Your AI tools run on fracked gas and bulldozed Texas land

The AI ​​era gives fracking a second act, a surprising turn for an industry that, even in its early 2010s boom, was blamed by climate advocates for poisoned groundwater, 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 energy by using fossil fuels directly. It’s a trend overshadowed by headlines about the intersection of AI and healthcare (and solving climate change), but it’s one that could reshape the communities that house these facilities—and raise tough questions.

Take 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 — a footprint two-thirds the size of Central Park. The facility will generate its own energy by tapping natural gas from the Permian Basin, the nation’s most productive oil and gas field, where hydraulic fracturing is not only common, but essentially the only game in town.

The project, called Horizon, will produce two gigawatts of computing power. That’s equal to the full electrical capacity of the Hoover Dam, except instead of harnessing the Colorado River, it burns fracking gas. Poolside is developing the facility together with CoreWeave, a cloud computing company that leases access to Nvidia AI chips and provides access to more than 40,000 of them. The Journal calls it an “energy Wild West,” which seems appropriate.

Yet Poolside is far from alone. Almost all major AI players follow similar strategies. Last month, OpenAI CEO Sam Altman toured his company’s flagship Stargate data center in Abilene, Texas – about 200 miles from the Permian Basin – where he candidly said:We burn gas to run this data center.”

The complex requires about 900 megawatts of electricity across eight buildings and includes a new gas-fired power plant that uses turbines similar to those that power warships, according to the Associated Press. The companies say the plant only provides emergency power, with most electricity coming from the local grid. That grid, for the record, comes from a mix of natural gas and the vast wind and solar farms in West Texas.

But the people living near these projects are not exactly comforted. Arlene Mendler lives across the street from Stargate. She told the AP that she wished someone had asked her opinion before bulldozers cleared a large area of ​​mesquite brush to make room for what was being built on top of it.

“It completely changed the way we lived,” Mendler told the AP. She moved to the area 33 years ago in search of “peace, quiet, tranquility.” Now construction is the background soundtrack, and bright lights on site have ruined her nighttime view.

Then there’s the water. In drought-prone West Texas, local residents are particularly nervous about the impact of new data centers on water supplies. The city’s reservoirs were at about half capacity during Altman’s visit, and residents were required to water outside twice a week. Oracle claims that each of the eight buildings requires only 12,000 liters per year after an initial fill of one million liters for closed cooling systems. But Shaolei Ren, a professor at the University of California, Riverside, who studies AI’s carbon footprint, told the AP that this is misleading. These systems require more electricity, which means more indirect water use at the power plants that generate that electricity.

Meta follows 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, which will require two gigawatts of energy for calculations alone. Utility Entergy will spend $3.2 billion to build three large natural gas plants with a capacity of 2.3 gigawatts to power the facility by burning gas extracted through fracking in the nearby Haynesville Shale. Louisiana residents, like those in Abilene, are not enthusiastic Being surrounded by bulldozers 24 hours a day.

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

Even Elon Musk’s xAI, whose factory in Memphis has generated considerable controversy has fracking connections this year. Memphis Light, Gas and Water — which currently sells power to xAI but will eventually own the substations xAI is building — buys natural gas on the spot market and routes it to Memphis through two companies: Texas Gas Transmission Corp. and Trunkline Gas Company.

Texas Gas Transmission is a bidirectional pipeline that transports natural gas from Gulf Coast supply areas and several large hydraulically fractured shale formations through Arkansas, Mississippi, Kentucky and Tennessee. Trunkline Gas Company, Memphis’ other supplier, also transports natural gas from fracked wells.

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.

That was the argument Chris Lehane made last week. Lehane, a veteran political operative who joined OpenAI in 2024 as vice president of global affairs, explained the matter during an on-stage interview with TechCrunch.

“We believe that in the not-too-distant future, at least in the US, and really around the world, we’re going to need to generate about a gigawatt of energy per week,” Lehane said. He pointed to China’s massive energy expansion: 450 gigawatts and 33 nuclear facilities built in the past year alone.

When TechCrunch asked about Stargate’s decision to build in economically depressed areas like Abilene or Lordstown, Ohio, where more gas-fired power plants are planned, Lehane returned to geopolitics. “Like us [as a country] If you get this right, you have the opportunity to reindustrialize countries, bring back manufacturing and also transform our energy systems so that we can do the modernization that needs to happen.”

The Trump administration is certainly on board. The July 2025 executive order accelerates gas-powered AI data centers by streamlining environmental permitting, providing financial incentives, and opening federal lands to projects using natural gas, coal, or nuclear power – while explicitly excluding renewables from support.

For now, most AI users are largely unaware of the carbon footprint behind their dazzling new toys and gear. They are more focused on capabilities like Sora 2 – OpenAI’s hyper-realistic video generation product that requires exponentially more energy than a simple chatbot – than on where the electricity comes from.

The companies count on this. They have positioned natural gas as the pragmatic, inevitable answer to AI’s exploding energy demand. But the speed and scale of this fossil fuel expansion deserve more attention than it gets.

If this is a bubble, it won’t be pretty. The AI ​​sector has become a circular firing squad of dependencies: OpenAI needs Microsoft Nvidia needs Broadcom Oracle needs data center operators who need OpenAI. They all buy from and sell to each other in a self-reinforcing loop. The Financial Times noted this week that if the foundation cracks, a lot of expensive infrastructure will be left behind, both the digital and the gas-burning kind.

OpenAI’s ability alone to meet its obligations is “of increasing concern to the broader economy,” the outlet wrote.

An important question that is largely absent from the conversation is whether all this new capacity is needed at all. A Duke University study shows that utilities typically use only 53% of their available capacity throughout the year. That suggests there is significant room to meet new demand without building new power plants, as MIT Technology Review says reported earlier this year.

The Duke researchers estimate that if data centers reduced electricity use by about half for just a few hours during annual peak periods, utilities could handle an additional 76 gigawatts of new load. That would effectively absorb the 65 gigawatts of data centers expected to be needed by 2029.

That kind of flexibility would allow companies to launch AI data centers faster. More importantly, it could provide relief from the rush to build natural gas infrastructure, giving utilities time to develop cleaner alternatives.

But again, that would mean losing ground to an autocratic regime, according to Lehane and many others in the industry. Instead, it appears the natural gas construction boom is likely to saddle regions with more fossil fuel plants and leave residents with sky-high electricity bills to finance current investments long after the tech companies’ contracts expire.

Meta, for example, has guaranteed to cover Entergy’s costs for the new Louisiana generation for 15 years. Poolside’s lease with CoreWeave has a term of 15 years. What happens to customers when those contracts end remains an open question.

Things can change eventually. A lot of private money is being funneled into small modular reactors and solar plants, with the expectation that these cleaner energy alternatives will become more central energy sources for these data centers. Fusion startups like Helion and Commonwealth Fusion Systems have similarly raised significant funding from those on the front lines of AI, including Nvidia and Altman.

This optimism is not limited to private investment circles. The excitement has spilled over into the public markets, where several “non-revenue-generating” energy companies that have managed to go public are actually anticipatory market caps, based on the expectation that they will one day power these data centers.

In the meantime – which could be decades away – the most pressing concern is that the people who will be in control, both financially and environmentally, never asked for it in the first place.