Infrastructure – Market volatility is prompting some companies to re-evaluate investments in data centers, which could have a knock-on effect for gas demand and midstream development.
Microsoft (MSFT) is pulling back on some of its data center plans, an executive confirmed earlier this month. Walsh, president of MSFT’s cloud computing operations, said in a LinkedIn post that the company is “slowing or pausing some early-stage projects†as it reviews its data center strategy.
Microsoft is one of the leading developers of data center projects. In the Data Center Demand Monitor, East Daley is tracking 18 projects by MSFT totaling over 5 GW of potential electric demand. These proposals span 10 states across the U.S. including Georgia, North Carolina, Ohio, Texas, Virginia and Washington. MSFT is also the anchor for the Wisconsin Reliability project on TC Energy’s (TRP) ANR Pipeline to supply a new data center in Mount Pleasant, WI.
Microsoft plans to spend $80B in 2025 on data centers to deploy AI and train language models. “By nature, any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers,†Walsh said in the post.
The MSFT decision comes amid growing uncertainty over tariffs in the technology sector. The Trump administration threatened, enacted, then postponed global tariffs earlier in April, leading to wild gyrations in financial markets. Trump has postponed for 90 days retaliatory tariffs on most US trade partners.
Trade tensions with China, a major supplier of electronic hardware, is another big risk to data center projects. President Trump on April 9 raised tariffs on Chinese imports to 145%, and Beijing retaliated with a 125% tariff on all US goods.
In the Data Center Demand Monitor, EDA is tracking 360+ data center projects totaling over 113 GW of potential electricity demand (see figure). Gas is expected to be the main source of power generation to meet this growing demand, so a slowdown creates risks for E&P and midstream companies.
The sheer volume of announced data centers is likely to put a strain on the grid in the coming years, but this pressure would be alleviated if companies begin postponing or canceling projects. Efficiency gains from new AI models like DeepSeek had already caused some reassessment, and tariff uncertainty is another reason to hit the brakes. Developers are likely to reconsider investments in long-lead projects that could see increasing prices and cost overruns.
The MSFT decision is an omen for the bull case in midstream. Greenfield projects can take years to construct, and investments require certainty from shippers to move ahead. If data center developers pull back, then risker pipeline expansions will be tabled. East Daley will continue to monitor the emerging data center industry in the Data Center Demand Monitor and impacts to the gas market in the Macro Supply & Demand Report.
Infrastructure – Kinder Morgan (KMI) looks to maintain project momentum with the Elba Express Bridge project announcement. The 71-mile extension into South Carolina is backed by agreements for 325 MMcf/d of capacity and is expandable to 1 Bcf/d.
East Daley believes the anchor shipper is likely Santee Cooper, Duke Energy, or Dominion Energy. KMI expects the Bridge project to enter service in 2Q30 at a $431MM price tag.
Santee Cooper stands out as a potential backer after issuing roughly $1B in bonds to fund capital investments and refinance debt. The 2030 in-service date also aligns with the utility’s plan to retire the coal-powered Winyah Generating Station.
KMI management noted that South Carolina is one of the fastest growing markets for natural gas. The initial 325 MMcf/d of capacity establishes a platform that can easily scale as demand materializes, including potential data center load.
Although data centers have generated significant buzz, this expansion appears driven primarily by traditional residential and industrial growth. East Daley’s Data Center Demand Monitor tracks only about 860 MW of projects in South Carolina (see figure from the Data Center dashboard).
The 30-year contract signals a more stable demand outlook than a typical deal for data centers. Many developers view gas as a bridge fuel while building out alternative energy portfolios. For example, Williams (WMB) has inked only 10-year agreements to back its Socrates data center project.
By adding a competing route to Williams’ (WMB) Transcontinental pipeline, the Bridge project offers South Carolina consumers greater optionality to source gas. The long-dated contracts and scalable design make it a strategic addition to KMI’s project backlog.
Storage – Traders and analysts expect the Energy Information Administration (EIA) to report a 110 Bcf injection for the week ending May 9. A 110 Bcf injection would be 52 Bcf greater than the 5-year average, expanding the surplus to 96 Bcf. This would be the largest 5-year surplus since the week ending January 3.The storage deficit to last year would decrease by 38 Bcf to 374 Bcf.
The next three EIA weekly surveys (May 16, May 23 and May 30) could all yield triple-digit injections, a run of six weeks in a row that would rival the 2014 injection season as the longest triple-digit injection streak of all time. As forecast in our Macro Supply & Demand Report, storage inventories at the end of May will be just under 2.5 Tcf. Through the first two weeks of May, Henry Hub cash prices have averaged $3.16/MMBtu, a $0.45 discount to the June prompt-month contract. We anticipate that despite storage headwinds, Henry Hub cash could average $3.45 for May due to growing LNG feedgas and power demand as the month winds down.
Rigs – The US rig count decreased by 4 for the May 10 week, standing at 542. The Anadarko (+1) and ArkLaTex (+1) gained rigs, the Permian (-4) and Marcellus+Utica (-1) lost rigs, and other basins remained relatively flat compared to last week.
On the midstream side, Enterprise Products (EPD) is down 3 rigs net with losses on its Permian and Green River systems. Phillips 66 (PSX) is up 5 rigs total with additions on its Denver-Julesburg and Permian systems.
East Daley’s weekly Rig Activity Tracker monitors rig activity by basin and by gathering and processing (G&P) system to better understand midstream impacts. We allocate rigs and monitor flows through 150+ public and privately owned G&P systems in every North American basin. Reach out for more information on the Rig Activity Tracker.
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