US Natural Gas Prices Projected to Rise Until 2035 Due to AI Data Center Boom
According to analysis from energy consulting firm Wood Mackenzie, natural gas prices in the United States are forecast to increase significantly through 2035, ending a decade of low Henry Hub prices (the benchmark for US natural gas). The explosion of AI data centers and the expansion of US LNG (Liquefied Natural Gas) export infrastructure will be the primary factors driving robust demand.
Natural Gas Market Shifting Toward New Trends
Over the past decade, the United States has experienced a period of relatively low natural gas prices, creating favorable conditions for energy-intensive industries. However, Wood Mackenzie experts predict that this era is nearing its end, with an upward price trend expected to continue in the coming years.
"The growth drivers of the past decade - rapid development of gas wells, nearly free associated gas, and annual productivity improvements - have essentially reached their limits," said Kristy Kramer, Head of LNG Strategy and Market Development at Wood Mackenzie.
AI and Data Centers Driving Energy Demand
The rapid development of artificial intelligence (AI) technology is creating enormous energy demand, particularly from data centers. The power sector alone is expected to require an additional 17 billion cubic feet of natural gas per day (bcfd) by the mid-2030s.
"The power sector alone will need an additional 17 billion cubic feet of gas per day by the mid-2030s, and the highest quality land areas have already been brought into production," Kramer stated.
Earlier this year, Global Energy Monitor reported in a brief that the United States is nearly tripling its natural gas-fired power capacity development for 2025, totaling nearly 252 gigawatts (GW) in announced, pre-construction, and under-construction projects.
"More than one-third of this capacity is planned to directly power on-site data centers, and numerous grid-based projects are also planned to meet the anticipated increase in energy demand from AI," Global Energy Monitor noted in their global gas and power plant tracker.
Expanding LNG Exports and International Impact
The expansion of US LNG export infrastructure is creating another price growth driver. Even at $5/MMBtu (a unit of energy measurement), US natural gas remains competitive internationally, as prices in Europe and Asia are significantly higher.
This creates an interesting situation where the US is both a major natural gas producer and an increasingly significant LNG exporter, creating simultaneous domestic and international demand.
End of the Cheap Gas Era
Wood Mackenzie indicates that the era of cheap natural gas in the US may have concluded. The factors that helped maintain low prices over the past decade are no longer as effective:
- Rapid gas well development - has reached saturation point
- Nearly free associated gas - this supply source has been maximized
- Annual productivity improvements - the most significant gains have already been realized
Challenges Ahead
Meeting increasing energy demand is no small challenge. Experts warn that finding and developing higher-quality land areas will become more difficult as the best resources have already been brought into production.
Meanwhile, the transition to renewable energy continues, but the pace may not be fast enough to offset increased demand from AI data centers and industry.
Cost Analysis and Competition
The following table compares projected US natural gas prices with international markets:
| Market | Current Price (USD/MMBtu) | 2030 Forecast (USD/MMBtu) | Change (%) |
|---|---|---|---|
| Henry Hub (US) | 2.5 | 4.8 | +92% |
| Europe (TTF) | 8.2 | 9.5 | +16% |
| Asia (JKM) | 12.3 | 14.2 | +15% |
The table below shows the development of natural gas-fired power capacity in the US:
| Year | Total Capacity (GW) | YoY Increase | Percentage for Data Centers |
|---|---|---|---|
| 2023 | 180 | - | 5% |
| 2024 | 205 | +14% | 12% |
| 2025 | 252 | +23% | 35% |
| 2030 (Forecast) | 320 | +27% | 45% |
The Future of Natural Gas in the AI Era
Despite the upward price trend, natural gas will continue to play a vital role in the US energy system for many years to come. The flexibility of gas-fired power plants, their ability to meet immediate demand, and lower emissions compared to coal make them an ideal complement to intermittent renewable sources like wind and solar.
"The combination of demand from AI data centers and LNG export demand will reshape the US natural gas market for decades to come," Kramer added. "We're entering a new era where natural gas is not just a transition fuel but a cornerstone of modern energy systems."
Policymakers and investors will need to account for these changes when planning the nation's energy future, balancing increasing demand, climate commitments, and price stability.