South Korea selects Texas gas plant for AI data centers as first project in $350 billion US investment
South Korea has chosen a natural gas plant in Encinal, Texas, as the inaugural project in its $350 billion U.S. investment pledge, primarily to power AI data centers and semiconductor factories. This $20 billion facility requires approval from a U.S. government investment committee and is part of a November 2025 trade deal between the two nations. Texas state officials emphasize that data centers must fund their own infrastructure and undergo thorough reviews by state agencies like TCEQ, ERCOT, and the Water Development Board.
South Korea has designated a 6.3-gigawatt natural gas plant in Encinal, Texas, as the initial undertaking within its substantial $350 billion investment commitment to the United States. This more than $20 billion facility is intended to supply power to AI data centers and semiconductor manufacturing plants.
South Korean Industry Minister Kim Jung-kwan confirmed the selection, noting that the project still requires approval from a U.S. government investment committee and further discussions with Commerce Secretary Howard Lutnick. The announcement is reportedly pending a statement from former President Donald Trump. This investment is tied to a November 2025 trade agreement that includes a 15% U.S. tariff on imports from South Korea, following previous U.S. concerns about the pace of South Korean investment.
Energy experts like Stuart Turley of Sandstone Group and Christopher Johnson of the American Energy Leadership Institute lauded the project, highlighting its benefits for South Texas natural gas producers and the broader electricity market, arguing that large, predictable data center demand can stabilize power prices and justify new infrastructure.
However, Texas Governor Greg Abbott's press secretary, Andrew Mahaleris, stated that data centers must be responsible for their own electric infrastructure, avoid residential disruption, and eliminate reliance on taxpayer-funded incentives. He added that the Texas Commission on Environmental Quality (TCEQ) will not issue permits until the Electric Reliability Council of Texas (ERCOT) completes its review, and no other state agency will approve data centers without necessary information from the Public Utility Commission and the Water Development Board.