New Mexico regulators reject Oracle’s pipeline application again, threatening AI data center plans

New Mexico’s Land Commissioner Stephanie Garcia Richard has denied Energy Transfer’s applications for a second time to build a natural gas pipeline segment that would fuel Oracle’s ambitious AI data center project. The rejection, which came on July 14, creates a significant obstacle for one of the largest planned data center developments in the country.

The decision follows an initial denial back in March, making it clear that state regulators have fundamental concerns about the project’s impact on state trust lands, emissions, water usage, and resource protection.

What’s actually at stake

The pipeline segment in question covers roughly 0.6 miles of state land.

The rejected ‘Green Chile’ pipeline would deliver natural gas to Project Jupiter, Oracle’s planned AI data center complex spanning approximately 1,400 acres with a targeted capacity exceeding 2 gigawatts.

Oracle has tried to sweeten the deal. The company says over 440 New Mexico residents are already employed on-site. The full buildout promises 4,000 construction jobs and 1,500 permanent positions. Oracle has also committed $50 million to local water system improvements.

Garcia Richard’s office concluded the pipeline applications didn’t demonstrate sufficient benefits to state trust lands, which the commissioner is legally obligated to protect and manage for revenue generation.

The energy puzzle gets messier

Oracle has already pivoted its fuel strategy to rely on Bloom Energy fuel cells, a cleaner-burning alternative to traditional power generation. But those fuel cells still need natural gas delivered to them.

The company has also set a target of 100% carbon-free electricity for its facilities by 2035.

Energy Transfer now has a 30-day window to appeal the denial.

Why crypto and tech investors should pay attention

The rejection also highlights a growing tension that investors need to price in. A project promising 1,500 permanent jobs and $50 million in water infrastructure used to be the kind of offer that got rubber-stamped.

For companies like Oracle, the risk calculus is shifting. Alternative energy sourcing strategies add cost and complexity. Project delays erode returns on massive capital expenditures.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.