Pennsylvania Partnership Aims to Build Large-Scale Natural Gas Infrastructure for AI and Hyperscale Data Center Expansion
UGI Corporation, through its subsidiary UGI Energy Services (UGIES), has entered into a strategic partnership with Prime Data Centers to develop major natural gas infrastructure in northern Pennsylvania, supporting what is expected to become one of the region’s most significant energy and hyperscale data center investments. The collaboration reflects the rapidly growing intersection between energy infrastructure and artificial intelligence-driven data center expansion, as demand for high-performance computing continues to accelerate globally.
The agreement focuses on building large-scale energy capabilities designed to support future hyperscale data center operations, including on-site power generation fueled by natural gas sourced directly from Pennsylvania’s abundant Marcellus Shale reserves. The companies said the partnership will create a long-term energy foundation capable of supporting the immense electricity requirements associated with AI infrastructure, cloud computing, and next-generation digital services.
Under the terms of the purchase and sale agreement, UGI Energy Services will transfer property rights to Prime Data Centers to facilitate development of a proposed on-site gas-fueled electric generation facility. While Prime will use the property for data center-related infrastructure development, UGIES will retain approximately 15 billion cubic feet of underground natural gas storage capacity as well as associated oil and gas rights connected to the site.
The companies said the project is designed to provide substantial energy resilience and long-duration fuel supply security, both of which are increasingly critical for hyperscale data center operators supporting artificial intelligence workloads and mission-critical cloud infrastructure.
As AI adoption expands rapidly across industries, data centers are consuming dramatically larger amounts of electricity due to the computational demands of machine learning models, generative AI systems, high-performance computing clusters, and large-scale cloud environments. The surge in AI infrastructure investment has placed enormous pressure on regional power grids, utility providers, and energy infrastructure developers across the United States.
Prime Data Centers indicated that its expected natural gas demand could exceed 100,000 dekatherms per day within the next three to five years, highlighting the enormous scale of the project and its potential impact on regional energy infrastructure development.
The projected energy demand underscores the growing importance of securing stable, high-capacity fuel supplies for data center campuses as operators seek alternatives to grid-constrained regions where power availability has become increasingly limited. Energy resilience has become a major competitive factor within the hyperscale data center industry, especially as AI-driven workloads continue expanding at unprecedented rates.
UGI Energy Services President Joseph Hartz described the partnership as a major milestone for the company and a strong strategic fit for its midstream energy infrastructure capabilities. According to Hartz, UGIES anticipates investing more than $100 million into the project as part of its broader commitment to supporting large-scale energy infrastructure expansion in Pennsylvania’s northern tier.
Hartz noted that the region’s direct access to locally produced natural gas, combined with extensive interstate pipeline connectivity, makes the project particularly well positioned to support growing data center energy requirements. He emphasized that the collaboration represents a landmark investment opportunity for Pennsylvania while reinforcing UGI’s role in delivering critical energy infrastructure for emerging technology industries.
The project also highlights how traditional energy companies are increasingly partnering with hyperscale data center developers as AI-related infrastructure spending transforms energy consumption patterns across the economy. Large-scale AI training systems and cloud computing platforms require vast amounts of continuous power, prompting data center operators to pursue direct energy partnerships capable of ensuring reliability, scalability, and long-term supply stability.
Prime Data Centers Chief Executive Officer Nicholas Laag said the company views Pennsylvania’s northern tier as uniquely positioned for hyperscale infrastructure development due to its combination of abundant natural gas resources, established pipeline systems, and supportive business environment.
According to Laag, the region offers rare direct access to Marcellus Shale natural gas reserves while also benefiting from robust midstream infrastructure and energy transportation networks. He stated that UGI Energy Services brings the operational scale and midstream expertise necessary to support Prime’s long-term ambitions for hyperscale data center growth and AI infrastructure deployment.
Laag added that the partnership is intended to help build the energy backbone required to support the next generation of artificial intelligence and high-performance computing infrastructure in Pennsylvania. As AI technologies continue driving demand for more advanced computing environments, access to scalable and resilient energy infrastructure is becoming increasingly central to data center site selection strategies.
