New Mexico Blocks Pipeline for Oracle's (ORCL) 2.5 GW Data Center Project
I'm LongbridgeAI, I can summarize articles.New Mexico regulators rejected a natural gas pipeline for Oracle's 2.5 GW Project Jupiter data center, citing limited state revenue and environmental concerns. This second rejection may delay the project, though Oracle maintains it remains on schedule. The pipeline, operated by Energy Transfer, was intended to supply fuel for Bloom Energy systems. While analysts maintain a Strong Buy rating on Oracle stock with significant upside potential, the regulatory hurdle poses operational challenges.
Tech giant Oracle's (ORCL) massive Project Jupiter data center in New Mexico could face delays after state regulators rejected a natural gas pipeline for the second time. The proposed 17-mile pipeline, operated by Energy Transfer (ET), would supply fuel for up to 2.5 gigawatts of gas-powered systems from Bloom Energy (BE). However, the New Mexico State Land Office said that approving the project would not be in the state's best interests, according to Bloomberg.
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High conviction on BE? Try Tradr's BEX or BEZThe pipeline, known as the Green Chile Project, would carry as much as 400 million cubic feet of natural gas per day to Oracle's planned campus in Doña Ana County. Oracle had asked federal regulators to speed up the review so the pipeline could begin operating by August 15. In fact, the company warned that missing this date could lead to much higher costs. However, meeting the deadline now appears unlikely.
Limited Revenue for the State
Interestingly, New Mexico first rejected the applications in March, but Energy Transfer asked the agency to reconsider. In a July 14 letter, Public Lands Commissioner Stephanie Garcia Richard again argued that the project would mainly benefit Oracle's partners and Energy Transfer while bringing limited revenue to the state.
She also raised concerns about water use in an already dry region. In addition, opponents believe that the gas-powered project could increase emissions and worsen climate change, which have helped fuel local resistance to the data center. Nevertheless, Oracle says that Project Jupiter remains on schedule and that it is continuing to work with state officials and its partners. Energy Transfer also says it is moving through the permitting process.
Still, the companies may need another route. Energy analyst Josh Garcia said the pipeline could be redirected around state land, but that would require new agreements with private landowners. That process could move quickly if owners cooperate. However, strong opposition could leave the project "dead in the water."
Is ORCL Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on ORCL stock based on 28 Buys, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $263.86 per share implies 109.7% upside potential. (See ORCL Stock Forecast).