Greylock Midstream
Oct 30, 2025
Data center developers face an underappreciated risk when they turn to EPC firms to build new pipelines.
Data centers need energy fast. Instead of waiting in lengthy queues for power from our nation’s overtaxed energy grids, enterprising developers are turning to natural gas to speed up development.
But choosing gas presents its own questions:
How can we secure the necessary gas supply for our project?
Should we build our own pipeline using an engineering, procurement, and construction (EPC) firm, or should we hire a third-party pipeline developer?
Do we have the skills, expertise, and bandwidth to manage and operate a pipeline – and more importantly, is that where our time is best spent?
This decision can seem small in the scope of the project, but there are unseen risks that could cost data centers in the long run.
The Problem With EPCs Building Pipeline Assets
The EPC route looks straightforward on paper to developers. You control the schedule. You pick the contractor. You avoid a third-party’s rate. Your company even has the capital to build its own pipeline.
In practice, EPCs don’t operate pipelines, and this creates misalignment. It’s like having a custom airplane built for travel without a pilot and a maintenance plan.
In addition, ownership means data centers will be completely responsible for all capital expenses (CAPEX) as well as the operating expenses (OPEX) for their pipeline. This creates the following risks for the project:
It concentrates regulatory exposure.
It increases the total risk-adjusted cost.
It regularly produces delays and change orders.
Ultimately, the DIY approach using an EPC to build pipelines erodes any perceived savings for developers.
Questions Data Centers Should Ask First
The decision to build a gas pipeline carries long-term implications well beyond the capital outlay. Data center developers should ask the following questions before hiring an EPC firm for the pipeline:
What is the plan for operations and maintenance? How confident are you that your team has full visibility on long-term operations and maintenance (O&M) costs, including staffing, insurance, and unplanned capital programs?
Who will hold the operator of record designation with the Pipeline and Hazardous Materials Safety Administration (PHMSA)? How will you resource compliance programs over the life of the pipeline?
Who carries the reputational and regulatory risk in the event of a rupture, cyber incident, or compliance failure? You, the EPC firm, or a contract operator?
How will you manage permanent O&M obligations? This includes integrity digs, class location changes, and Transportation Security Administration (TSA) cybersecurity audits.
If insurance underwriters classify you as a “pipeline operator,” are you comfortable with the higher premiums, exclusions, and retained liabilities that may impact your broader portfolio?
If the pipeline becomes the bottleneck that delays energization by six months, what’s the real cost of lost compute revenue compared to the dollars saved by self-funding?
How will you ensure the system isn’t overbuilt, overpriced, or impractical to maintain? EPCs are incentivized to complete construction, but not to manage lifecycle costs or operability.
How will you keep your project’s economics aligned with the EPC’s incentives, given how common change orders and unforeseen delays are in pipeline projects?
With the scale of your overall power investment, is taking on permanent pipeline obligations really the highest and best use of your capital and leadership bandwidth?
A Better Way
The cost of a pipeline may look small in relation to the full project investment, but the risks and headaches can be disproportionately huge.
Meanwhile, a third-party developer like Greylock Midstream specializes in building, owning, and operating complicated pipeline projects.
This gives data centers all the benefits of gas – predictable rates, faster development timelines, and energy reliability – without the risks of owning and maintaining a pipeline. And it enables data center developers to focus on their main priority: their projects.
To learn more, visit Greylock Midstream’s website or set up a meeting to learn how Greylock Midstream can support your project.