Oracle’s $165 Billion Data Center Project Faces New Mexico Pipeline Delay

New Mexico: Oracle’s ambitious $165 billion data center expansion in New Mexico is facing a major infrastructure hurdle after a natural gas pipeline intended to supply power to the facility was pushed back by six months.

Transwestern Pipeline, a subsidiary of Energy Transfer, has moved the expected completion date of its Green Chile Project from August 15 to February 1, 2027, according to a regulatory filing.

The delay could complicate the timeline for Oracle’s Project Jupiter, a large proposed data center development in Doña Ana County near the US-Mexico border.

Project Jupiter is expected to rely heavily on on-site power generation rather than waiting for a traditional grid connection. The facility could require up to 2.5 gigawatts of electricity from Bloom Energy fuel cells, creating a substantial need for a reliable natural gas supply.

The Green Chile pipeline was planned to provide as much as 400 million cubic feet of natural gas per day to the project. That volume represents roughly 0.4% of total natural gas production across the Lower 48 US states.

Oracle had already warned federal regulators that the pipeline schedule was critical to the wider development. In a filing in May, the company stressed the urgency of the project and cautioned that delays to the gas infrastructure could put the broader construction timetable at risk.

Pipeline Route Faces Approval Problems

The pipeline project has also encountered regulatory obstacles in New Mexico.

The state's State Land Office has repeatedly refused to approve Energy Transfer's proposed route because a portion of the planned pipeline would cross state-owned land.

That dispute has become an important factor in determining how quickly the gas infrastructure can be completed and brought into service.

The situation highlights a growing challenge for the US artificial intelligence industry.

Technology companies are rapidly building large data centers to support AI workloads, but many of these facilities require far more electricity than existing power networks can provide quickly.

As a result, developers are increasingly turning to dedicated or behind-the-meter power generation. While that approach can reduce dependence on lengthy grid-connection processes, it creates another set of requirements, including fuel supplies, pipelines, environmental approvals and land permits.

Energy Transfer Already Supplying Oracle

Energy Transfer has already positioned itself to benefit from rising energy demand from data centers.

The company began supplying natural gas to an Oracle data center campus near Abilene, Texas, earlier this year. It has also signed agreements linked to more than 6 billion cubic feet per day of additional gas demand from data centers, utilities and power plants.

The developments demonstrate how the rapid expansion of AI infrastructure is creating new demand for natural gas alongside electricity.

For Oracle, however, the New Mexico project now faces an additional test: securing the fuel infrastructure needed to keep its planned power system on schedule.

The pipeline delay does not necessarily mean Project Jupiter will be cancelled, but it adds another layer of uncertainty to a development already facing regulatory and infrastructure challenges.

In Friday trading, Oracle shares fell about 4%, while Energy Transfer shares gained 1.4%.