The U.S. could lag in the AI race if it doesn’t increase its use of natural gas to meet the rising electricity needs of data centers, says Alan Armstrong, CEO of Williams Companies. In a CNBC interview, Armstrong emphasized that natural gas is essential for handling the growing power demand from tech advancements.
Williams Companies operates a large pipeline network that transports about one-third of the U.S.’s natural gas. This includes the Transcontinental Pipeline, which spans 10,000 miles and supplies regions like Virginia, a major data center hub, and fast-growing markets in the Southeast.
Rising Electricity Demand
A recent report by Rystad projects that electricity demand will rise by 290 terawatt hours by the end of the decade, driven by tech sector expansion and the growth of electric vehicles. This increase is comparable to Turkey’s total electricity demand.
Debate Over Energy Sources
Some utility executives warn that failing to meet this rising demand could hurt not only AI development but also the U.S. economy. There is ongoing debate about the role of natural gas, as the U.S. also seeks to expand renewable energy sources like solar and wind.
Renewable energy supporters believe that solar, wind, and battery storage should primarily power data centers. However, CEOs from Dominion Energy and Southern Company, which serve major data center areas, argue that natural gas and nuclear power are necessary to support renewables when conditions are not ideal.
National Security Concerns
Armstrong called the situation a “national security issue,” stressing that the U.S. needs natural gas to remain competitive in AI. Some major data center developers have approached Williams for natural gas due to a lack of other options.
Williams expects natural gas demand to grow by 18% from 2023 to 2030. The company’s pipeline capacity is currently full, including the Transco pipeline. Williams is expanding Transco’s capacity by 15% to meet this demand. Armstrong noted that the U.S. has not invested enough in natural gas infrastructure.
Investment and Stock Performance
Goldman Sachs estimates $7.4 billion in pipeline investments are needed through 2030 to keep up with demand growth. Williams and Kinder Morgan are well-positioned to benefit. Williams’ stock has recently hit 52-week highs, with shares up 17% over the past three months and 26% this year. Armstrong highlighted the company’s competitive advantages due to its extensive pipeline network.