Oil And Gas Hubs Are The New Centers Of Gravity For Data Centers

Natural gas is emerging as a driving force behind the redrawing of the U.S. data center map.

An industry that was once tightly clustered in just a handful of places is suddenly spreading across the U.S., with remote areas that were once strangers to data centers becoming new digital infrastructure hubs.

Several factors are driving this change in the site selection math for Big Tech's data centers, from local political opposition to the evolving computing needs of artificial intelligence. But the predominant force shaping the data center industry’s new geography is the availability of power as developers race to build campuses that consume gigawatts of electricity that utilities are struggling to provide. 

Increasingly, this means building in locations where natural gas is most abundant.

Proximity to oil wells, fracking pads or gas pipelines was previously considered an unacceptable liability for data center construction due to the physical risk of explosions or other industrial incidents. Developers’ aversion to building near oil and gas extraction defined the industry’s footprint in major markets like Dallas, where developers steered clear of areas sitting above the Barnett and Eagle Ford shale formations. 

Yet today, proximity to natural gas infrastructure is practically a prerequisite for hyperscale data center build-out. 

“We had transactions that would be completely nixed because of the presence of a natural gas pipeline on the site,” said Chris Herrmann, who co-heads CBRE's DFW data center practice.

“Now it’s kind of a general rule that a site won’t be chosen unless it has it.”

With yearslong wait times for grid connections from utilities, developers and tech firms are looking for places where they can generate their own power or buy it directly “behind the meter” from power plant owners. 

This has led the fastest-growing data center hotbeds to emerge in the regions producing the bulk of the country's natural gas supply, a Bisnow analysis of historical market data provided by JLL and Data Center Map found.

Regions like West Texas and western Pennsylvania that were data center hinterlands just two years ago now have tens of gigawatts of planned development.

Gas-powered megaprojects are planned or under construction in places that until now were blank swaths of the data center map, like Louisiana, Mississippi and West Virginia. 

Many data center leaders expect development will continue shifting toward energy production centers. 

“Energy-rich states, if they're open to data centers, are going to see more and more data centers show up. You're going to start to see that become a real clear pattern,” said Wes Cummins, CEO of Applied Digital, a hyperscale developer with campuses in North Dakota.

“You’ll still want to be in Northern Virginia, but you're going to see much faster growth in other areas that have a lot of energy.”

Beyond the geographic change, this also represents a shift for tech giants that once led the corporate push into renewable energy. Firms such as Amazon, Microsoft and Google spent years promoting ambitious carbon-reduction targets, underwriting wind and solar projects through power purchase agreements.

But the rise of AI has seemingly changed those priorities. Facing urgent demand for power that renewable projects typically can’t deliver fast enough or with enough reliability, these companies’ shift to natural gas has prompted criticism that they are sidelining sustainability to chase AI growth.

The shift has been sharpened by the hostile stance toward renewables from the Trump administration, even as tech companies have lobbied to preserve key clean energy tax incentives.

Alongside gas investments, firms continue to sign renewable energy deals, attracted not only by sustainability but also the economics of low-cost wind and solar. CleanArc Chief Energy Officer Bill Thomas said modern gas infrastructure can offer a lower-carbon footprint than the grid power it replaces.

“If there is a world in which you can bring together renewable energy development, natural gas development and digital infrastructure and merge all of those things within a utility that's willing to party, then you really have something,” Thomas said. “Then you create a very unique solution set. And we're seeing that happen.” 

Gas is proving to be the easiest answer for developers and tech giants that are increasingly desperate for power. 

In 2020, a 30-megawatt data center was considered a large facility. Today, campuses are being built with more than a gigawatt of capacity. 

But few such blocks of power are available through regional grids.

Demand from the data center industry far exceeds what utilities can supply, so wait times for grid connections are now measured in years instead of months as utilities build new power plants and transmission infrastructure. 

To bring sites online faster, data center firms have turned to on-site or behind-the-meter electricity, almost always in the form of natural gas.

The use of self-generation or behind-the-meter power for data centers was rare just three years ago. Now, JLL estimates that close to 20% have some form of on-site generation beyond backup generators. Another study anticipates 30% will utilize on-site generation by decade's end. 

Even sustainability-focused data center firms like Las Vegas-based CleanArc have turned to gas power. The company’s business model is centered around purchasing renewable energy, but it now self-generates electricity using gas turbines at its Austin campus while awaiting interconnection to the grid. 

Thomas said there is no other option. 

