Little-known underground salt caverns could slow the AI boom and its thirst for power
A slow race to build underground salt caverns could hamper the AI data center boom and weaken the power supply for massive computing installations that typically require 99.999% reliability. According to industry sources, approximately half as much new gas storage is planned as will be needed in the future.
Yes, you read that right, salt caves. Man-made reservoirs located thousands of feet below the surface are ideal storage structures for the volume of natural gas needed to power the AI data centers built by hyperscalers and to fuel the rapid growth of gas exporters along the U.S. Gulf Coast.
U.S. natural gas production is expected to increase another 15% to 25% between 2024 and 2030 – and continue to rise – due to a doubling of gas exports and increased domestic demand from the wave of data center construction, ongoing electrification and the relocation of manufacturing.
The lack of underground storage now threatens to become a bottleneck in the AI race against China. Without gas storage facilities nearby, customers rely on gas pipelines for their supply. Pipes can fail due to weather events, landslides and corrosion, leaving facilities without power even if gas is available elsewhere.
A wave of construction of new pipelines and power plants is underway – despite a shortage of gas turbines for electricity generation – but virtually no new gas storage has been built in more than a decade.
“I don’t want to be a bomb thrower or a Chicken Little, but it seems like everyone in the data center world is in a big hurry, and hasn’t thought about everything that can happen on the gas side,” said Edmund Knolle, president of Gulf Coast Midstream Partners, which is developing a major salt cavern gas storage project near Houston that is expected to come online by the end of 2030.
Electricity and gas heating costs are already rising due to increased demand for gas, and the lack of storage is expected to add to volatility and rising utility bills in the future, according to analysts and energy developers.
“I think we’re going to run out of storage,” Knolle added. “Once the light bulb goes on for a lot of people, it will take us years to create storage.”
Accelerating slowly
Enbridge (No. 397 on the Fortune Global 500) is North America’s largest pipeline and energy storage company, and it is currently building more new gas storage systems than anyone else, all by expanding its existing salt caverns in Texas and Louisiana. Caitlin Tessin, Enbridge vice president of gas transportation, said Fortune She’s not losing sleep over hoarding yet, but it’s a growing problem.
“Our pipelines are full. There is incredible demand from a natural gas perspective, and our existing infrastructure and assets are full,” Tessin said. “There are concerns about storage supply.”
“This [growth] is absolutely unprecedented from a gas storage and demand perspective,” she added.
Tessin said gas pipelines and storage will prove to be the “backbone” of digital infrastructure AI, even combining gas with renewable energy to power AI. “For this population, the reliability of power supply to these data centers, providing 24/7 base power, and rapid deployment, are at the forefront.
Energy analyst Jack Weixel of East Daley Analytics said there are more than a dozen gas storage projects in the works, including a few recently completed, but some won’t have the funding to get off the ground, and others might not be completed for five years.
About twice as much storage capacity is needed as the roughly 300 billion cubic feet of storage currently planned, Weixel said. The needs for data centers, electrification and gas exports are enormous, but the key remains maintaining an overall strong grid, he said, which requires more gas storage for consistent reliability.
“The No. 1 rule for utilities is don’t freeze grandma out,” Weixel said.
Salt of the earth
Unlike the U.S. Strategic Crude Oil Reserve, there is no federal backstop for natural gas storage.
This means the industry must build commercial storage itself with the promise of revenue years from now – a key reason why there is a wait-and-see approach to launching projects only once demand and price signals are strong enough.
There are two main options for expanding storage. The first involves drilling natural salt domes into the earth and injecting water to pump and excavate the space. This “washing” of the caves takes time and often requires four years of construction.
The cheapest and quickest option is to use existing gas wells that are dry, which essentially means pumping gas into depleted reservoirs. But these reservoirs are not as structurally strong as salt caverns and cannot withstand higher pressures, so companies cannot inject and remove gas from them as frequently. Typically, injection takes place in summer and autumn, and gas is pumped out for the winter when heating demand increases.
Weather disruptions can range from fog to frozen pipes, but the biggest fear is a massive hurricane aimed directly at gas export infrastructure concentrated along the Gulf Coast of Texas and Louisiana, Weixel said. This could lead to a large amount of stranded gas – nationally, storage is already close to capacity.
“Typically these hurricanes hit late in the injection season, so there may not be room for the gas. It’s operational chaos,” Weixel said.
With proper storage, businesses can “save the gas and scatter it like an acorn. Then remove it in the winter once operations are normal.”
What do we do?
Knolle’s Freeport Energy Storage Hub (FRESH) project, southwest of Houston, aims to begin construction in the second half of 2026 to reach 26 billion cubic feet of gas capacity between two salt caverns.
Enbridge is expanding its Moss Bluff and Egan storage facilities in Texas and Louisiana, respectively, to add a combined 23 billion cubic feet of capacity, Tessin said, and will be phased into service from 2028 to 2033. Enbridge also recently completed an expansion of its major Tres Palacios facility in South Texas and just announced additional growth planned there: three new caverns adding 24 billion cubic feet cubes from 2028 to 2030.
But the only major storage project recently completed is Trinity Gas Storage’s newest facility in East Texas, with 24 billion cubic feet of storage. In December, Trinity just approved an expansion to add another 13 billion feet by the end of summer 2026. Trinity’s approach is one of the only projects using depleted reservoirs instead of salt domes.
Trinity CEO Jim Goetz said Fortune that quickly building more storage is essential to keep pace with the rise of data centers, particularly because many of them require building their own temporary gas power before they can be connected to the electrical grid. Storage provides necessary redundancies in the event of a gas or electricity outage, he said.
The industry accumulated enough storage for the early days of the shale gas boom until around 2010, but it has completely stagnated from then until today. He called it a wave of construction growth for the “gas storage supercycle 2.0.”
“The market is a bit like a pendulum, and we seem to go from one extreme to the other,” Goetz said. “Now we’re caught behind the ball here, and we have to catch up.”
He worries the industry isn’t moving fast enough with enough storage projects. And yet he is strangely confident that capitalism will find a solution, just as it has in the past.
“This is a problem that will be resolved,” Goetz said. “How? I’m not necessarily sure. But it needs to be addressed; I think it’s just that there’s too much to play for.”
