Natural Gas’s AI Moment: Winners and Losers

The natural gas market is entering a new era as artificial intelligence (AI) data centre power needs drive unprecedented demand.

However, the opportunity is playing out differently across sub-sectors as downstream utilities face growing regulatory concerns and political risks over surging electricity prices.

In this article, we review the natural gas outlook and compare the prospects for diversified energy company DTE Energy [DTE], utility company Eversource [ES] and natural gas infrastructure company Williams [WMB].

Structural shifts

Natural gas has emerged as a preferred energy source for data centres due to its availability, relatively low cost and ability to ramp up electricity supply when needed.

According to BloombergNEF, natural gas consumption for data centre power generation is expected to increase by 15bn cubic feet per day in the 10 years to 2035.

To put that into context, this means US data centres are expected to consume more natural gas than most countries currently use, according to Bloomberg estimates based on data from the US Energy Information Administration.

This also means that the low cost that made natural gas an attractive energy source for data centres may not last for long.

Analysts at Wood Mackenzie warned that the decade of cheap Henry Hub gas is coming to an end, referring to the Louisiana pipeline trading hub that sets the benchmark US natural gas prices. 

The energy research firm added that Henry Hub – one of the global energy market’s most stable benchmarks that traded narrowly between $2-4 per million British thermal units (MMBtu) for most of the past decade – is forecast to approach $5 per MMBtu in real terms by 2035.

“Two structural shifts are working in the same direction at once. Demand continues to grow at a sustained pace. Supply is becoming harder and more expensive to grow,” said Wood Mackenzie.

Data centres are not the only factor putting pressure on US natural gas supply. The biggest driver of future demand remains liquefied natural gas exports. Natural gas production in the US, meanwhile, is becoming “less productive and more geologically complex” as breakeven costs stop falling and technological gains plateau.

Looking further ahead, the outlook for natural gas demand will also be shaped by the pace of renewable and nuclear energy adoption at data centres. Hyperscalers such as Amazon [AMZN] and Alphabet [GOOGL] have committed to use clean energy and are backing small modular reactor technology, which is expected to begin coming online in the 2030s.

DTE Energy looks to make data centres pay

DTE Energy, which operates electric utility and natural gas distribution businesses in Michigan, is looking to use revenue from hyperscaler data centres to help keep electricity affordable for its existing customers.

The company has an approved power supply contract with Oracle [ORCL] for a large data centre campus in Michigan’s Saline Township. It also has an agreement to supply 2.7GW of power from new resources to Google’s planned data centre in Van Buren Township.

In parallel, DTE has sought regulatory protections aimed at ensuring large-load customers bear the costs and risks associated with the infrastructure built to serve them. These include minimum monthly billing charges, upfront administrative fees, termination payments and collateral requirements from large-load customers.

Eversource says no to data centres

For utility companies such as Eversource, balancing corporate profit while keeping electricity rates affordable for end consumers is shaping up to be a complex task.

Concerns over rising electricity prices are getting louder. In September, the US House of Representatives passed the Ratepayer Protection Act, a bill aimed at protecting households from higher electricity costs linked to data centre expansion.

During the Q1 earnings call in May, Eversource CEO Joseph Nolan went as far as saying that the company was “not interested in the data centre” buildout in New England as it is “only going to drive up the price of energy”, bringing “no value to our residential customer”.

Increasing political and regulatory risk from affordability concerns has already prompted Fitch Ratings to lower the sectoral outlook for North American utilities and power corporates to ‘deteriorating’ from ‘neutral’. 

Williams invests in behind-the-meter power projects

Amid regulatory concerns for utilities, midstream players offer a different route into the natural gas boom story. Williams, a company focused on providing natural gas processing, transmission and storage services, is one example.

The company is looking to capitalise on the AI infrastructure boom through behind-the-meter power projects.

To do so, Williams is taking its natural-gas infrastructure expertise a step further down the value chain. Instead of only transporting gas to a power plant, it is building dedicated gas-fired power systems for data centres.

In July, Williams announced that a Blackstone-led group [BX] agreed to invest $5.34bn in five of its behind-the-meter power projects. Neo, the company’s largest behind-the-meter power project to date, is targeted to start operations in 2028 and has already signed customer agreements, Williams said.

Boom or bust: DTE vs ES vs WMB

DTE Energy shares are down 0.32% year-to-date. DTE stock hit a 17-month low of $125.13 on 22 September amid earnings weakness, analyst downgrades and an ongoing capital deployment cycle.

Eversource Energy shares have remained close to flat in 2026. As of the 22 September close, ES stock was trading at $66.38.

ES shares fell 8.1% in March. During the month, US regulators lowered the return that Eversource and other New England utilities are allowed to earn on their electricity transmission investments from 10.57% to 9.57%.

Williams stock was up 20.67% year-to-date. In H1 2026, the company reported a 36.8% year-on-year rise in net income to $1.691bn. Williams recently added more than 4,000 miles of pipeline following its $5.5bn acquisition of Momentum Midstream.

The table below compares the three companies based on valuation and expected sales growth:

Source: Yahoo Finance

Conclusion

The AI data centre boom is strengthening the long-term demand outlook for US natural gas, but the benefits will vary across the sector. 

Upstream producers could benefit from higher gas prices, while midstream companies stand to gain from growing infrastructure needs. Utilities, meanwhile, face affordability and regulatory pressures as electricity demand rises.