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Natural gas producers hope to court data centre business with off-grid power

Jan 29, 2025 - financialpost.com
Natural gas producers in Western Canada, like Pine Cliff Energy Ltd., are exploring opportunities to supply off-grid power to data centers as a way to diversify their markets and increase income. Pine Cliff recently secured a 25-year deal with a data center developer to supply natural gas, which will power a sub-100-megawatt data center near Drumheller, Alberta. This strategy allows natural gas producers to avoid congested power grids and capitalize on local resources, providing a hedge against market volatility and low AECO gas prices. Alberta's government is actively supporting such developments to attract tech investments, although the introduction of energy-efficient AI models like China's DeepSeek could impact future power demand.

The deal highlights Alberta's potential as a prime destination for data center investments due to its abundant natural gas resources and the ability to offer off-grid power solutions. However, the emergence of energy-efficient AI technologies raises questions about the long-term growth of energy demand from data centers. Despite this uncertainty, Pine Cliff and other natural gas producers are optimistic about the scalability of such projects, given the right conditions, including stable natural gas supply and supportive regulatory environments.

Key takeaways:

  • Natural gas producers are targeting data centre developers with off-grid power solutions to diversify markets and increase income.
  • Pine Cliff Energy Ltd. has signed a 25-year deal to supply natural gas to a data centre developer, representing a strategic hedge for the company.
  • Alberta is actively promoting investment in data centre infrastructure, leveraging its natural gas resources and off-grid power capabilities.
  • The introduction of a new AI model, DeepSeek, raises questions about future energy demand for data centres, though tech companies continue to invest in infrastructure.
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