ENMG Analysis
Texas data center gas demand is beginning to move beyond forecasts and into long-term pipeline contracts.
Kinder Morgan’s biggest announcement this week involved two multibillion-dollar natural gas pipelines targeted for 2030. A smaller Central Texas expansion, however, may say more about what is happening now. Data-center and industrial customers are already reserving pipeline capacity years before many of the facilities expected to use that gas begin operating.
In its third-quarter 2026 financial release, Houston-based Kinder Morgan said it sanctioned the second and third phases of its Creekside Lateral Project after executing additional long-term, take-or-pay transportation agreements with data-center and industrial customers. The newly sanctioned phases represent $150 million of investment: $95 million for phase two and $55 million for phase three.
Combined with the original $85 million phase, Creekside is now an approximately $235 million intrastate pipeline project. Kinder Morgan says the completed phases are expected to provide more than 750 million cubic feet per day, or 0.75 billion cubic feet per day, of contracted natural gas transportation in Central Texas.
The system is designed to transport approximately 1.3 Bcf/d and could eventually be expanded beyond 2 Bcf/d. Those larger figures represent designed or potential capacity, not volumes that are currently contracted, constructed, or operating.
What Creekside Shows About Texas Data Center Gas Demand
Creekside provides evidence that some data-center and industrial projects are moving from preliminary power discussions into contractual infrastructure commitments.
A long-term transportation agreement can provide a pipeline developer with predictable revenue needed to support construction. A take-or-pay arrangement generally requires the customer to pay for reserved service even when it does not use its entire contractual capacity.
That commitment is economically meaningful, but it does not prove that every associated data center, power plant, or industrial facility will be completed. Nor does it guarantee that customers will consume their maximum contracted volumes every day.
Kinder Morgan has not publicly identified the Creekside customers, disclosed how much capacity is assigned specifically to data centers, or provided a complete route showing which counties and communities would be affected. The company also has not identified the power-generation projects that may ultimately receive the gas.
The announcement nevertheless points to a more advanced stage of development than an electricity-demand forecast or a nonbinding project proposal. Customers are not merely expressing interest in gas-fired power. They are making long-term transportation commitments intended to support the infrastructure required to deliver the fuel.
Creekside Is Moving On A Faster Schedule
The first Creekside phase was announced earlier in 2026 as an approximately 11.2-mile, 42-inch pipeline supported by binding, long-term contracts. Kinder Morgan said that phase was designed to serve growing power-generation, industrial, and data-center demand in Central Texas.
The company’s first-quarter release placed the original project cost at approximately $85 million and targeted service for the fourth quarter of 2026.
Following the addition of phases two and three, Kinder Morgan now expects Creekside service to begin in stages. Subject to receiving the required permits and approvals on time, the first service is expected in the fourth quarter of 2026, with additional service following in the fourth quarter of 2027.
That schedule is significantly earlier than the company’s two newly sanctioned megaprojects.
Kinder Morgan plans to invest approximately $1.6 billion as its share of the Permian Link Project, which is designed to transport roughly 2.8 Bcf/d through approximately 434 miles of pipeline. The company also plans to invest about $3.1 billion as its share of the approximately 470-mile Southeast Connector, which is designed to transport up to 2.6 Bcf/d.
Permian Link is targeted for service in the third quarter of 2030, while the Southeast Connector is expected to enter service in phases beginning in the fourth quarter of 2030. Together, Kinder Morgan’s approximately $4.7 billion share of those projects has received most of the national attention. Creekside is much smaller, but it could begin serving customers several years sooner.
Contracted Capacity Is Not The Same As Gas Consumption
The distinction between contracted transportation, pipeline capacity, and actual consumption matters.
Contracted transportation represents the amount of service customers have reserved under their agreements. Designed capacity represents the physical amount the pipeline is expected to be capable of moving under specified operating conditions. Actual throughput will depend on customer nominations, gas availability, pipeline pressure, compression, maintenance, and downstream demand.
Creekside’s more than 750 MMcf/d of contracted transportation should therefore not be described as current gas consumption. Likewise, its approximately 1.3 Bcf/d design capacity should not be treated as committed customer demand.
Kinder Morgan’s stated expansion potential above 2 Bcf/d is even more conditional. Reaching that level would likely require additional customer commitments, engineering work, equipment, permits, and capital authorization.
This is the same distinction ENMG has emphasized in its coverage of Texas natural gas storage and deliverability. Holding gas, reserving transportation capacity, and delivering fuel at a specific location and time are related functions, but they are not interchangeable.
Why Pipeline Commitments Matter To Data Centers
Data centers consume electricity, not pipeline gas directly, unless their campuses include gas-fired generation or contract with nearby facilities that do.
