TITLE: Salt Caverns Lag in Meeting AI Data Centers' Gas Storage Needs

Salt Caverns Lag in Meeting AI Data Centers' Gas Storage Needs

The rapid growth of artificial intelligence data centers is straining U.S. natural gas infrastructure, particularly the development of underground salt caverns for storage. Industry experts warn that insufficient storage could disrupt power delivery to these facilities, which demand near-perfect reliability of 99.999%. Projections show U.S. natural gas production rising 15-25% from 2024 to 2030, driven by doubled exports and domestic surges from data centers, electrification and manufacturing resurgence. Yet, planned new storage capacity totals about 300 billion cubic feet—roughly half of what is required, according to analysts.

Salt caverns, manmade reservoirs carved thousands of feet underground, provide ideal high-volume storage for the gas needed to fuel hyperscale data centers and Gulf Coast export terminals. Without adequate nearby storage, operators rely on pipelines, which are susceptible to failures from weather, landslides or corrosion. Such disruptions could leave data centers powerless even when gas is plentiful elsewhere, potentially hampering the U.S. AI race against competitors like China.

Construction of new pipelines and gas-fired power plants is accelerating, despite shortages of turbines, but gas storage development has stagnated for over a decade. Edmund Knolle, president of Gulf Coast Midstream Partners, highlighted the oversight in data center planning. "Everybody in the data center world is in a great big giant hurry, and they haven’t thought about all the things that can happen on the gas side," he said. His company is developing a major salt cavern project near Houston, the Freeport Energy Storage Hub, expected online by 2030.

Rising electricity and heating costs from increased gas demand are already evident, with storage shortages likely to exacerbate price volatility and utility bills, analysts say. "We’re going to be way short of storage," Knolle added. "Once the light bulb turns on for a lot of people, we’re going to be looking at years to create storage."

Growing Concerns Over Infrastructure Reliability

Enbridge, North America's largest pipeline and energy storage operator, is leading expansions but acknowledges the pressures. Caitlin Tessin, vice president for gas transmission, noted that pipelines are at full capacity amid unprecedented demand. "There’s some concern around supply of storage," she said. Natural gas will serve as the backbone for AI digital infrastructure, she added, potentially paired with renewables for reliable 24/7 baseload power and quick deployment.

Energy analyst Jack Weixel of East Daley Analytics estimates more than a dozen storage projects are underway, including a few recent completions, though financing issues and timelines could delay others by five years. Twice the planned 300 billion cubic feet is needed to ensure grid stability for data centers, electrification and exports. "The No. 1 rule there for utilities is don’t freeze grandma," Weixel said, emphasizing the priority of reliable heating and power.

Unlike the federal Strategic Petroleum Reserve for oil, natural gas storage lacks a national backstop, forcing commercial development based on future revenue prospects. This has led to a cautious approach, with projects advancing only after clear demand signals emerge.

How Salt Caverns Are Built and Why They Matter

Developing salt caverns involves drilling into natural salt domes and leaching space by injecting water, a process that can take four years. A faster, cheaper alternative uses depleted gas reservoirs, but these are less durable and support slower injection-withdrawal cycles, typically seasonal for summer storage and winter release.

Weather events pose significant risks, especially hurricanes targeting Gulf Coast export hubs in Texas and Louisiana. Nationwide storage is already near capacity, and late-season storms could create chaos by limiting injection space. "It’s operational chaos," Weixel said. Adequate storage allows operators to stockpile gas during disruptions and release it when needed, akin to "squirreling away an acorn."

Key Projects Underway to Bridge the Gap

Several initiatives aim to bolster capacity. Gulf Coast Midstream's Freeport project, southwest of Houston, plans construction in late 2026 for 26 billion cubic feet across two caverns.

Enbridge is expanding facilities in Texas and Louisiana. Its Moss Bluff and Egan sites will add 23 billion cubic feet incrementally from 2028 to 2033. The company recently completed work at Tres Palacios in South Texas and announced three new caverns there, adding 24 billion cubic feet from 2028 to 2030.

Trinity Gas Storage completed a new 24-billion-cubic-foot facility in East Texas, the first major hub in years, using depleted reservoirs rather than salt domes. An expansion for 13 billion more cubic feet is set for late summer 2026. CEO Jim Goetz stressed the urgency, noting data centers often build temporary gas-fired power plants before grid connections. Storage provides critical redundancy against disruptions.

The industry built ample storage during the shale boom through 2010 but has since stalled. Goetz described the current wave as "gas storage super-cycle 2.0," urging faster action. "Now we’re caught behind the eight-ball here, and we have to catch up," he said. Despite concerns, he expressed confidence that market forces would drive solutions.

Overall, while projects are progressing, the pace may not match the AI boom's velocity, risking broader energy reliability challenges.