Back to Drawing Board for New Mexico Data Center Gas Supply Pipeline

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

The New Mexico State Land Office has rejected the proposed route for a natural gas pipeline that would feed the power plants supporting a large data center complex in southern New Mexico.

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Pipeline Path Rejected

A large data center being constructed in southern New Mexico just hit a stumbling block. Multiple media outlets report that the New Mexico State Land Office has rejected the proposed path of a 17.7-mile pipeline that would supply the power plants powering the facility, so it's back to the drawing board for the pipeline's developer, Energy Transfer.

The Data Center Complex

The multi-building data center, part of the multiple-campus Project Stargate throughout the U.S., is being constructed near Santa Teresa, New Mexico, led by Stack Infrastructure. Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database shows construction of a first building kicked off late last year and is expected to be completed before the year's end. Work on a second building is just starting, and work on two other buildings was expected to start later this year, but those plans may be extended until power-supply issues can be resolved. Subscribers can learn more by viewing the related project reports.

Each data center building will consume around 250 megawatts (MW) of power, and Stack planned to oversee construction of two supporting natural gas-fired power plants to supplement the campus' energy consumption.

The Power Plants

The data center buildings' power needs are planned to be primarily supported through two captive power plants with a combined 700 megawatts (MW) of generating capacity. Plans call for the 400-MW Jupiter West power plant to be built first, followed by the 300-MW Jupiter East power plant. Jupiter West would feature four natural gas-fired simple-cycle units, while the East site would feature three simple-cycle units. Clayco Incorporated is expected to head up the engineering, procurement and construction of both power plants. Subscribers to Industrial Info's GMI Project Database can learn more by viewing the related project reports.

The Pipeline

Those power plants were to be supplied by a 17.7-mile gas pipeline developed by a subsidiary of Energy Transfer, but the pipeline's proposed path has been rejected by New Mexico regulators. The primary cause of the rejection was Energy Transfer's proposed leasing of 0.63 miles of state trust lands, although most of the pipeline's route is on federal and private lands.

Late last month, the State Land Office rejected the proposed route, and Assistant Commissioner of Communications Joey Keefe said, "The Commissioner determined that approving the applications would not be in the best interest of the trust the State Land Office funds. The applicants will need to find a route for this proposed pipeline that does not cross through state trust lands," according to the Santa Few New Mexican. Energy Transfer says the project is still in early stage, and it is at work on an alternate route. While the entire multi-campus Project Stargate was announced only last year, developers are moving quickly on some of the campuses, and Energy Transfer informed the U.S. Federal Energy Regulatory Commission (FERC) that it planned to begin work on the pipeline soon after the close of a public comment period on April 15, aiming for the pipeline's completion by mid-August. Those near-term plans have now been delayed as Energy Transfer maps out an alternative pipeline path.

Unknown Effects

The pipeline's delay will have unknown effects on the overall campus' development, but work on future buildings could be delayed until an adequate fuel-supply source is worked out. And the entire undertaking still faces potential stumbling blocks, as the air-quality permits for the power plants haven't been granted and are not expected until late July, following a public hearing. Critics of the project such as Kacey Hovden of the New Mexico Environmental Law Center have noted that beginning work on the pipeline before the target facility is properly permitted may be an irresponsible action.

Power supplies were also a major consideration when Project Stargate developers opted not to proceed with the possible extension of the flagship campus located in Abeline, Texas. For more on that, see March 10, 2026, article - Flagship Stargate Data Center Campus Expansion in Texas is Questioned.

Key Takeaways

• The New Mexico State Land Office has rejected Energy Transfer's proposed route for a 17-mile pipeline to supply natural gas to two power plants meant to support a Project Stargate data center campus in New Mexico.
• The power plants consist of simple-cycle configurations, and an initial plant would generate 400 MW, followed by a second 300-MW plant.
• Energy Transfer must now provide an alternative route for the pipeline, which could cause delays to the campus' construction.
• A decision regarding the air-quality permits for the power plants has been delayed until July, following a public hearing.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 trillion (USD).