Oracle’s $165 Billion Data Center Plan Hits a Gas Pipeline Delay

Oracle's ambitious $165 billion data center initiative in New Mexico has encountered an unexpected hurdle – a delay in the natural gas pipeline required to power the facility. The issue stems from the Green Chile Project's expected in-service date, which has been pushed back from August 15 to February 1, 2027, according to a regulatory filing released on Friday.

This six-month delay poses a significant threat to the schedule of Oracle's Project Jupiter, a proposed data center development situated in Doña Ana County near the U.S.-Mexico border. The scale of the project is considerable, with Project Jupiter potentially utilizing up to 2.5 gigawatts of gas-powered fuel cells, provided by Bloom Energy, while the Green Chile pipeline is projected to deliver up to 400 million cubic feet of natural gas daily to the site, accounting for approximately 0.4% of total Lower 48 U.S. gas production.

Oracle had warned federal regulators in May about the severity of the delay, stating that it could jeopardize the overall project. The New Mexico State Land Office has repeatedly declined to approve the proposed pipeline route, which crosses a small portion of state-owned land. This setback underscores one of the emerging constraints alongside the rapid growth of AI data center construction.

Developers are increasingly seeking dedicated power generation instead of relying on lengthy grid connections, yet back-of-the-meter power still necessitates fuel, pipelines, and permits. Energy Transfer, the subsidiary responsible for the pipeline, is already reaping the benefits of this transition. The company has begun supplying gas to an Oracle data center campus near Abilene, Texas, and has signed agreements for over 6 billion cubic feet of new demand daily across data centers, utilities, and power plants. Oracle's stock experienced a 4% decline on Friday, while Energy Transfer shares gained 1.4%.