“It's kind of becoming our business, unfortunately. It’s because the grid connection is so far out now that you have no other choice but to self-generate if you want to bring on capacity before something like 2032,” Thomas said, although he emphasized that the firm’s gas generation is cleaner than electricity from the local grid. 

“We're being forced, in a way, to pursue that solution,” he added.

Gas-powered data centers aren't exclusively found in production-heavy regions, but due to constraints in pipeline capacity, developers can often only access substantial gas supplies near production centers.

Of the top 10 gas-producing states, all but one are set to have their data center capacity at least double from mid-2024 levels. All 10 have at least one gas-powered megacampus planned.

The largest gas-fueled data center booms are happening in the top two states for production: Texas and Pennsylvania. 

In the Lone Star State, the Permian Basin in West Texas and other gas-producing regions have seen a drumbeat of new proposals for gigawatt-scale campuses with behind-the-meter gas over the past two years. This includes the Stargate campus being developed for Oracle, OpenAI and Microsoft in the West Texas town of Abilene, slated to host more than 2 GW of capacity. 

“There's so much gas in West Texas that they were burning it off. Now they’re building one of the most significant data centers in the world,” said CBRE Senior Vice President Brant Bernet, who co-heads the firm’s DFW data center practice. “And there's a lot of growth west of there, all the way out in El Paso. There are going to be these outlier markets that will be bigger than the Dallas market.”

While places like Dallas have always been major data center markets, West Texas didn't have enough data center capacity to register in JLL's data until last year. 

Today, the region has more than 3 GW under construction and more planned, JLL found, representing more computing power than exists in all but three U.S. markets.

Texas could surpass Northern Virginia as the industry’s largest market by the end of the decade, JLL projects. 

Gas from the Permian Basin and Haynesville Shale has also driven massive projects in the neighboring states of New Mexico, Oklahoma and Louisiana, where Meta is building a gigawatt-scale campus powered by an adjacent Entergy gas plant. Until now, none of those states had anything in the way of hyperscale build-out. 

Yet no state is poised to potentially jump from a data center desert to a hyperscale hotbed like Pennsylvania. 

Until 2025, the state’s data center markets were stagnant, with less than 100 MW between them. But according to a Bisnow analysis, the state had more than 14 GW of data center projects proposed during a 12-month stretch ending in 2025, largely powered by natural gas. 

Such projects include the $10B Homer City Energy Campus, in which the world’s largest gas-fired power station will supply a 3,200-acre data center complex. Elsewhere, TECfusions has planned a 3 GW campus with fracking pads on-site. 

“The quickest route to power is with natural gas, and all the fracking plants that sit in Pennsylvania make it a very sought-after location,” TECfusions former Chief Revenue Officer Shawn Novak told Bisnow last year.

As in Texas, the flood of planned development in Pennsylvania has spilled into neighboring states that share its energy resources.

Ohio has seen a surge in gas-powered campuses, including a proposal this month for a new gas plant from developer EdgeConneX. Hyperscale developers are also planting their flag in West Virginia for the first time, among them Nscale’s planned 1.35 GW, gas-powered campus for Microsoft.  

Not every data center leader agrees that access to gas will remain a dominant force shaping the contours of the sector's expanding footprint. Some are doubtful that most of the planned capacity in new markets like Pennsylvania or West Texas will actually come to fruition. 

Data centers aren’t turning to natural gas because of an affinity for the fuel — they’re going wherever the power is, and gas is the low-hanging fruit in the new era of energy scarcity. But that may not always be the case. 

Hyperscalers and other data center firms still prefer grid power, and utilities are spending hundreds of billions of dollars building new infrastructure that will expand grid capacity in the years ahead. Other on-site and behind-the-meter power solutions are slowly becoming economically viable at scale, from battery storage paired with renewables to small modular nuclear reactors.

But the limiting factor that caps the growth of these new gas-driven markets may end up being about computing more than energy, CleanArc’s Thomas said. 

The emergence of hyperscale facilities in places like Abilene, Texas, and North Dakota was enabled by the fact that training AI models — unlike traditional cloud computing — doesn't require proximity to major population centers to ensure low latency.

Now, demand is shifting to inference, the computing through which users interact with AI models. Thomas said that is pushing new development back toward population centers. 

While there may be a burst of growth underway in gas-rich locations, Thomas is among those skeptical that they will evolve into major digital infrastructure ecosystems like Northern Virginia. 

“It's happening. I just don't necessarily believe that it's a super durable development plan,” Thomas said. “You'll see discrete hubs that can be developed and will evolve, but I think they'll be pretty limited. You won't see them just popping up everywhere just because there happens to be energy.”