Your AI tools run on fracked gas and bulldozed Texas land

The AI ​​era is giving fracking A second act, a surprising turnaround for an industry that, even in its boom years in the early 2010s, was blamed by climate advocates for toxic water tables, man-made earthquakes and the stubborn persistence of fossil fuels.

AI companies are building massive data centers near major gas-production sites, often generating their own power by tapping directly into fossil fuels. It’s a trend that’s been overshadowed by headlines about the intersection of AI and healthcare (and climate change solutions), but it’s one that could reshape — and raise tough questions for, the communities that host these facilities.

Take the latest example. This week, The Wall Street Journal Report 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 — with a footprint two-thirds the size of Central Park. The facility will generate its own power by tapping natural gas from the nation’s most productive oil and gas field, the Permian Basin, where hydraulic fracturing is not only common but really the only game in town.

The project, known as Horizon, will generate two gigawatts of computing power. It’s equivalent to the full electric capacity of Hoover Dam, except instead of using the Colorado River, it’s burning fracked gas. Poolside is developing the facility with CoreWeave, a cloud computing company that rents access to Nvidia AI chips and is providing access to more than 40,000 of them. The Journal calls it the “Energy Wild West,” which seems appropriate.

Yet poolside is far from alone. Almost all major AI players are following the same strategy. Last month, OpenAI CEO Sam Altman visited his company’s flagship Stargate data center in Abilene, Texas — about 200 miles from the Permian Basin — where he was candid, saying, “We are burning gas to run this data center“

The complex’s eight buildings require about 900 megawatts of electricity and include a new gas-fired power plant that uses turbines to generate electricity, according to the Associated Press. The companies say the plant only provides backup power, with most electricity coming from the local grid. That grid, for the record, draws from a mix of natural gas and extensive wind and solar farms in West Texas.

But people living near these projects are not exactly relieved. Arlene Mendler lives across the street from Stargate. He told the AP that someone asked his opinion before bulldozers removed a large tract of mesquite thicket to make room for what was being built above him.

“It completely changed the way we live,” Mendler told the AP. He moved to the area 33 years ago seeking “peace, quiet, tranquility.” Now construction is the soundtrack in the background, and the scene’s bright lights spoil its night scenes.

Then there is the water. In drought-prone West Texas, locals are particularly concerned about how the new data centers will affect water supplies. The city’s reservoirs were at about half capacity during Altman’s visit, with residents on a twice-weekly outdoor watering schedule. Oracle claims that closed-loop cooling systems in each of the eight buildings will require only 12,000 gallons per year after the initial million-gallon fill. But University of California, Riverside professor Shaolei Ren, who studies AI’s environmental footprint, told the AP that’s misleading. These systems require more electricity, which means more indirect water consumption in the power plants that produce that electricity.

Meta is following a similar strategy. In Richland Parish, Louisiana’s poorest region, the company plans to build a $10 billion data center the size of 1,700 football fields that will require two gigawatts of power for computing alone. Utility company Entergy will spend $3.2 billion to build three large 2.3 gigawatt natural-gas power plants to feed the facility by burning gas extracted through fracking in the nearby Haynesville Shale. Louisiana residents, like Abilene, Not thrilled Surrounded by bulldozers around the clock.

(Meta also makes them in Texas, though elsewhere in the state. This week the company announced a $1.5 billion data center In El Paso, near the New Mexico border, one gigawatt of capacity is expected to come online in 2028. El Paso is not near the Permian Basin, and Meta says the facility will be 100% clean and powered by renewable energy. (One point for meta.)

Even Elon Musk’s xAI, which has built its Memphis facility Enough controversy This year, there is the fracking connection. Memphis Light, Gas and Water — which currently sells electricity to xAI but will eventually own the substations xAI is building — buys natural gas on the spot market and pipes it to Memphis through two companies: Texas Gas Transmission Corp. and Trunkline Gas Company.

