Energy Transfer Pipeline Delay Risks Oracle Data Center Power

Energy Transfer's proposed natural gas pipeline to power a planned Oracle data center has been delayed by nearly six months, the company said in an August 14 update. The project faces obstacles in certification at both the state and federal level, and could be canceled entirely if progress stalls in the coming months.

The pipeline is one of several long-term agreements Energy Transfer has signed to supply gas to data centers. Two customers recently added a combined 100 MMcf/d to existing contracts for gas services at power plant or data center sites in Texas. The AI boom's demand for electricity – natural gas supplies about 43% of U.S. power – has become a central growth driver for midstream operators.

The delay comes as Energy Transfer posted a strong Q2. Revenue grew more than 164% year over year. Adjusted EBITDA surged 31% to roughly $4.8 billion, and distributable cash flow rose 32%. The company raised its full-year 2026 adjusted EBITDA guidance to $18.8 billion–$19.1 billion, up from the prior $18.2 billion–$18.6 billion range. Morgan Stanley boosted its price target on ET from $23 to $25 on August 18, citing the earnings beat and growth outlook.

Yet the regulatory snag highlights a risk that runs alongside the opportunity. Energy Transfer plans to spend $5.6 billion–$5.9 billion on growth capital in 2026. The Hugh Brinson Pipeline came online ahead of schedule and is expected to reach full phase 1 capacity by September 1, moving Permian Basin gas to Texas access points and beyond. But the Oracle pipeline delay shows that even fee-based infrastructure projects can be slowed by permitting hurdles.

Other risks include commodity price exposure on certain businesses and the high capital outlay itself. While most of Energy Transfer's earnings come from fee-based contracts, some segments remain tied to oil and gas market conditions. The company has raised its quarterly dividend for 19 consecutive quarters, most recently by 0.7% in July, targeting long-term annual distribution growth of 3% to 5%. The dividend yield sits near 6.35%.

The Oracle pipeline's next milestone is unclear. Progress in the next few months will determine whether the project moves forward or faces cancellation. Energy Transfer's Alpha Score of 62/100 – labeled Moderate – reflects a solid underlying business weighed by execution and regulatory uncertainties.

For investors tracking the AI-driven demand for natural gas infrastructure, the near-term catalyst is whether state and federal certification can be resolved before the pipeline's window closes. Energy Transfer's full Q2 report showed record NGL exports and raised EBITDA guidance, but the regulatory clock on that Oracle deal is ticking.