US Natural Gas Production Surges Amid AI Demand and Exports

The United States is experiencing a substantial increase in natural gas production, driven by escalating demand from artificial intelligence (AI) data centers and a robust growth in liquefied natural gas (LNG) exports. This surge in production is prompting a wave of multibillion-dollar acquisitions among major pipeline companies seeking to consolidate the industry and expand their operational scale. This week, ONEOK, headquartered in Tulsa, Oklahoma, finalized the acquisition of Brazos Midstream's Permian Basin assets for $4.42 billion. This strategic move follows closely behind pipeline giant Williams' acquisition of Momentum Midstream, which included significant pipeline gathering and processing facilities in Texas and Louisiana, for $5.5 billion. Earlier in May, Western Midstream invested $1.6 billion to acquire Brazos' Delaware Basin facilities, located in the western part of the Permian region. The U.S. shale gas boom, which began in 2006, has more than doubled natural gas production over the past two decades, a stark contrast to the three decades of relatively flat output prior to that period. Projections indicate that this upward trend in production is expected to continue through 2050. Currently, the U.S. accounts for approximately a quarter of the global natural gas output, nearly double that of Russia, which ranks second. Furthermore, the U.S. leads the world in LNG exports, a market it entered only ten years ago. The ongoing expansion of LNG export facilities along the Texas and Louisiana coasts, combined with the burgeoning domestic demand for powering AI infrastructure, suggests that U.S. natural gas output could increase by an additional 35% by 2050, reaching an estimated 150 billion cubic feet per day (Bcf/d). This figure represents a significant jump from the 50 Bcf/d produced twenty years ago, according to projections from the U.S. Department of Energy. Energy analyst London Spivey of East Daley Analytics commented to Fortune that ONEOK's acquisition of Brazos' assets represents a favorable valuation for expanding its presence in the Permian's Midland Basin. Spivey noted that the acquired gas infrastructure is crucial for meeting the demands of AI operations, allowing ONEOK to profit at every stage of the value chain, from extraction and processing to transportation via its pipeline network. The acquisition includes gathering lines directly from wells and gas processing plants, enabling the company to manage the entire supply chain for this vital energy resource.