The AI era is giving fracking a second act, a surprising development for an industry that even during the boom years of the early 2010s was criticized by climate change advocates for polluted water tables, man-made earthquakes, and the persistence of fossil fuels.
AI companies are building large data centers near major gas production areas, often using fossil fuels directly to generate their own electricity. This is a trend that has been overshadowed by headlines about the intersection of AI and healthcare (and solving climate change), but one that has the potential to reshape the communities that host these facilities and pose difficult questions.
Let’s take a look at the latest example. This week, the Wall Street Journal reported that AI coding assistant startup Poolside is building a data center complex on more than 500 acres in West Texas (about 300 miles west of Dallas). Its site area is two-thirds that of Central Park. The facility will generate its own electricity by extracting natural gas from the Permian Basin, the country’s most productive oil and gas field, where hydraulic fracturing is not only common but actually the only play in town.
The project, named Horizon, will generate 2 gigawatts of computing power. That’s equivalent to the entire electrical capacity of Hoover Dam, except it’s burning fracked gas instead of tapping into the Colorado River. Poolside is developing the facility in collaboration with cloud computing company CoreWeave, which lends access to Nvidia AI chips and provides access to more than 40,000 chips. The Journal calls it “the wild west of energy,” which seems appropriate.
But poolside is not lonely. Almost every major AI player is pursuing a similar strategy. Last month, OpenAI CEO Sam Altman toured his company’s flagship Stargate data center in Abilene, Texas, about 320 miles from the Permian Basin, and said bluntly: “We burn gas to run this data center.”
According to the Associated Press, the complex will require about 900 megawatts of power across eight buildings and will also include a new gas-fired power plant that uses turbines similar to those that power warships. The companies say the power plant provides only backup power, with most of the power coming from the local grid. For the record, its power grid is powered by a mix of natural gas and wind and solar farms across West Texas.
But people living near these projects don’t necessarily feel safe. Arlene Mendler lives across the street from Stargate. She told The Associated Press that she wished someone had listened to her before bulldozers removed vast areas of mesquite brush to make room for construction on top.
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“It completely changed our way of life,” Mendler told The Associated Press. She moved to the area 33 years ago seeking “peace, quiet and serenity.” Construction work is now the soundtrack in the background, and the site’s bright lights ruin her night view.
Then there’s water. In drought-prone West Texas, local residents are especially concerned about how new data centers will affect water supplies. During Altman’s visit, the city’s reservoirs were at about half capacity, and residents were on a twice-weekly outdoor watering schedule. Oracle claims that after initially filling the closed-loop cooling system with 1 million gallons, each of its eight buildings will require only 12,000 gallons per year. But Xiaolei Ren, a professor at the University of California, Riverside, who studies the environmental impact of AI, told The Associated Press that’s misleading. These systems require more electricity, which increases indirect water consumption at the power plants that generate that electricity.
Meta is pursuing a similar strategy. The company plans to build a $10 billion data center the size of 1,700 football fields in Richland Parish, Louisiana’s poorest region, that would require an estimated 2 gigawatts of power alone. Power company Entergy plans to spend $3.2 billion to build three large 2.3 gigawatt capacity natural gas power plants that will feed the facility by burning gas extracted through hydraulic fracturing in the nearby Haynesville Shale. Louisiana residents, like Abilene residents, are not thrilled about being surrounded by bulldozers 24/7.
(Meta is also building in Texas, but elsewhere in the state. The company announced this week that it is building a $1.5 billion data center in El Paso, near the New Mexico border, with 1 gigawatt of net capacity expected by 2028. El Paso is not near the Permian Basin, and Meta says the facility will be 100% clean and powered by renewable energy. Points for Meta.)
Even Elon Musk’s xAI, whose Memphis facility sparked much controversy this year, has hydraulic fracturing connections. Memphis Light Gas & Water Co. (currently selling power to xAI, but which will eventually own the substation being built by xAI) buys natural gas on the spot market and pipes it to Memphis through two companies: Texas Gas Transmission Corporation and Trunkline Gas Company.
