The North American midstream sector is accelerating investments in growth projects directly related to data centers and artificial intelligence (AI), according to Fitch Ratings. Data center-driven pipelines provide diversification benefits to midstream companies, though the evolving nature of the market underscores the construction and execution risks.
For most Fitch-rated issuers, data center projects provide some diversification benefits, as there is limited demand correlation with conventional industrial or residential gas. Expanding into data center supply may also reduce customer concentration. Fitch does not expect data center projects to meaningfully affect the credit profiles of these companies in the next few years, as they will remain a relatively small segment of the overall business.
The rapid growth in data centers is underpinning expected energy demand growth in North America. Natural gas offers the fastest path to large-scale, reliable power, though ESG considerations and alternative energy options remain under review. By some estimates, data centers could add several billion cubic feet per day of incremental gas demand by 2030, fundamentally altering pipeline utilization and investment strategies.
Over the past year many midstream companies, including Energy Transfer (BBB/Stable), TC Energy (BBB+/Stable), Williams Companies (BBB/Positive), Kinder Morgan (BBB+/Stable), Boardwalk Pipelines (BBB/Stable), and Tallgrass Energy Partners (BB-/Negative) have announced new pipeline projects and launched open seasons tailored to supplying natural gas in high growth digital hubs, including Arizona, Texas, the U.S. Southeast, Midwest, and Alberta. Long-term gas supply contracts and commercial offtake commitments underpin project economics, as data center operators seek scalable, dispatchable power.
Some rated firms are moving beyond traditional pipelines, entering in joint ventures or partnerships to develop gas-fired generation or sell power directly to data centers and utilities via PPAs. Notably, Williams Companies’ Socrates Power Solution Facilities in Ohio, which includes two 400 MW (200 MW each) Power Generation sites powered by Natural Gas; Tallgrass Energy Partners’ (BB-/Negative) JV with Crusoe to build a 1.8 GW AI Data Center (scalable to 10 GW) campus in Southeast Wyoming; and Pembina’s JV with Kineticor in Alberta that aims to build a 1.8 GW gas-fired plant.
Beyond the announced projects, a broader set of midstream players—including Enbridge Inc. (BBB+/Stable), Enterprise Products Operating LLC (A-/Stable), Plains All American Pipeline L.P. (BBB/Stable), ONEOK, Inc. (BBB/Stable) and others —are actively pursuing or exploring data center opportunities, particularly in last-mile connectivity and new power solutions.
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