/d from Susquehanna County, PA to western NW. Williams withdrew the project after years of opposition and failure to obtain necessary state permits.
Finally, the Borealis Pipeline, which would run east-to-west across Ohio along with related enhancements to Boardwalk’s Texas Gas Transmission system, would increase Appalachian gas producers’ capacity to ship even more gas–up to 2 Bcf/d–south to LNG exporters along the Gulf Coast.
Note: Pipeline expansion project routes are approximate.
The data center boom is a windfall for gas companies, reversing the planned phaseout of fossil fuel generation.
In April, developers announced plans for the Homer City Energy Campus in Pennsylvania, which would house the country’s largest gas-fired power plant along with a 3,200 acre data center campus. The massive 4.5 GW power station would be fueled by Appalachian gas via the Texas Eastern gas pipeline system. Notably, Enbridge is pursuing an expansion project along the Pennsylvania section of its Texas Eastern pipeline that would add 55 MMcf/d of capacity.
The Homer City project joins a growing list of proposals that would see on-site gas-fired power generation for data centers. Dominion Energy plans to bring online an additional capacity of 5.9 GW of natural gas generation between 2030 and 2036 to satisfy growing data center demand, according to its 2024 IRP. Earlier this year, a developer sought to build a 3.5 GW capacity gas-fired power plant and data center campus on 750 acres of land in Pittsylvania County. The project, which would be fueled by Appalachian gas coming straight from MVP, was rejected by county officials in April.
Gas companies are betting big on the AI data center boom to reverse the planned phaseout of fossil fuel generation. Instead, the gas industry–backed by White House support–is using rising data center electricity demand as an excuse for building even more gas-fired generation capacity. If industry has its way, new pipelines and gas-fired power plants will keep the industry doing business as usual for decades to come.