A massive data center planned by OpenAI and Oracle in southern New Mexico shows the new dynamic influencing pipeline investments in the Permian Basin.
The two technology companies are partnering in Project Jupiter, a four-building data center campus located in Santa Teresa, NM. The facility in Doña Ana County will be developed and operated by BorderPlex Digital Assets and Stack Infrastructure, which plan to construct an onsite natural gas–powered microgrid capable of supplying 700–900 MW of generation directly to the campus.
The companies intend to invest more than $165B over 30 years, making Project Jupiter one of the largest private technology investments proposed in the Southwest. In the Data Center Demand Tracker, East Daley Analytics expects the full campus to be in service by October 2029 and to consume 110–140 MMcf/d of gas once fully operational.
Kinder Morgan’s (KMI) El Paso Natural Gas (EPNG) system could benefit from this new demand. EPNG’s South Mainline runs through Doña Ana County and transports Permian gas across southern New Mexico (see basin and regional pipeline map from Energy Data Studio). However, East Daley’s West Coast Supply & Demand model shows the South Mainline is fully utilized seasonally. A second option is Energy Transfer’s (ET) new Desert Southwest expansion on Transwestern Pipeline, which is expected to add at least 1.5 Bcf/d of takeaway capacity from the Permian toward Arizona and Southern California.
ET has been light on details for its latest pipeline, including the planned route. But in a project update on its website, ET lists Doña Ana County as a delivery point for Desert Southwest. Assuming the new pipeline traverses southern New Mexico, it could provide additional volumes to the county and support Project Jupiter’s demand. ET plans to start Desert Southwest by 4Q29, aligning with our forecast for Project Jupiter’s full in-service date and underscoring the region’s emergence as a key growth corridor for Permian gas and infrastructure investment.
The Permian is likely to be the primary gas source for Project Jupiter. However, the San Juan Basin could play an indirect role, by backfilling system volumes. While the San Juan lacks a direct connection to Doña Ana County, the basin’s production could help meet power and industrial demand in northern New Mexico or Arizona, effectively freeing up Permian gas to serve load growth from new developments like Project Jupiter farther south.
New pipeline capacity will be critical as new data center and power generation load emerges in the Southwest. The West Coast depends on supply from the Permian both for baseload demand and to fill storage in the Pacific region for peak winter use. As Project Jupiter and other data center campuses come online, summer injections will increasingly compete with baseload power and industrial demand for Permian gas. – Kritika Gaikwad Tickers: ET, KMI.
The Permian Basin at a Crossroads: Download the Latest White Paper
The Permian Basin is the heart of the US energy industry, supplying half of crude oil and NGL production and nearly 20% of natural gas. Yet market pressures are forcing changes, prompting billions in new pipeline investments and reorienting how operators approach the basin. East Daley’s new white paper, The Permian Basin at a Crossroads, is the first of a 3-part series looking at the shifts underway in the Permian. In this series, we reveal how LNG demand and AI data centers could transform Permian gas into a primary revenue driver. We also review the multi-billion-dollar infrastructure needed to unlock this shift, and what’s at stake for oil, gas and midstream operators. — Click here to download the The Permian Basin at a Crossroads white paper!
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