ONEOK’s Quiet AI Power Play: How a Pipeline Giant Is Fueling Data Centers

Wall Street has spent the past year chasing nuclear reactors and utility giants in the race to power artificial intelligence. Yet one of the steadiest winners sits in a sector long dismissed as dull. ONEOK just inked an agreement to feed natural gas to a 1-gigawatt power plant dedicated to AI data centers. The deal itself looks small. Its implications stretch far wider.

The Motley Fool first highlighted the move in mid-August, noting how data center developers race against a strained electric grid. (The Motley Fool) They cannot wait years for new transmission lines or nuclear plants. Gas-fired generation offers speed. Pipeline laterals deliver the fuel even faster. ONEOK’s project carries a $100 million capital cost. That sum barely registers against the company’s $2.7 billion to $3.2 billion annual spending plan. Still, Chief Operating Officer Sheridan Swords called the return “very nice” on the second-quarter earnings call.

And he dropped a hint. “We also are in late stages of discussions with a couple of other opportunities to be able to supply AI data centers.” Those words landed with investors. ONEOK shares jumped nearly 10 percent after the company raised full-year guidance.

Numbers tell part of the story. Second-quarter net income climbed 13 percent to $967 million. Adjusted EBITDA rose 7 percent to $2.12 billion. Record natural gas liquids volumes helped. So did higher fees across the system. ONEOK now expects 2026 net income between $3.41 billion and $3.79 billion, up from prior forecasts. The company’s integrated network across the Mid-Continent, Permian, and Rockies lets it capture value from wellhead to burner tip.

Yet the real shift sits ahead. Wood Mackenzie projects U.S. power-sector gas demand will surge 47 percent by 2035. Data centers drive much of that increase. S&P Global Commodity Insights tracked more than 130 North American data center projects planning on-site generation through early 2026. Over 80 percent of that capacity would burn natural gas. (S&P Global)

Energy Transfer signed its own deal last year with CloudBurst Data Centers to supply up to 450,000 MMBtu per day for a potential 1.2-gigawatt campus in Texas. Similar agreements surface across the industry. One Gas committed 20 million cubic feet per day to an Oklahoma data center. Pipeline operators sense the shift from intermittent renewables and slow nuclear builds toward firm, dispatchable gas.

ONEOK’s latest win fits a pattern. The company already holds a strong position in natural gas gathering, processing, and transportation. New laterals to power plants create immediate cash flow. They also open doors to larger expansions. A single lateral today can justify bigger mainline capacity tomorrow. Several such projects, each delivering high returns, compound over time.

Investors have grown used to ONEOK’s reliability. The stock yields more than 4 percent. Dividend growth has been consistent. Market capitalization sits near $61 billion. Shares traded around $96 recently after touching 52-week highs. That performance beats many traditional pipeline names stuck in slower industrial demand.

But excitement now comes from a new customer class. Hyperscale tech firms pour hundreds of billions into data centers. Their power appetite outruns grid planning. Colocated gas plants solve the mismatch. And those plants need dedicated fuel supply. Midstream companies that can build quickly and contract firmly stand to gain.

Challenges remain. Not every forecast will prove accurate. The Institute for Energy Economics and Financial Analysis warned that some Southeast pipeline proposals rest on inflated data center projections. Actual build-out may lag. Timelines slip. Yet the direction looks clear. Even conservative estimates point to several billion cubic feet per day of added gas demand from data centers by 2030.

ONEOK’s CEO Pierce H. Norton II struck an optimistic tone in the August earnings release. “Higher volumes across ONEOK’s businesses, including record NGL volumes, drove another consecutive quarter of earnings growth. These results reflect the strength of our integrated system.” He pointed to growth projects entering service through 2029, including a joint-venture gas pipeline and storage expansion. The AI-related laterals would sit on top of that base.

Other midstream players watch closely. Phillips 66 recently benefited from a different pipeline project that helped push its shares to 52-week highs. (Seeking Alpha) Energy Transfer laid out $5 billion to $5.5 billion in growth capital for 2026, with several projects tied to data center gas needs. The sector no longer feels quite so boring.

Wall Street analysts debate how large the opportunity becomes. Some see 3 to 6 billion cubic feet per day of new demand by decade’s end. Others push higher. Pipeline companies do not need every gigawatt to materialize. They win when they secure long-term contracts backed by creditworthy counterparties. Tech giants bring strong balance sheets.

ONEOK’s $100 million project marks an early step. Its COO’s comments suggest more follow. Each incremental deal de-risks the next. Each builds the case that midstream infrastructure forms a critical, if underappreciated, layer in the AI supply chain.

The grid will evolve. Renewables and storage will grow. Nuclear may eventually scale. But for the next several years, natural gas offers the fastest bridge. Pipeline operators that position themselves at the intersection of data centers and power generation could see their growth profiles brighten considerably.

ONEOK has shown it can execute. Its latest earnings beat, raised guidance, and new AI-related contract point to a company adapting to fresh demand centers. Investors who once prized the stock for its steady dividend now get an added growth narrative. The pipeline business never stopped moving. It simply found a faster current.