Sections 278 & 279 Could Fuel Demand

Trump’s “One Big, Beautiful Bill” (H.R. 1) is a roughly 1,000-page budget-reconciliation omnibus that the House passed 215-214 towards the end of May. By stitching together dozens of disparate measures, repeal of most Inflation Reduction Act tax credits, streamlined oil-and-gas permitting, farm-bill revisions, defense add-ons, and more, serving as the single fast-track vehicle for the GOP’s wider tax, energy and regulatory agenda, now eligible to clear the Senate on a simple-majority vote.

Although the OBBB features several provisions that explicitly reference oil and gas, the language with the greatest potential to shift natural-gas demand is tucked away in a far less conspicuous clause. Sections 278 and 279 of the bill hands Washington sole authority, for ten years, over “any infrastructure necessary for the training or deployment of artificial-intelligence systems.” Lawyers who have parsed the language note that “infrastructure necessary” sweeps far beyond algorithms: it covers the hyperscale data-center campuses, the dedicated substations, and, crucially, the power plants. The bill would replace today’s patchwork of local controls with a single federal green light.

The implications for natural gas become clear once the math is laid out: The DOE and Lawrence Berkeley National Laboratory estimate that U.S. data centers consumed roughly 4.4 percent of all domestic electricity in 2023 and could claim between 6.7 and 12 percent, some 325 to 580 terawatt-hours, by 2028. A modern combined-cycle plant running baseload burns about 150 million cubic feet a day for every gigawatt it delivers.

Meta’s new Louisiana AI campus, for example, has already asked Entergy for 2.3 gigawatts of firm capacity, roughly 0.35 billion cubic feet per day when dispatched. Remove state siting friction and similar “self-supply” projects can spring up wherever gas is cheap and pipelines are close at hand.

Evidence of pent-up demand is already showing: PG&E reports a 40 percent jump in data-center requests this spring, piling another 4.1 GW onto an existing 8.7 GW queue in Northern California. In New York, the grid operator warns that retiring gas plants and a surge of AI projects are pushing reliability margins into the red. With state imposed taxes and clean-power quotas potentially off the table, developers finally have a path to develop in these strategically vital coastal markets, as long as they can lock down firm gas-fired power.

The traditional leaders won’t disappear; Texas still has 59 GW of data-center load waiting to hook into Oncor’s wires, and Appalachia sits atop the cheapest shale gas in the country. What changes is that the growth curve flattens across the map: some of the next wave of AI campuses could land in California’s Central Valley, the New York/New Jersey corridor, or Chicago’s collar counties, all regions where gas-fired plants run at the margin today. Utah, Wyoming, and the Dakotas are now marketing “plug-and-play” green-field sites, helped by Utah’s new law letting big loads build or contract their own generation, a go-ahead that developers interpret as free rein for on-site gas plants.

Those emerging data-center hubs, and the traditional hotspots, are likely hoping that the OBBB takes effect. The bill amplifies the incentives for gas-fired power in two key ways. First, it repeals the Inflation Reduction Act’s methane fee, trimming $900 to $1500 dollars per tonne of compliance cost for producers in higher-emission basins and marginally lowering the delivered price of gas. Second, it creates a two-year, bond-backed fast track for federal environmental reviews. Developers who post a performance guarantee can force agencies to finish a full environmental impact state ment within 24 months, enough to shave half a year off the build cycle for pipelines or gas plants. Combined with the new permit-by-rule for nonfederal drilling, the package tilts both supply and infrastructure timelines in gas’s favor.

The decade-long federal override has triggered a rare left-right alliance of states-rights defenders. Several Republican senators worry openly about surrendering local control; Democratic leaders call the clause an assault on state climate authority. Capitol Hill vote counters put its odds of survival near forty percent, and the Senate could rule that the language falls outside the scope of budget-reconciliation rules. If the clause holds, the United States could see an AI-driven demand surge, with roughly 1-2 Bcf/d of additional baseload gas burn emerging by 2030 in “AI corridors”. DOE’s high-end projection that data centers will reach twelve percent of the grid by 2028, signals that AI is emerging as one of the strongest potential demand drivers for domestic gas; Sections 278 and 279 will determine how quickly this is true.