Oracle Turns Project Jupiter Power Risk Into a Rent Hedge

Oracle told the developer of Project Jupiter on Thursday it may defer rent if the New Mexico AI campus misses 2028. The company says it is still the tenant, still hiring, and still on its plan.

The fight that can actually stop the site sits in Santa Fe. An air permit, a twice-denied gas crossing, and a county tax deal written for off-grid power now sit in front of the megawatts Oracle sold OpenAI.

Oracle Files to Pause Rent if Power Slips

The notice went to STACK Infrastructure, the Blue Owl Capital unit building the 1,400-acre campus near Santa Teresa in Doña Ana County. People close to the contract say Oracle is not walking off the lease. It wants room to put off rent if the four-building campus is not ready to run in 2028 because power is late.

If both sides agree that a force-majeure event tied to power has occurred, Oracle could win a three-year delay before rent starts, those people said. That is a timing fight, and it is not the same as cancelling the campus.

Michael Egbert, an Oracle spokesman, said the paper is ordinary at this scale.

Force-majeure notices are commonplace in developments of this scale and are often used to preserve contractual rights among project partners. They do not, by themselves, establish a project delay or change delivery expectations.

Michael Egbert, Oracle spokesman

A Blue Owl spokesman said the notice does not change the financial commitments on the multi-year project and that the parties remain aligned. Oracle’s public account posted the same schedule line on Thursday, with a headcount the county can check against payroll.

Project Jupiter remains on our planned schedule. We are fully committed to New Mexico and confident in our path forward.

Oracle has made significant economic, community, and philanthropic investments in the state. This includes reimagining Project Jupiter’s power plan as part of…

— Oracle (@Oracle) September 24, 2026

The post put more than 3,600 construction workers on site, including more than 1,000 New Mexico residents, with more than 900 hires in August and more than 2.8 million hours logged. It also kept STACK in the picture as a partner. Mahesh Thiagarajan, an Oracle executive vice president, told county commissioners on September 9 the job was 26% complete.

WHAT WE KNOW

• The tenant: Oracle remains the main occupant and says it will put OpenAI infrastructure in the four buildings.
• The paper: The notice is written to delay payments if the campus misses 2028, not to end the lease.
• The site: Crews are pouring a campus that county agreements still describe as a private microgrid paid by the companies, not by local ratepayers.

WHAT IS UNCONFIRMED

• The rent holiday: A three-year pause only works if Oracle and Blue Owl agree that a force-majeure event tied to power has occurred.
• The carry cost: People close to the financing say Oracle can still owe a carry payment that helps cover debt service even if the halls have no electricity, because the power-delivery risk sits with the tenant.
• The 2028 date: Oracle says delivery expectations have not changed. The gas line’s own calendar has already moved.

That split is the whole story in one frame. Steel is going in the ground in Santa Teresa while the clock that starts rent is being lawyered in case the fuel never arrives on time.

A 0.6-Mile Stretch of State Land Blocks the Gas

The campus is designed around an on-site plant, not a quiet tap on El Paso Electric. After local anger at turbines and diesel, Oracle, BorderPlex Digital Assets, and Bloom Energy switch the campus to Bloom Energy fuel cells rated at 2.45 gigawatts. The cells still burn pipeline gas. Opponents told the state the array would run on about 2,275 stacks and draw about 400 million cubic feet of gas a day.

Energy Transfer’s Transwestern unit planned a 17-mile Green Chile lateral from the El Paso system to feed that plant. Most of the route crosses federal and private land. The piece that died is short: 0.6 mile of state trust land, two rights-of-way, and a business lease.

Land Commissioner Stephanie Garcia Richard denied the pipeline crossing on state land in March, then denied it again on July 14. She said the line offered little for trust beneficiaries and too much risk for water and emissions.

In New Mexico, we truly mean it when we say ‘water is life.’ We can’t live without it and we know how precious and rare it is in our dry climate. Massive AI data centers like Project Jupiter can rapidly deplete critical natural resources like water and threaten ecosystems by generating shocking levels of emissions to power their operations.

Stephanie Garcia Richard, New Mexico Commissioner of Public Lands

THE GREEN CHILE LINE’S CALENDAR

1. March 20, 2026: The State Land Office cancels Energy Transfer’s rights-of-way and business-lease filings for the 0.6-mile trust-land segment.
2. July 14, 2026: Garcia Richard denies reconsideration and says the remaining path is an administrative appeal.
3. August 2026: The line’s planned in-service window slips; Transwestern had aimed to flow gas in August.
4. October 5, 2026: Public comments close on a Federal Energy Regulatory Commission staff environmental assessment that found no significant federal environmental impact, which is not a final permit.
5. February 1, 2027: Energy Transfer’s reset in-service date for the lateral.

