South Korea Chooses Texas Plant for AI Data Centers under $350 Billion Investment Plan

In a significant move, South Korea has selected a natural gas facility in Encinal, Texas, as the inaugural project of its ambitious $350 billion investment in the U.S. This facility, capable of generating 6.3 gigawatts, is intended to support artificial intelligence data centers and semiconductor manufacturing, and the project is estimated to be valued at over $20 billion, as reported by Reuters.

During a briefing with lawmakers, South Korean Industry Minister Kim Jung-kwan explained that although the plans are in motion, final approval is still required from a U.S. government investment committee. Further discussions with Commerce Secretary Howard Lutnick are also necessary. The announcement of the final plan is expected from President Donald Trump, according to the Yonhap news agency.

There have been some concerns from U.S. officials regarding South Korea’s investment pace when compared to other partners like Japan. Trump had issued warnings about potential tariff increases if South Korea did not accelerate its investments. The substantial $350 billion investment deal was part of a trade agreement made in November 2025, which included a 15% tariff on imports from South Korea.

Stuart Turley, the president and CEO of Sandstone Group, commented that this facility would provide South Texas producers with a much-needed market for gas sourced from new wells. The region has seen reduced gas flaring since 2024 due to new pipeline developments, and there’s a resurgence in drilling and investments.

“This plant and the investment from South Korea is a tremendous benefit not only for the U.S. and Texas but also for local producers looking to profit from natural gas,” Turley said, noting that many producers are excited as the plant will utilize gas from new wells that may otherwise be wasted.

Christopher Johnson, president of the American Energy Leadership Institute, shared his perspective that data centers can actually contribute to lowering electricity costs. “They create consistent demand, which justifies significant capital investments,” he explained. He further emphasized that the facility would enable not only the operation of data centers but also support the industrial sectors needed to bring manufacturing back to the U.S.

Additionally, Andrew Mahaleris, press secretary for Texas Governor Greg Abbott, outlined that data centers need to financially support their own electrical infrastructure and minimize disruption to residential areas. He also mentioned that no construction permits for data centers would be granted until the Electric Reliability Council of Texas (ERCOT) completes its evaluation.

The American Gas Association pointed out that while demand for gas might increase, it doesn’t always lead to higher household prices. Their data indicates the U.S. has vast natural gas reserves, enough for over a century of supply, with projections suggesting residential prices could drop significantly in the coming years.

According to lawmaker Bae Jun-young, South Korea is expected to make a “significant” payment by the end of September once the project is officially announced. It is anticipated that this payment could be made within 45 days of a U.S. request. Moreover, South Korea plans to cover the entire investment while equally sharing ownership of the plant with U.S. partners.

The South Korean government estimates that the plant could generate up to $45 billion in returns over the next 20 years. However, some opposition lawmakers have raised concerns regarding the long-term viability of purchasing power generated by the plant.

Beyond this project, South Korea is also considering developing up to eight large nuclear reactors in the U.S. and a long-stalled liquefied natural gas project in Alaska. Kim mentioned that South Korea might gain 5% to 10% voting rights in the U.S. nuclear company Westinghouse as part of the discussions for the reactor project.

He assured lawmakers that no investments would proceed if it risks exceeding the established $200 billion limit. While no timeline was provided for finalizing the Texas project, further discussions with Lutnick were mentioned as necessary.

According to reports, it’s likely Trump will personally announce this agreement before the midterm elections in November.