Oracle's $165 Billion Data Center Project Delayed by Gas Pipeline

Oracle's AI data center project in New Mexico has been delayed due to the schedule of a natural gas pipeline. The Project Jupiter, estimated to be worth up to $165 billion (approximately 234 trillion won), highlights that infrastructure projects require coordination of power, gas, water, and permits before server installation can begin.

Oilprice reported on the 14th (local time) that Energy Transfer's subsidiary, Transwestern Pipeline, has postponed the expected operational date of the Green Chile Project from August 15, 2026, to February 1, 2027. This pipeline is the infrastructure that supplies natural gas to Project Jupiter in Dona Ana County, New Mexico.

Project Jupiter is an AI data center campus being developed by Oracle and BorderPlex Digital Assets. Public FERC documents indicate that this project is linked to an investment of up to $165 billion, over 4,000 construction jobs, and 1,500 permanent jobs.

In a statement on April 27, Oracle announced that Bloom Energy's fuel cells would be used as on-site power facilities. At that time, Oracle and Bloom Energy announced an expansion of fuel cell supply of up to 2.8 GW, proposing to convert existing gas turbine and diesel generator designs into fuel cell microgrids.

The bottleneck is not the fuel cells themselves but the fuel supply chain. Data Center Dynamics reported that the Green Chile Project is designed to supply up to 400,000 Dth, approximately 400 million cubic feet, of natural gas to the site daily. Although fuel cells do not operate on combustion, the current plans assume the supply of natural gas and pipeline permits.

The Green Chile Project is part of a solution for on-site power generation as the power demand of data centers becomes difficult to manage solely through existing power grid connections. While having the data center's own or adjacent power facilities can reduce transmission bottlenecks, it is challenging to avoid separate regulatory processes related to fuel procurement, air quality permits, and land crossing rights.

The New Mexico State Land Office announced on July 15 that it had again denied Energy Transfer's request for reconsideration. The application concerned a 0.6-mile section of the 17-mile pipeline that crosses state land.

Stephanie Garcia Richard, the New Mexico Land Commissioner, stated in a press release that "large-scale AI data centers can rapidly deplete essential natural resources like water and generate high emissions in the process of securing operational power." The state land office cited concerns over water resource burdens, greenhouse gas emissions, and compliance with the interests of state trust lands as reasons for the denial.

Oracle emphasizes the local economic impact of the project. In a statement on July 28, the company noted that Project Jupiter has already generated approximately $80 million (about 113.4 billion won) in state and county tax revenue, with long-term economic effects potentially exceeding $4.7 billion (approximately 6.6646 trillion won).

However, Oracle noted at the end of the same announcement that projections regarding tax revenue, employment, and investment are contingent upon air permits and pipeline approvals. This creates a scenario where the company's economic impact claims clash with the state government's environmental and land management assessments within the same permitting process.

Power design plans are also undergoing public review. Oracle announced on June 3 that the New Mexico Environment Department had moved the revised air quality permit application to the public review stage. The company explained that the new design would reduce nitrogen oxide emissions by approximately 92% compared to the existing gas turbine plans and would not use drinking water sources for cooling and power generation.

OpenAI has also been mentioned as a background partner in Project Jupiter. As the demand for AI model training and inference grows, data centers are evolving into businesses that encompass not only servers and semiconductors but also power procurement methods, cooling water usage, local tax revenue, and land use issues.

Market reactions have been limited, but interest in related stocks has emerged. Stocktwits reported that following the state land office's re-denial on July 15, the volume of messages related to Oracle and Bloom Energy doubled within 24 hours. However, this reflects a community trading platform's response and does not imply that changes in project schedules will determine stock price directions.

For domestic investors, this issue illustrates that investments in AI infrastructure are not solely about semiconductors and cloud contracts. Earlier reports indicated that the share of data centers in the backlog of Texas power grid connections has increased. The U.S. data center business is transitioning to a structure where power grid access, on-site generation, gas procurement, and local government permits simultaneously influence pricing and schedules.

This situation demonstrates that even if the expansion of AI data centers shifts to on-site generation outside the power grid, it is challenging to avoid permitting risks. The schedule impact of Project Jupiter will depend on the operational goals of the Green Chile Project set for February 1, 2027, and the results of the revised power plan review.

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