To deliver the AI data center on time, Oracle (Oracle) adopted unconventional energy supply methods to compensate for pipeline delays, but high costs and capacity expansion bottlenecks remain concerns.
On October 8th, according to Bloomberg, Oracle is transporting compressed natural gas by truck to maintain the construction and operation progress of several of its AI data centers, in order to avoid time losses caused by delays in pipeline infrastructure.
This unconventional strategy has already been implemented in Utah and Texas, and is being considered for introduction into key projects in New Mexico. Oracle's free cash flow is currently negative, and it is expected to remain under pressure until more AI data centers are completed and put into use.
Oracle's stock price closed down 5.5% on Thursday, at $135.69, marking the largest single-day decline since July 16.
Meanwhile, the stock price of Bloom Energy, which has a fuel cell energy supply collaboration with Oracle, tumbled by over 6% on the same day, indicating a clear increase in market concerns regarding the pace of Oracle's data center expansion and the prospects for the implementation of related collaborations.
There are precedents for supplying gas to trucks: Utah and Texas were the first to implement this initiative.
This is not the first attempt at oracle bone inscriptions.
It is reported that, according to sources familiar with the matter, in a data center project in the suburbs of Salt Lake City, Oracle managed to maintain normal progress for over a year by using trucks for transportation. The related services were provided by Certarus, which is under the umbrella of Superior Plus.
Certarus indicates that the timeline for integrating data centers with the power grid is continuously extending, 'creating an increasing demand for energy solutions that are quickly deployable and flexibly scalable.'
In the data center park built for OpenAI in Shackelford County, Texas, Oracle also adopted this solution, with VoltaGrid LLC as the supplier. Oracle wrote on social media:
"Thank to the VoltaGrid team for finding a cost-effective power supply solution, ensuring that customers can use the computing power of OCI (Oracle Cloud Infrastructure) on time."
The nodes with the highest concentration of pressure are located in New Mexico.
Wall Street Journal mentioned that a data center project with the code name “Project Jupiter” is facing serious delays in its pipeline construction. The pipeline operator Energy Transfer LP was forced to re-plan the route due to the original route being rejected by New Mexico’s regulatory authorities, resulting in an expected deployment time being postponed from this summer to next year.
To adhere to the project schedule, Oracle is considering delivering compressed natural gas to the data center via truck, allowing the facility to begin operations in the early stages before the pipelines are officially connected to the grid. The urgency of the situation is evident: last month, Oracle issued a force majeure notice to the project developer, and if subsequent delays continue, this move may exempt the company from some of its payment obligations.
High costs and scale limitations: not a sustainable solution in the long run
Truck luck is not a cheap solution.
According to the estimates of Jack Weixel, the senior energy analysis director at the energy analysis firm East Daley Analytics, the cost of compressed natural gas delivered by truck, including labor, specialized equipment, and vehicle fuel, is approximately four times that of natural gas at major pipeline hubs.
Natural gas must first be extracted from pipelines, compressed, and loaded onto trucks. After several hours of transportation, it is then depressurized and injected into generators. For a data center that operates continuously, this entire process means that truck scheduling needs to be carried out without interruption throughout the day.
The scale bottleneck also cannot be ignored.
According to analyst Ellie Holbrook from the energy analysis firm SemiAnalysis, if Oracle provides 100 megawatts of power to “Project Jupiter” using compressed natural gas trucks, it would only account for about 4% of the project's total planned capacity of 2.45 gigawatts; each large truck could only support power supply for approximately 40 minutes. This means that dozens of trucks would need to be used for uninterrupted delivery every day.
For this reason, the transportation of compressed natural gas by truck was previously mainly limited to remote industrial scenarios such as mining and oil drilling, which are far from power grid access points. However, for Oracle, which has made commitments to customers like OpenAI and is in urgent need of delivering computing power on time, this may be the least costly transition option under the current circumstances.
