For the second time, New Mexico Land Commissioner Stephanie Garcia Richard has denied Energy Transfer’s application to build a natural gas pipeline segment that will power Oracle’s ambitious AI data center project. The rejection, made on July 14, was a major setback for one of the largest data center developments planned in the country.
The decision follows an initial rejection in March that revealed state regulators had fundamental concerns about the project’s impact on state trust lands, emissions, water use and resource conservation.
what’s actually at stake
The pipeline section in question covers approximately 1.0 km of state-owned land.
The rejected Green Chile pipeline would provide natural gas to Oracle’s Project Jupiter, a roughly 1,400-acre AI data center complex with a targeted capacity of more than 2 gigawatts.
Oracle is trying to take advantage of the deal. The company says more than 440 New Mexico residents are already employed at the site. Full construction promises 4,000 construction jobs and 1,500 permanent jobs. Oracle also committed $50 million to improve local water systems.
Garcia Richard’s office concluded that the pipeline application did not demonstrate sufficient interest in state trust lands that the Secretary has a legal obligation to protect and manage for revenue generation.
The energy puzzle becomes even more complex
Oracle has already shifted its fuels strategy, relying on Bloom Energy fuel cells to provide a cleaner-burning alternative to traditional power generation. But those fuel cells still need to be fed with natural gas.
The company has also set a goal of making the electricity at its facilities 100% carbon-free by 2035.
Energy Transfer now has 30 days to appeal the denial.
Cryptocurrency and why tech investors should pay attention
The rejection also highlights the growing tensions that investors need to price into. The project, which promises 1,500 permanent jobs and $50 million in water infrastructure, was once a rubber-stamped proposal.
At companies like Oracle, the risk calculus is changing. Alternative energy procurement strategies increase cost and complexity. Project delays erode returns on large capital investments.