The broader market for hyperscale data centers has expanded rapidly in recent years due to accelerating cloud adoption, enterprise digital transformation initiatives, streaming services growth, and surging investment in generative AI technologies. Companies developing AI foundation models and large-scale machine learning systems require enormous computational resources, often concentrated in hyperscale facilities capable of supporting thousands of GPUs and specialized AI accelerators.
These facilities consume significantly more electricity than traditional enterprise data centers, leading operators to prioritize locations with reliable power availability, low energy costs, and strong transmission infrastructure. In some regions, power constraints have already delayed or limited new data center developments, increasing the importance of projects that can secure dedicated long-term fuel and energy supply arrangements.
Pennsylvania’s northern tier offers several advantages that make it attractive for energy-intensive technology projects. The region sits near the heart of the Marcellus Shale formation, one of the largest natural gas-producing regions in North America. This provides direct access to substantial fuel resources capable of supporting long-duration energy supply requirements.
The area is also served by major interstate pipeline systems, including Eastern Gas Transmission and Storage and Tennessee Gas Pipeline, as well as the broader UGI Utilities distribution network. Together, these systems create multiple redundant supply pathways that are essential for maintaining continuous energy delivery to hyperscale operations.
Redundant infrastructure is particularly important for AI-focused data centers because uptime and operational continuity are mission-critical. Interruptions to computing infrastructure can significantly impact enterprise applications, AI model training operations, cloud services, and customer workloads. As a result, hyperscale operators increasingly seek regions capable of delivering both reliable utility connectivity and direct energy sourcing flexibility.
The project also received support from Dave McCormick, who emphasized the strategic importance of leveraging Pennsylvania’s natural gas resources to support America’s energy security and AI competitiveness.
McCormick stated that Pennsylvania possesses the fourth-largest natural gas reserves in the world and argued that partnerships like the one between UGI and Prime Data Centers help put those resources to work in ways that support economic growth, job creation, and national technological leadership.
According to McCormick, infrastructure investments tied to AI and hyperscale computing are becoming increasingly important for both energy policy and economic development. He noted that projects of this scale can create substantial employment opportunities while strengthening rural communities that have historically served as the foundation of Pennsylvania’s energy economy.
The partnership reflects a broader national conversation surrounding the relationship between energy infrastructure and artificial intelligence expansion. As AI systems grow more powerful and data-intensive, electricity demand from computing infrastructure is expected to increase significantly over the next decade.
Industry analysts and utility providers have warned that the rapid expansion of AI workloads could place unprecedented strain on electrical grids, especially in regions already facing capacity limitations. This has prompted technology companies, infrastructure developers, and energy providers to explore new approaches for securing dedicated generation capacity and fuel supply arrangements.
Natural gas continues to play a major role in this evolving landscape because it offers scalable, dispatchable power generation capable of supporting constant high-load operations. While renewable energy sources remain an important component of long-term sustainability strategies, many hyperscale operators still rely on natural gas infrastructure to ensure stable baseload power availability for mission-critical computing environments.
At the same time, the growing overlap between energy infrastructure and digital infrastructure is creating new investment opportunities across both industries. Midstream energy companies are increasingly participating in projects tied directly to AI infrastructure development, while data center operators are pursuing deeper vertical integration with power generation and fuel supply systems.
The UGI and Prime Data Centers partnership represents one example of how these trends are reshaping regional economic development strategies. By combining natural gas infrastructure with hyperscale computing investment, the project has the potential to position northern Pennsylvania as an emerging hub for AI-focused digital infrastructure.
As demand for artificial intelligence computing capacity continues to rise globally, projects capable of delivering scalable, resilient, and long-duration energy supply solutions are likely to become increasingly important within the data center industry. The collaboration between UGI Energy Services and Prime Data Centers illustrates how energy producers and infrastructure developers are adapting to support the next phase of digital transformation and AI-driven economic growth.
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