Texas Gas Transmission is a bidirectional pipeline that carries natural gas from the Gulf Coast supply region and several major hydraulically fractured shale formations through Arkansas, Mississippi, Kentucky, and Tennessee. Another Memphis supplier, Trunkline Gas Company, also transports natural gas from fracked sources.
If you’re wondering why AI companies are pursuing this path, they’ll tell you it’s not just about electricity. It also means defeating China.
That was Chris Lehane’s argument last week. Lehane, a veteran political operative who joined OpenAI in 2024 as vice president of international affairs, described the incident in an on-stage interview with TechCrunch.
“We believe that in the not-too-distant future, at least in the United States, and indeed around the world, we will need to generate close to a gigawatt of energy per week,” Lehane said. He pointed to China’s massive energy buildup, noting that 450 gigawatts and 33 nuclear facilities were built last year alone.
When TechCrunch asked about Stargate’s decision to build in economically challenged areas like Abilene and Lordstown, Ohio, where gas power plants are planned, Lehane returned to the topic of geopolitics. “If we [as a country] If we get this right, we have an opportunity to re-industrialize countries, bring back manufacturing, and transition our energy systems to make the necessary modernizations. ”
The Trump administration certainly agrees with that. A July 2025 executive order seeks to accelerate the adoption of gas-powered AI data centers by streamlining environmental permitting, providing financial incentives, and opening up federal lands to projects that use natural gas, coal, and nuclear power, while explicitly excluding renewable energy from support.
For now, most AI users are largely unaware of the carbon footprint behind their dazzling new toys and work tools. They’re more focused on features like Sora 2, OpenAI’s hyper-realistic video generation product that requires exponentially more energy than a simple chatbot, rather than where the power comes from.
Companies are counting on this. They are positioning natural gas as a real and inevitable answer to AI’s exploding power demands. But the speed and scale of this fossil fuel build-up is more remarkable than ever.
If this were bubbles, it wouldn’t be pretty. The AI sector has become a circular bombardment of dependencies: you need OpenAI, you need Microsoft, you need Nvidia, you need Broadcom, you need Oracle, you need data center operators who need OpenAI. They all buy and sell from each other in a self-reinforcing loop. The Financial Times pointed out this week that if the foundations were to crack, much expensive infrastructure, both digital and gas-fired, would be left abandoned.
The ability of OpenAI alone to meet its obligations is “of increasing concern to the entire economy,” the outlet wrote.
One important question that is largely left out of the conversation is: Is all this new capacity needed? A Duke University study found that power companies typically use only 53% of their available capacity throughout the year. As MIT Technology Review reported earlier this year, this suggests there is a lot of room to meet new demand without building new power plants.
Duke University researchers estimate that if data centers could cut their electricity consumption by about half for just a few hours during peak demand periods each year, utilities could handle an additional 76 gigawatts of new load. This would effectively absorb the 65 gigawatts that data centers are projected to need by 2029.
This flexibility allows companies to stand up AI data centers faster. More importantly, it would ease the rush to build natural gas infrastructure, giving utilities time to develop cleaner alternatives.
But Lehane and many other industry officials say that would mean losing ground to the dictatorship, which would instead be burdened by a natural gas construction boom that would burden areas with more fossil fuel power plants, forcing residents to pay higher electricity bills to fund their investments today, even long after the tech companies’ contracts expire.
For example, Meta guarantees that Entergy’s costs for New Generation Louisiana will be covered for 15 years. Poolside and CoreWeave leases are for 15 years. What happens to customers when these contracts end remains an open question.
Things may change eventually. A lot of private money is pouring into small modular nuclear reactors and solar power plants in hopes that these cleaner alternatives will become a more central energy source for data centers. Fusion startups like Helion and Commonwealth Fusion Systems have similarly raised significant funding from companies at the forefront of AI, including Nvidia and Altman.
This optimism is not limited to private investment circles. This excitement has spilled over into the public markets, with some of the “non-revenue-producing” energy companies that have gone public with truly forward-looking market capitalizations based on hopes of one day fueling these data centers.
In the meantime, and it could still be decades away, the most pressing concern is that the people who will be left holding the bag, both economically and environmentally, never asked for any of it in the first place.
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