April 23 (Reuters) - A spike in power usage from

artificial intelligence (AI) data centers could significantly

boost natural gas demand in the second half of the decade,

analysts at investment banker Tudor Pickering Holt & Co said in

a report on Tuesday.

As much as 8.5 billion cubic feet per day of natural gas

could be required additionally to match the rise in demand, the

report added.

WHY IT'S IMPORTANT

U.S. power and technology companies have expressed concerns

that the country's electrical systems are not expanding fast

enough to meet the rapidly growing power needs of technology

such as Generative AI, prompting data center businesses to

sometimes bypass utilities and strike deals directly with power

producers or build their own supply.

The uptick in overall demand has added to a nationwide queue

of requests for power generation and energy storage projects to

connect to the grid, which swelled to 2,600 gigawatts in 2023

from 2,000 gigawatts in 2022, according to the latest data from

Lawrence Berkeley National Laboratory.

CONTEXT

According to the report, natural gas prices could average $4

per million British thermal units during the second half of the

decade.

Natural gas prices touched a three-and-a-half-year low in

February to $1.61 per mmbtu largely due to mild winter weather,

forcing many producers to curtail their production.

The analysts expect pipeline operators such as Kinder Morgan ( KMI )

, Williams and Energy Transfer ( ET ) to be in

the best position to take advantage of the growing gas demand,

while gas producers such EQT and Chesapeake Energy ( CHK )

would also benefit.

BY THE NUMBERS

The report estimates current power demand from data centers

at 11 gigawatts (GW), which, in the base case, is expected to

grow to 42 GW by 2030.

The report added that, at its base case, around 2.7 bcfd of

incremental natural gas would be required by 2030.