The Texas Gas Transmission is a two-way pipeline that carries natural gas from the Gulf Coast supply area and several major hydraulic fracturing shale formations through Arkansas, Mississippi, Kentucky, and Tennessee. Trunkline Gas Company, another Memphis supplier, also carries natural gas from fracking sources.

If you’re wondering why AI companies are following this path, they’ll tell you it’s not just about electricity; It’s also about beating China.

Chris Lehane made the same argument last week. Lehane, a veteran political operative who joined OpenAI in 2024 as vice president of global affairs, during a lawsuit. On-stage interview With TechCrunch.

“We believe that in the not-too-distant future, at least in the U.S. and really around the world, we need to be producing around one gigawatt of energy per week,” Lehane said. He points to China’s massive energy buildout: 450 gigawatts and 33 nuclear plants built in the last year alone.

When TechCrunch asked about Stargate’s decision to build in economically disadvantaged areas such as Abilene, or Lordstown, Ohio, where more gas-fired plants are planned, Lehane returned to geopolitics. “If we [as a country] Get it right, you have the opportunity to re-industrialize countries, bring back manufacturing and shift our energy systems so we can do the modernization we need.”

The Trump administration is certainly on board. July 2025 executive order Fast-track gas-powered AI data centers by issuing environmental permits, providing financial incentives and opening up federal land for projects using natural gas, coal or nuclear power — while expressly excluding renewables from support.

For now, most AI users are largely unaware of the carbon footprint behind their fancy new toys and work tools. They’re more focused on capabilities like Sora 2 — OpenAI’s hyperrealistic video-generation product that requires exponentially more power than a typical chatbot — than where the power comes from.

Companies are counting on it. They positioned natural gas as the realistic, inevitable answer to AI’s exploding energy needs. But the speed and scale of this fossil fuel generation deserves more attention than it gets.

If it’s a bubble, it won’t be pretty. The AI ​​sector has become a circular firing squad of dependencies: OpenAI needs Microsoft needs Nvidia needs Broadcom needs Oracle needs data center operators who need OpenAI. They are all buying and selling from each other in a self-reinforcing loop. As the Financial Times noted this week, if the foundations crack, a lot of expensive infrastructure, both digital and gas-burning, will be left standing around.

OpenAI’s ability to meet its obligations alone is “a growing concern for Greater economy” wrote the outlet.

A key question that has been largely absent from the conversation is whether all these new capabilities are even necessary. A Duke University study found that utilities typically use only 53% of their available capacity throughout the year. This suggests significant room to accommodate new demand without building new power plants, according to the MIT Technology Review. As reported earlier this year.

Duke researchers estimate that if data centers cut electricity use by about half for just a few hours during annual peak demand, utilities could handle an additional 76 gigawatts of new load. This is effectively projected to require 65 gigawatts of data centers by 2029.

Such flexibility will allow companies to quickly launch AI data centers. More importantly, it could relieve the rush to build natural gas infrastructure, giving utilities time to develop cleaner alternatives.

But again, that means losing ground to authoritarian regimes, according to Lehane and many others in the industry, so instead, a natural gas construction spree will likely litter the region with more fossil-fuel plants and drive up residents’ electricity bills to finance today’s investments, including long after the tech companies’ contracts expire.

For example, Meta has guaranteed that it will cover Entergy’s costs for new Louisiana generation for 15 years. Poolside’s lease with CoreWave runs for 15 years. What will happen to customers when those contracts end remains an open question.

Things may change eventually. A lot of private money is being funneled into small modular reactors and solar installations in the expectation that these clean energy options will become a more central power source for these data centers. Fusion startups such as Helion and Commonwealth Fusion Systems have likewise emerged Sufficient funds From the front lines of AI, including Nvidia and Altman.

This optimism is not limited to private investment circles. The tension has spilled over into the public markets, where several “non-revenue-generating” energy companies that have managed to go public have expected, Market cap, based on the expectation that they will one day fuel these data centers.

In the meantime – which may still be decades away – the most pressing concern is that individuals will be left holding the bag, financially and environmentally, that they never asked for in the first place.