Adam Arthur, who runs Energy Transfer’s liquids business, told analysts in August the company was in constant contact with regulators and was confident the line would enter service. Mackie McCrea, the firm’s chief executive, called the fight a data-center protest more than a classic pipeline fight. Energy Transfer later said it continues to work through permitting. How it replaces the trust-land slice, by a reroute onto private land or by an appeal, is still not on paper.

A permit denial on less than a mile of dirt is a thin reason to call the heavens. It is a very good reason to freeze a rent date. Building a gas-fed campus in a dry border county was a siting choice. Force majeure is the clause companies reach for when they want that choice treated as something that happened to them.

Tax Breaks Built Around a Private Microgrid

Doña Ana County did not sign a generic cloud deal. The industrial revenue bonds and related agreements, summarized in the county’s own published Project Jupiter company commitments, assume the campus makes its own power and pays for it.

The on-site microgrid is supposed to leave existing customers’ bills and reliability alone. HB93 still pushes qualified microgrids toward net-zero carbon by 2045. Potable water for full buildout is capped at an average 20,000 gallons a day and a peak of 60,000, with closed-loop cooling and company-funded line extensions along Highway 136.

COUNTY PAPER VERSUS ORACLE’S LATER NUMBERS

Those job lines are not a contradiction if they are read as a lease floor and a later corporate estimate. The dates are harder. The county’s first-capacity window is the fourth quarter of 2026. Oracle’s own customer-delivery language for Doña Ana is the first half of 2027. The force-majeure notice is aimed at a 2028 miss. Three clocks, three documents, one campus.

Commission Chair Manuel Sanchez has already flagged the grid as a problem for the paperwork, not just for physics. The bond deal and the community benefits agreement were built around on-site generation. If Oracle has to take El Paso Electric power for daily load, he said, the commission would have to talk through amendments. Precinct 5 Commissioner Manny Sanchez said Thursday that Oracle had not notified the county of any Project Jupiter update and that he still expects the payments in lieu of taxes: $12 million a year for 30 years, or $360 million.

That $360 million is the same stream Josh Pitcock, Oracle’s senior vice president for government affairs, listed as direct county payments in a July 2 letter, alongside $50 million to repair local water systems and more than $6.9 million in other community funds. The county’s cash calendar does not move just because rent between Oracle and STACK might.

What the November Air Permit Decision Controls

Yucca Growth Infrastructure still needs New Mexico Environment Department Air Quality Permit 10883 before the fuel-cell plant can legally run. NMED has until November 23 to decide. The New Mexico Supreme Court paused that case in August, then lifted the stays on September 17, clearing opponents’ bid to freeze the hearing. The department still has to seat a hearing examiner and set a date.

Pitcock’s comments urging approval of the updated air permit are the cleanest statement of what Oracle says changed after January, when the file still described turbines and diesel.

CUTS ORACLE CLAIMS VERSUS THE JANUARY FILE

• Nitrogen oxide: About 92% lower.
• Carbon monoxide: 67% lower.
• Volatile organic compounds: 38% lower.
• Particulate matter: 83% lower.
• Carbon dioxide: 21% lower.

The same letter is blunt about fuel. The cells use natural gas now because it is available at this scale, with hydrogen or biogas treated as a later option if those fuels exist in the volumes the campus would need. Cooling is direct-to-chip, closed-loop, and non-evaporative. Pitcock said neither the halls nor the cells would draw Camino Real Regional Utility Authority drinking water, only non-potable well water from an existing rights holder, with public supply limited to kitchens and restrooms.

Opponents still read the file as a methane plant. New Energy Economy told the court the hearing was rushed and that the gas supply was not legally in hand after the land-office denials. Executive Director Mariel Nanasi said a developer should not get to manufacture an emergency and then use it to strip public participation. Greenhouse-gas estimates in the public fight moved from more than 10 million tons a year to 8.8 million tons in later notices. Either number is a county-scale stack, which is why the November decision is not a paperwork footnote.

Oracle has already told commissioners what it might do if NMED says no. A company representative said the current plan has not changed, but that a grid provider would have to be worked if the air permit failed, and that any El Paso Electric hookup should lower local rates rather than raise them. That fallback collides with the microgrid deal Sanchez described. It also collides with the force-majeure theory, because a tenant that can take utility power is in a weaker place to call the lights an act of God.

