AI’s rapid rise comes with an overlooked consequence—an energy crunch. As data centers drive unprecedented electricity demand and Washington clears the way for fossil fuel expansion, natural gas is emerging as the big winner. The combination of these forces is likely to set off a revival in natural gas mergers and acquisitions (M&A), creating lucrative opportunities for investors and energy companies alike.
AI and Data Centers Drive Surging Energy Demand
Top tech companies are projected to spend over $200 billion on AI this year as they build massive computing capacity, as per an analysis by Bloomberg Intelligence. In early 2025, Microsoft announced plans to spend $80 billion to develop new data centers and train AI models. It’s not just US tech giants, but investors globally are pouring capital into data centers, from an Emirati billionaire’s $20 billion pledge for US facilities to SoftBank’s $100 billion US tech investment focused on AI. This rapid expansion reflects AI’s appetite for power and translates into soaring electricity consumption.
This trend is already affecting the power market. A December 2024 report by the US Department of Energy projects that data center power demand will likely nearly triple over the next three years, rising from about 4% of US electricity use today to between 6.7% and 12% of total consumption. To keep up, analysts estimate the US will need dozens of new power plants. Enverus, an energy consultancy, forecasts as many as 80 new gas-fired plants with ~46 GW of capacity will be built by 2030 to support AI-driven load growth. In short, AI is becoming a significant driver of electricity demand – much of which will likely be met by natural gas, given its availability and responsiveness.
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Trump’s Energy Policies Create a Favorable Backdrop for Natural Gas
In parallel with the AI-driven demand boom, President Trump’s early policy moves in 2025 have signaled a clear shift toward fossil fuel support and deregulation. Key actions included lifting restrictions on liquefied natural gas (LNG) exports and fast-tracking approvals for energy projects like drilling on federal lands and pipelines. Such policies aim to grow American energy by removing regulatory hurdles, which will directly benefit natural gas developers and infrastructure investors. For example, Appalachian gas producers in constrained basins will finally get new pipelines to reach broader markets under a deregulation-friendly regime.
The pipeline expansion is a centerpiece of this strategy. Trump has explicitly vowed to revive stalled natural gas pipeline projects to increase supply. During his first term, Trump’s administration moved to limit states’ ability to block such pipelines on environmental grounds. Now, in 2025, we see a renewed push with Federal Energy Regulatory Commission (FERC) appointees moving to ease restrictions on pipeline approvals. Beyond pipelines, Trump’s policies favor natural gas through other avenues. Export policy is another lever wherein, by expediting LNG export permits and ending moratoria on export terminals, the administration is opening the door for more US gas to reach global markets.
Investors Turn Optimistic
Private equity firms, which saw stagnant deal activity in the sector last year, are expected to capitalize on these shifting dynamics. Nearly 60% of PE-backed gas assets have remained unsold for over five years, according to Pitchbook, creating a need for exits. Rising natural gas prices are expected to hit $4.2 per MMBtu by 2026, according to a forecast by the US Energy Information Administration, providing much-needed growth in dealmaking. Additionally, midstream infrastructure such as pipelines and processing facilities are set to play a crucial role in meeting growing natural gas demand, prompting further mergers and acquisitions (M&A) opportunities.
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Investor sentiment toward natural gas has improved significantly. Major deals in the natural gas sector highlight this trend. Constellation Energy’s announcement in January 2025 to acquire Calpine’s gas-fired power plants for $16.4 billion underscores the value investors see in these assets. Midstream investments are also picking up, with Blackstone Infrastructure partnering with EQT on a $3.5 billion pipeline joint venture. LNG producers are attracting foreign buyers, with global firms securing the US gas assets to support growing export capacity. This activity signals long-term confidence in natural gas infrastructure.
NextEra Energy’s partnership with GE Vernova to develop gas-fired power projects for AI data centers highlights a broader industry shift where traditional renewable energy players are now betting on natural gas to sustain the energy-intensive digital economy. According to Enverus, utilities and even tech companies are building portfolios of generation assets to meet the growing demand for electricity, which makes gas assets hot commodities. Therefore, the oil and gas sector, more broadly, is expected to see busier M&A in coming quarters as dealmakers capitalize on supportive trends.
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