New Mexico Denies Gas Pipeline Permit for Oracle Data Center

Article content

(Bloomberg) — New Mexico regulators have rejected, for a second time, applications for a natural gas pipeline across state lands that would supply power systems at a planned Oracle Corp. data center project.

Article content

Approving the rights-of-way and business lease requested by pipeline operator Energy Transfer LP would not be “in the best interests” of the state, according to a July 14 letter from the New Mexico State Land Office.

Article content

Article content

The decision threatens to delay Oracle’s proposed data center, known as Project Jupiter, which is expected to be driven by as much as 2.5 gigawatts of gas-powered fuel cells from Bloom Energy Corp. The campus in Dona Aña County near the US-Mexico border, has prompted strong local opposition over environmental concerns, and is also facing pushback from regulators. 

Article content

Article content

While the project would “enrich Project Jupiter’s financial backers, developers and tenants,” as well as Energy Transfer, it would generate little revenue for the state while consuming significant amounts of water in an arid region, and likely accelerating climate change, New Mexico Commissioner of Public Lands Stephanie Garcia Richard wrote in the letter to Energy Transfer.

Article content

Article content

New Mexico lawmakers said this month they’re considering introducing legislation that would impose a statewide moratorium on large-scale data centers. That would follow New York, which this week became the first state to do so, with a one-year ban on building more of the energy-hungry facilities. 

Article content

The New Mexico commission initially denied the applications in March, and Energy Transfer requested the following month that the agency reconsider its decision. 

Article content

Energy Transfer continues “to work through the permitting requirements as we move this project forward,” a spokeswoman said by email. 

Article content

The 17-mile (27 kilometer) pipeline, dubbed the Green Chile Project, would move up to 400 million cubic feet per day of gas to the data center. Oracle in May asked federal regulators to expedite a review of the pipeline so Energy Transfer could meet an in-service target date of August 15. If the pipeline is not able to enter service by this time, “costs would increase substantially,” the tech giant said.

Article content

Article content

The pipeline is now unlikely to meet that deadline, but the companies may be able to pursue alternatives, according to Josh Garcia, senior North American gas analyst at Energy Aspects. 

Article content

“We were always pessimistic on it entering service this year and thought next year would be the earliest it could be built,” Garcia said by email Thursday. “They can reroute the pipe around the state land. but they would have to negotiate a different right of way and leases with whoever owns the land. If it’s a private owner, the project could move forward faster, but if the owner does not want it built, the project could be dead in the water.”

Article content

Oracle didn’t immediately respond to a request for comment.

Article content

—With assistance from Brody Ford and Nathan Risser.

Article content