OpenAI’s New Mexico Megawatts Wait on Fuel

Project Jupiter is one site in the Stargate build Oracle is doing with OpenAI and SoftBank. Oracle confirmed itself as tenant on January 23 and said it would deploy AI gear for OpenAI across the four halls. On the fiscal 2026 year-end call, co-chief executive Clay Magouyrk walked through five large campuses and put Doña Ana customer delivery in the first half of calendar 2027, with the design based on gigawatts of Bloom cells. Abilene, Texas, was already delivering capacity. New Mexico was still a power-design slide.

Oracle closed its latest quarter with remaining performance obligations of $664 billion. That backlog is a contract stack, not a row of humming racks. A New Mexico miss does not hit fiscal 2027 revenue, because this campus was never going to print 2026 cloud sales. It does move the later years in which those OpenAI megawatts were supposed to show up, which is why a rent hedge on one desert site is being read as a conversion test for the whole pile.

S&P Global Ratings cut Oracle to the lowest investment-grade rung in early July after the firm’s AI build outran earlier models. El Paso Matters, citing that review, put this year’s capital spending at $90 billion to $95 billion and pointed to about $260 billion in lease commitments expected to start between fiscal 2027 and 2029, mostly data centers, worldwide rather than Santa Teresa alone. Those leases are the silent twin of the New Mexico notice: rent that starts when halls are supposed to be live.

OpenAI can train in Texas while New Mexico argues about gas. It cannot treat 2.45 gigawatts in Doña Ana as inventory until the cells have both a permit and a pipe. The second-order hit is on timing, not on whether Oracle still wants the lease.

Project Jupiter Loans Trade Below 90 Cents

A bank group of almost 20 lenders put up about $18 billion for the campus. Those loans have been quoted at 89 to 91 cents on the dollar. That is the cash price of a delay Oracle will not name. A loan that still trades near par is a construction story. A loan in the high 80s is a calendar story.

MONEY AROUND THE SANTA TERESA SITE

Shares fell after the notice moved, then bounced as traders argued over whether a force-majeure filing is a delay or a footnote. Bloom Energy, whose cells sit at the center of the new power plan, was sold with it. The sharper tell is the loan. Twenty banks underwrote a 2028 energizing. The tape is already paying them like a later date.

People close to the financing add a clause the notice does not advertise. Even if rent is pushed, Oracle can still be on the hook for a carry cost that keeps lenders and some equity whole while the site waits for fuel. In that reading the tenant bought a pause on the big rent check and kept the power risk. That is a hedge. It is a very expensive hedge if the halls are finished and dark.

Commissioners Are Still Waiting on Basic Reports

Local patience ran out months before Thursday’s lawyers. In June, Economic Development Director Denisse Carter told the commission the project had missed quarterly job reports due January 31 and April 30 and had not turned over requested environmental agreements. Commissioner Susanna Chaparro put the names on the record and said she was still waiting for STACK, Bloom Energy, OpenAI, and Oracle to answer the board and the public. Board Chair Sanchez talked about calling bond counsel if the file stayed empty.

July’s update packed the chambers past the 30-speaker cap, with people in “No Data Centers” shirts chanting to be heard. Cyndy Haber told the board the companies had promised town halls and then moved the goalposts. Thiagarajan stood through questions on noise, water, hiring, and power and said Oracle wanted a decades-long partnership matched with accountability. Oracle later promised a public dashboard for air, noise, heat, light, and water once the campus is live, and up to $1 million for carbon-capture research. Dashboards do not replace the missing quarterly job reports.

The September 9 session was quieter and longer on the grid fallback. State Senate Minority Leader Bill Sharer showed up to back the campus and to warn against a statewide moratorium. Construction kept moving through the court stays, which is why aerials from June already show a scraped, fenced job, not a rendering. The political risk is now specific: a county that can withhold cooperation on easements, a land office that has already said no twice, and an environment department that still has to rule by November 23.

Oracle can keep saying the schedule holds, and the headcount on the dirt makes that claim less hollow than a pure press line. The gas still is not permitted across state land. The air file still is not signed. The county’s first-capacity window in the published commitments is the fourth quarter of 2026. Energy Transfer’s own line is now aiming at February 1, 2027. The force-majeure notice is how Oracle tries to keep rent from starting on a campus that can be built faster than it can be fed.

Disclaimer: This article is news reporting and analysis of a construction, permitting, and financing dispute. It is for information only and is not investment advice, legal advice, or a recommendation to buy, sell, or hold any security or loan. Readers who are considering Oracle, Blue Owl, Bloom Energy, Energy Transfer, or related credits should consult a licensed financial adviser, and anyone relying on the contracts or permits described here should consult a qualified attorney, before making any decision. Figures, permit dates, loan prices, and project status reflect the cited company, county, and state materials as they stood on the dates given and can change as regulators and the parties update their positions.