That makes the relationship between data centers and pipeline capacity more complicated than a simple increase in gas demand. A pipeline may serve a power plant dedicated to a data-center campus, a generator selling into the ERCOT market, an industrial facility, or a combination of customers.
ENMG has previously examined why on-site natural gas generation for AI data centers is difficult to develop. A project needs more than gas turbines. It may also require firm fuel transportation, interconnections, backup systems, emissions permits, water or alternative cooling, electrical equipment, and a plan for operating through equipment outages and extreme weather.
Creekside addresses only part of that chain: natural gas transportation. It does not build the generating plant, connect the facility to the electric grid, or guarantee that gas will remain available under every operating condition.
The contracts are still important because pipeline developers generally do not commit hundreds of millions of dollars merely because a demand forecast looks impressive in a presentation. Long-term agreements provide commercial support that can move a project closer to construction.
More Gas Infrastructure Does Not Resolve Every Reliability Constraint
Additional pipeline capacity could create another outlet for Texas natural gas production. The U.S. Energy Information Administration reported that U.S. gas production reached a record in July 2026, driven largely by new wells in Texas and New Mexico. EIA also noted that new pipeline infrastructure is easing Texas transportation bottlenecks.
For power generators, another pipeline connection could provide additional fuel-delivery options. But a pipeline alone does not guarantee electric reliability.
Reliable gas-fired generation also depends on:
- Adequate upstream gas supply
- Firm transportation rights
- Compression and pipeline operating performance
- Storage or other supply flexibility
- Power-plant construction and commissioning
- Fuel and equipment winterization
- Electric transmission capacity
- ERCOT interconnection approval
- Sufficient generating and transmission availability during peak demand
Those limitations are particularly important in Texas, where electricity demand from data centers and other large users is rising faster than some infrastructure can be planned and built.
ERCOT is using a new batch process to evaluate large-load connection requests of at least 75 megawatts. The grid operator said in June that it was tracking more than 438,000 MW of large-load requests, nearly 89% of which came from data centers. ERCOT also cautioned that not every request will become an operating project. Its large-load interconnection process is intended to determine which projects can connect without undermining grid reliability.
That means a customer can make progress on pipeline service while still facing separate approvals for generation, electric load, and transmission. Natural gas infrastructure and electric-grid infrastructure operate together, but neither process automatically completes the other.
ENMG’s analysis of the Texas transmission bottleneck explains why building new generation does not necessarily solve the problem if power cannot be delivered through the grid.
Permits, Routes, And Local Effects Remain Unclear
Creekside is described as an intrastate pipeline, placing relevant Texas pipeline registration and safety requirements under the Railroad Commission of Texas.
The Railroad Commission requires applicable pipeline operators to submit T-4 permit applications. New permits and amendments must include maps and pipeline attributes, according to the commission’s pipeline permitting and mapping guidance.
The commission also notes that pipeline owners determine routes for intrastate systems and that the agency does not possess general routing or siting authority. That makes Kinder Morgan’s eventual route disclosure particularly important for affected landowners and communities.
Questions that remain unanswered include:
- Which Texas counties will the additional phases cross?
- Which data-center and industrial customers have contracted for service?
- How much of the 750 MMcf/d is tied specifically to data centers?
- What power plants or generation systems will receive the gas?
- Have those generators entered ERCOT’s interconnection process?
- What permits, rights-of-way, compressor stations, and interconnections are required?
- How much additional capacity could be supported without another major expansion?
- What firm-supply or storage arrangements will customers use during extreme weather?
Until those details emerge, the project’s local effects and ultimate contribution to power-system reliability cannot be fully evaluated.
What Comes Next
The immediate milestones are permitting, route disclosure, construction progress, and confirmation that the first Creekside service remains on schedule for the fourth quarter of 2026.
Observers should also watch whether Kinder Morgan identifies the customers or generation projects supporting the expansion. Those disclosures would help establish how much of Creekside’s contracted capacity is connected directly to data-center power demand and how much serves other industrial development.
Consumers should not interpret the project as a promise of lower electricity prices. Kinder Morgan has not disclosed project tariffs, customer power contracts, fuel costs, or expected effects on retail rates. New infrastructure can improve access to fuel, but its cost is also recovered through contracts and commercial arrangements.
Creekside’s significance is more immediate and more specific. Texas data center gas demand is no longer appearing only in utility forecasts, interconnection queues, and proposed power plants. It is beginning to influence binding transportation agreements and sanctioned pipeline investment.
The $4.7 billion Permian Link and Southeast Connector announcement may be the larger headline. Creekside may be the clearer near-term signal.
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