Technology

Oracle’s AI Data Center Waits On New Mexico To Approve The Power It Promised To Bring

Oracle chief technology officer Larry Ellison, Oracle Corporate Communications, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons

Oracle is preparing for possible delays at its New Mexico artificial intelligence data center as state officials have yet to approve its power supply.

The company sent the developer of its Project Jupiter campus a notice that would let Oracle delay payments if the campus misses its 2028 target to come online, Bloomberg reported Thursday. The New Mexico Environment Department has not appointed a new independent hearing officer for the air quality permit covering the campus’s gas-powered fuel cells, department communications director Drew Goretzka told the Daily Caller News Foundation.

The previous officer recused himself in August, Source NM reported.

Goretzka said the new officer will set the hearing schedule once appointed and that Nov. 23 remains the department’s deadline for a permit decision.

Oracle said in a statement to CNBC that “Project Jupiter remains on our planned schedule.” Blue Owl Capital, whose unit is developing the campus and received the notice, told the outlet it does not change the financial commitments to the project.

Oracle also removed BorderPlex Digital Assets, one of the project’s land and power partners, from the development, The Wall Street Journal reported Friday.

Oracle was one of seven technology companies that signed President Donald Trump’s Ratepayer Protection Pledge on March 4, committing to build, bring or buy all the power their data centers need and to pay its full cost, the Environmental Protection Agency (EPA) said in a July 23 release.

“The whole point of the Ratepayer Protection Pledge is that if you bring your own power, you can just do that,” Chris Johnson, president of the American Energy Leadership Institute, told the DCNF.

Johnson said that requiring companies to get permission from a governor or regulator after they have committed to supplying and paying for their own power “just seems like fundamentally un-American.”

Democratic New Mexico Land Commissioner Stephanie Garcia Richard rejected Energy Transfer’s applications in March to run 0.6 miles of a 17-mile gas pipeline for the campus across state trust land, Pipeline & Gas Journal reported. She denied the company’s request to reconsider on July 14.

Garcia Richard wrote that building gas infrastructure to serve Project Jupiter was “a poor use of New Mexico state trust lands and staff resources.”

“It’s hard not to see that as explicitly political,” Johnson said of the denials.

Johnson said he did not want to guess at officials’ motives, but that it was hard to read the denials any other way for a project that runs on natural gas.

The New Mexico State Land Office and Oracle did not respond to the DCNF’s requests for comment.

Garcia Richard is running for lieutenant governor this fall on the Democratic ticket led by former Interior Secretary Deb Haaland, the party’s nominee for governor, Source NM noted.

Energy Transfer told federal regulators in August that the pipeline’s expected in-service date had moved from that month to February 2027, Source NM found in the filings.

“We continue to work through the permitting requirements as we move this project forward,” an Energy Transfer spokesperson told the DCNF.

Johnson said the pipeline delay worries him more than the air permit, because the point of building power on site is to avoid depending on outside infrastructure.

“It kind of negates the benefits, at least to the company itself, of providing their own power,” he said.

Johnson said Oracle could make “a pretty credible case” that state regulators are “potentially acting … in bad faith or are being unnecessarily burdensome in a way that was not predictable by Oracle.”

“It’s not like Oracle is not used to building these things. I mean, they’ve been building data centers for decades,” he said.

Johnson, who said he had not closely studied New Mexico’s permitting rules, argued that environmental permitting in many Democratic-led states is designed around “the process itself” instead of results.

“The process for them is the ends. It’s not actually protecting the environment,” he said.

Project Jupiter is one of the flagship sites of Stargate, the AI infrastructure venture Oracle, OpenAI and SoftBank announced with Trump early in his second term, TechCrunch reported.

The New Mexico Supreme Court on Sept. 17 lifted an August pause on the permit case without explanation, according to Source NM.

Mark Mills, executive director of the National Center for Energy Analytics and author of “The Cloud Revolution,” told the DCNF that the fight over data centers “has become political.”

“I think if we mapped it out, you probably find that there are more of the blue states that oppose or try to oppose than red states,” Mills said.

Mills said some concerns raised by Democratic governors and members of Congress, such as how data centers will affect the grid, are valid, while others, including warnings about water use, are “prima facie specious and not true.”

He said the test for New Mexico’s pipeline decision is whether the state has let gas lines cross the same land for other customers. If it has but refuses one for a data center, Mills said, that is “bad on the state,” and if it has not, the developers were asking it to break precedent.

Mills explained that the pledge means a data center either builds and funds its own private grid or covers the full cost of the power it draws from the public system.

In both cases, he said, the consumer is “not bearing the cost.”

Mills noted that a private grid still needs land, air and water permits, which he distinguished from the approvals needed to connect to a utility’s system.

“Those permits are still needed, but they’re not permissions to get on the grid,” he said.

Mills argued that a Georgia-style arrangement, in which a data center pays its utility for all the new costs it creates, likely would not work in New Mexico because the state’s grid is too small to absorb a campus of this size.

He pointed out that the bigger driver of rising electricity bills in many states has been requirements that utilities add more wind and solar power, a policy that “has directly resulted in higher cost electricity.”

Mills said data centers are being blamed for higher bills because their announcements arrived as rates were already rising.

“The contemporaneous announcement to build these big data centers occurs at the same time as rates have gone up,” he added, calling state data center moratoriums “more political theater than substance.”

Asked whether Washington should override state permits for data centers, Mills said, “Well, there’s something called the Constitution, which has a lot to say on this matter.”

Johnson said most new data center construction outside Virginia is happening in states such as Texas, Ohio and Indiana, where the power plants to supply those facilities are also being built relatively quickly.

He compared companies that build in Democratic-led states to the frog in the fable of the scorpion and the frog, which is stung by the scorpion it agreed to carry across a river — causing the scorpion to drown.

“If you’re a big industry that uses a lot of energy … and you go into a blue state and you get stung in the end. It’s like, what do you think was going to happen?” Johnson said.

Trump expanded the Ratepayer Protection Pledge on July 23 to include governors, state legislators, developers and power providers, the EPA announced at the time.