Oracle could delay some rent payments for up to three years if Project Jupiter’s power supply is not ready on time, according to a force majeure notice the technology company sent to the developer of the massive data center under construction near Santa Teresa, according to reporting from Bloomberg.
Oracle said its data center plans haven’t changed. But the force majeure notice comes as two essential parts of the data center’s planned power generation system – an air permit for a 2.45-gigawatt fuel-cell power plant and a new natural gas pipeline to fuel it – have faced delays and permitting hurdles and remain unresolved.
Bloomberg first reported Wednesday that Oracle had sent the force majeure – a notice citing unforeseen circumstances that will impact contractual obligations – to the Project Jupiter developer, Stack Infrastructure. The notice is Oracle’s attempt to avoid payment obligations if the data center doesn’t start operating as expected in about two years. Stack is owned by the investment firm Blue Owl Capital. Stack Infrastructure did not respond to a request for comment.
In a statement, Oracle said Project Jupiter remains on schedule and that the company is “fully committed to New Mexico and confident in our path forward.”
“Force-majeure notices are commonplace in developments of this scale and are often used to preserve contractual rights among project partners,” Oracle spokesman Michael Egbert said. “They do not, by themselves, establish a project delay or change delivery expectations.”
Citing unnamed sources, Bloomberg reported that Oracle could win a three-year delay before it has to make rent payments if the company and Blue Owl agree to a force majeure event “tied to meeting power commitments”.
In the tax break agreements between Doña Ana County and Project Jupiter, the companies developing the data center committed to bring a first phase of the facility into operation between October and December of this year, and complete the entire campus and power plant by the third quarter of 2028.
Doña Ana County officials did not respond to a request for comment.
Precinct 5 County Commissioner Manny Sanchez said in an interview Thursday that Oracle has not notified the county of any updates on Project Jupiter. He said he expects the company to continue fulfilling its commitments to the county and making payments in lieu of taxes; the agreement calls for the developers to pay $12 million in flat payments to Doña Ana County, annually, for 30 years.
Power plant, gas pipeline awaiting approvals
Oracle and its partners plan to power the campus using a huge array of Bloom Energy fuel cells capable of producing up to 2.45 gigawatts of electricity on site. The proposed power plant would run on natural gas delivered through a new pipeline.
The New Mexico Environment Department has not yet issued the air permit needed to operate the fuel-cell system. A public hearing on the permit was set to begin this month but was on hold for several weeks amid lawsuits filed by opponents of Project Jupiter before the New Mexico Supreme Court. The court last week cleared the way for the permitting process to resume, although the state still has to appoint a hearing examiner and set a hearing date.
The company developing the proposed gas pipeline has already pushed back the schedule for bringing the pipeline into operation.
Transwestern Pipeline, a subsidiary of Dallas-based Energy Transfer, initially expected the roughly 18-mile Green Chile pipeline to begin service last month. Transwestern has since pushed its expected in-service date to February. The New Mexico State Land Office has twice rejected Energy Transfer’s attempt to have the pipeline cross a 0.6-mile stretch of state trust land, arguing the pipeline would not benefit state lands.
How Energy Transfer will overcome the state’s denial is unclear. In an Aug. 4 earnings call with Wall Street analysts, an executive with the company declined to provide specifics about the pipeline status, but said Energy Transfer was working with federal regulators and other stakeholders.
“We’re in constant communication with them and are very confident that this pipeline will be put into service and will be ultimately successful,” said Adam Arthur, head of the company’s liquids business.
On the same call, Energy Transfer chief executive Mackie McCrea said opposition to the Project Jupiter pipeline is part of broader activism against data centers tied to climate change concerns.
“A lot of those same environmental activists are also shifting over, and now they’re trying to stop data centers,” McCrea said. “This, we believe, is much more of a data center focused kind of protest activity.”
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In a statement to El Paso Matters, Energy Transfer said: “We continue to work through the permitting requirements as we move this project forward.”
The pipeline has made progress at the federal level. Staffers with the Federal Energy Regulatory Commission this month completed an environmental assessment of the pipeline project and concluded its approval would not negatively affect the environment. That’s not a final regulatory approval; public comments on the environmental review remain open through Oct. 5.
Bloomberg reported a consortium of almost 20 banks provided a loan of $18 billion to Oracle to pay for construction of the data center campus.
Oracle’s broader AI spending has also prompted scrutiny from credit analysts.
S&P Global Ratings in early July downgraded Oracle to the lowest investment-grade credit rating. In a note, S&P credit analysts said they had underestimated the scale of the company’s AI infrastructure investment and the financial consequences.
Oracle’s capital spending has ballooned to between $90 billion and $95 billion this fiscal year, compared with S&P analysts’ previous expectation of $60 billion. For comparison, over the three fiscal years from 2022 through 2024, Oracle spent a combined $20.1 billion on capital expenditures.
Meanwhile, Oracle is expecting to see cash flow this fiscal year of negative $42 billion, compared with the S&P analysts’ estimated cash flow of negative $27 billion for this year.
Oracle’s bet is on having new data centers available in the coming years when customers expect; S&P estimated that Oracle has about $260 billion in lease commitments expected to begin between fiscal years 2027 and 2029, primarily related to data centers Those figures cover Oracle’s worldwide operations, not just Project Jupiter.
What about Meta?
Meta’s data center under construction in Northeast El Paso also still faces a major hurdle before it can go into operation: El Paso Electric has to win permission from the Public Utility Commission of Texas to build the so-called McCloud power plant next to the data campus at a cost of $500 million.
The McCloud plant would be made of 813 small gas-fired generators producing 225 megawatts, which would meet a portion of the Meta facility’s electricity demand.
On Wednesday, two administrative judges recommended the PUC deny El Paso Electric permission to build McCloud – unless the utility agrees to have Meta pay the full cost of the plant for as long as it operates.
El Paso Electric wants Meta to pay for McCloud and the electricity it produces for five years, and then after that shift the plant to serve the entire power grid and spread the cost out among all ratepayers.
El Paso Electric “did not show that the McCloud facility is a cost-effective and reliable resource to meet either (Meta’s) need or the need of EPE’s broader customer base,” wrote Cassandra Quinn and Arthur D’Andrea, the administrative law judges overseeing the McCloud case.
Both judges “recommend that the Commission approve the (construction) application only if it is conditioned on EPE holding its customers harmless from the capital and operating costs” of McCloud.
El Paso Electric did not respond to a request for comment.
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