Two major operators in the natural gas and power sectors say they are moving to meet data center power demand with new natural gas generation capacity.
GE Vernova executives reported during a Dec. 10 investor update presentation that its gas turbine business is surging, with 9 GW of manufacturing slots contracted in the past 30 days, largely due to hyperscaler demand.
ExxonMobil said in its corporate plan update Dec. 11 that it plans to build a large behind-the-meter generation facility that would burn natural gas the company produces and then sequester most of the resulting CO2 emissions in permanent underground storage. It said its facility would be built independent of existing grid infrastructure and independent of utility timelines and therefore will be faster-moving than alternatives available to power data centers.
GE Vernova Growth
“I’ve been involved in the gas business for 12 years,” GE Vernova CEO Scott Strazik said during the investor update. “I can’t think of a time that the gas business has had more fun than they’re having right now.”
GE projects 20 GW of gas equipment orders per year through 2028. The 9 GW of manufacturing slots it contracted in the past 30 days are priced higher than previous orders, and December bids are higher still.
“We’re barely scratching the surface of what that means for this company,” Strazik said. “We’re already into selling the last of our slots for gas in ’28 right now. We’re already selling transformers and switch gear into ’28 and ’29 very quickly.”
GE Vernova is gradually increasing gas turbine production capacity at existing factories. Even so, Strazik said the company’s output already is contracted through most of 2028.
Strazik noted that manufacturing slot reservations are not orders. Many of the projects in development have not secured air permits or engineering, procurement and construction contracts yet, and some of the prospective customers have no experience with the complexities of setting up a power plant.
But the reservations come with a firmly fixed price, hefty cash deposits and financial backstops, he said. The company expects they will begin to be converted to orders in mid-2025, but “as a bridge to secure those slots, we’ve gotten paid money now, while they work through the rest of their process.”
These reservations, Strazik said are “all in the U.S. tied to the load growth in the U.S., in the best indicators yet in our gas orders book — or what will be our gas orders book — of serving the hyperscaler demand associated with AI.”
Strazik compared the demand ramping up now with the aftermath of World War II, when nations rebuilding and modernizing needed to create a bigger, better grid. GE Vernova’s corporate forebear, General Electric, played a huge role in making that happen, he said, and is poised to do the same here.
That said, he is not rushing to increase gas turbine production capacity beyond the expansion already underway — from 55 units a year to 80 — because he does not want to spend money to accommodate what may turn out to be a short surge in production. He wants a sustained order book stretching out six to 10 years. If that happens, and more manufacturing capacity is needed, the company will consider adding it.
The investor update was delivered after the stock market closed Dec. 10 and contained mostly good financial projections — a marked contrast to the multiyear slide General Electric endured before the conglomerate dissolved into its component businesses.
GE Vernova’s stock price closed 5% higher in heavy trading Dec. 11 and is 145% higher than when it debuted April 2, 2024.
ExxonMobil’s Different Approach
Many companies in the technology sector are pressing for emissions-free power to burnish their environmental credentials. But wind and solar can’t provide the 24/7 baseload power that data center operations demand.
New-build nuclear generation potentially could meet this need, but it has many hurdles to clear before becoming a viable, scalable option, a decade or more in the future.
Natural gas burns more cleanly than other fossil fuels and it can serve as a baseload or peaker. Also, the United States produces far more of it than any other country. ExxonMobil is one of the largest U.S. producers of natural gas and GE Vernova is the leading supplier of equipment to turn it into electricity.
ExxonMobil’s data center plan comes with some caveats — the fully islanded power plant would require additional investments by the company and its partners, and the carbon capture and storage project would need government permits.
But the oil supermajor said it already has agreed to transport and store up to 6.7 million tons of captured CO2 per year for customers in the steel, ammonia and hydrogen industries.
Data centers are the next step — ExxonMobil said it believes energy-intensive AI could account for up to 20% of the CCS market in 2050.
Planning is underway for the first-of-its-kind project announced Dec. 11, with the company well into the front-end engineering design and engaged with potential customers.
The intent is to burn low-carbon-intensity natural gas and capture more than 90% of CO2 emissions, though it also might use higher-carbon-intensity gas.
The off-grid nature of the facility would free it from the interconnection and transmission constraints that are hampering U.S. energy development.
“We’re in a unique position to provide low-carbon power at large scale on a very competitive and accelerated timeline,” Dan Ammann, president of ExxonMobil’s Low Carbon Solutions business, said in a news release.
The company did not disclose details such as the location, cost and capacity of this facility.
The clean energy and net-zero commitments of Big Tech companies have not stopped them from using fossil power. Instead, they may offset the gas with clean energy capacity.
Entergy Louisiana, for example, seeks to build three gas plants with a combined output of 2.3 GW and cost of $3.2 billion to power a $10 billion facility that will be Meta’s largest data center.
Meta, which has a self-imposed goal of net-zero emissions across its operations and suppliers, has committed to matching 100% of the gas-fired electricity used there with clean generation elsewhere.
Nonetheless, this and similar arrangements result in construction of expensive fossil infrastructure with an operational lifespan and cost-recovery period potentially stretching decades.
