Oracle Data Center Project Hits New Mexico Roadblock

New Mexico denied a natural gas pipeline permit linked to Oracle's data center.

This article first appeared on GuruFocus. Oracle (ORCL, Financials), a U.S. software and cloud computing company, is facing another setback in New Mexico after state regulators rejected a permit for a natural gas pipeline linked to a planned data center. The pipeline was expected to supply fuel for power systems serving the site.

According to Bloomberg, regulators denied the rights-of-way and business lease needed to cross state-owned land. It was the second rejection of the proposal. The decision adds uncertainty to the project at a time when power availability has become one of the biggest challenges facing large data center developments.

AI and cloud facilities use significant amounts of electricity, and companies are increasingly competing for access to reliable energy sources. For Oracle, the ruling could mean a longer approval process, higher costs or changes to the project's energy plan. The company may need to revise the proposal, appeal the decision or look for another way to power the facility.

Investors will be watching for any update from Oracle or New Mexico officials on whether the project can move forward under a different plan.