With gas turbines and cooling knowledge, oil service companies are entering the AI data center market

As the demand in the traditional oil and gas drilling market weakens, oilfield service companies are choosing to accelerate their entry into the data center sector, leveraging their existing technological advantages to provide power generation, cooling, and energy efficiency management solutions.

On Thursday, crude oil hovered at low levels, with WTI prices maintaining around $56, and the mid-term expectation of oversupply remains a major suppressing factor. So far this year, WTI crude oil has cumulatively fallen over 25%, and the number of oil and gas drilling rigs operating in the U.S. has decreased by 7% year-on-year to 548.

(WTI crude oil prices fluctuated around $56 on Thursday)

Revenue pressure is prompting companies to seek new revenue sources with weaker cyclicality, while at the same time, the demand for AI computing power is surging, leading to an urgent need for power supply in the data center industry, which oilfield service companies are filling.

Major oilfield service companies such as Baker Hughes, Halliburton, and SLB are providing gas turbines, power generation systems, battery storage, and cooling equipment for data centers, as well as taking on system design and maintenance responsibilities. This business extension is viewed by investors as a more attractive growth area compared to the traditional oilfield market.

Major Companies Accelerate Layout

Baker Hughes is the most aggressive in investing in the data center sector.

The company sold nearly 1.2 gigawatts of gas turbine power generation equipment to data center customers in the first ten months of 2025 and spent over $13 billion to acquire U.S. natural gas processing and storage equipment manufacturer Chart Industries.

The company also provided 16 gas turbines to data center power supplier Frontier Infrastructure. CEO Lorenzo Simonelli stated:

Data centers are experiencing exponential growth, and providing infrastructure support for the AI boom is central to the evolution of the oil and gas industry.

Halliburton announced in October this year the acquisition of a 20% stake in mobile gas generator supplier VoltaGrid, with both parties collaborating to provide power generation systems for data centers, focusing on the Middle East market. VoltaGrid currently powers data centers in Memphis, Tennessee, for Oracle and xAI, owned by Musk.

SLB reported that its data center business revenue reached $331 million in the first nine months of 2025, a year-on-year surge of 140%. This is the first time the company has disclosed the performance of this business segment separately. CEO Olivier Le Peuch told the Financial Times, "I only see upside potential; we can benefit from diversifying our clients into rapidly growing new market segments."

Smaller oilfield service companies are also following suit. ProPetro and Liberty Energy plan to expand their power supply business to over 1 gigawatt.

Traditional Market Pressure Drives Transformation

The transformation of the oilfield service industry is driven by a significant slowdown in its core business. In addition to falling oil prices and a decrease in the number of drilling rigs, the decline in drilling activities has directly reduced the demand for oilfield services, squeezing profit margins for companies Ryan Duman, head of Americas upstream research at consulting firm Wood Mackenzie, stated that these factors are putting pressure on profit margins. Duman said:

Companies have been looking for ways to increase new sources of revenue.

Dan Pickering, chief investment officer at investment firm Pickering Energy Partners, pointed out:

Oilfield service companies are leveraging the skills they already possess to enter a market that is experiencing stronger growth and is valued higher by investors than the existing oilfield market.

Marc Bianchi, senior energy analyst at TD Cowen, believes that this diversification can create a "reserve fund" for companies, helping them avoid making "difficult decisions" during downturns. Bianchi noted:

You don't need to be as strict with oilfield service businesses during downturns because cash flow from data centers provides a buffer.

Industry Energy Consumption Raises Power Concerns

The explosive growth of the data center industry, driven by artificial intelligence, has led developers to compete in building and maintaining facilities capable of handling increasingly energy-intensive workloads. However, the high energy consumption of the industry has raised concerns about whether existing infrastructure can keep pace.

Grid Strategies predicts that the growth of data centers will increase electricity demand in the U.S. by 90 gigawatts by 2030, exacerbating anxieties about utility responsiveness and the impact on residential electricity bills. This has put increasing pressure on the industry to design self-sufficient power solutions.

Data centers find it difficult to rely entirely on the traditional grid for power, creating market opportunities for oilfield service companies.

The gas generator sets and battery storage systems offered by these companies can help data centers establish independent power sources outside the grid, while their accumulated experience in system design and maintenance in the energy sector also becomes a competitive advantage.

This trend indicates that the expansion of AI infrastructure is reshaping the energy services landscape, with the technical capabilities of traditional oil and gas companies finding applications in emerging fields, but it also highlights the structural challenges posed by data center energy demands on power systems