<<John>> Welcome to tonight's program Coming to you from the Basin PBS Anwar family studio.

I'm John Moesch, Basin PBS board member and tonight, we're going to hear from a few local leaders and experts on what has become a hot topic.

Data centers.

Data centers are not new.

They've been around since last century.

The first data center was built in 1945 by the Electronic Numerical Integration and Computer.

It was also known as NIAC, by the US military to calculate artillery firing tables.

This data center, called the mainframe, was specifically designed to house the NIAC at the University of Pennsylvania.

By the 1950s, additional facilities were built at West Point, the Pentagon and CIA headquarters.

In 1954, Bill Labs developed the first transistorized computer called TRADIC Transistor Digital Computer.

By 1955, IBM created its first transistorized computer, which was half the size, required significantly less power, and cost $83,210 to build.

By the 1960s, data centers or computer rooms were built in office buildings.

Now, as computers got smaller, mini and microcomputers began to replace mainframes.

Then in 1981, personal computers entered the scene.

[Cough] By the 1990s, traditional mainframes were replaced with the microprocessor boom, the birth of the internet and the development of client server computing models.

Old mainframe rooms filled up with microprocessor computers acting as servers, laying the foundation for the first in-house data centers.

Computers and technology were experiencing a significant boom, but with every boom, there's a bust.

The bust in the mid 2000s gave room for new technology, virtualization.

Companies had to tighten their expenses, streamline and innovate.

With that, innovation has evolved how we live, work and communicate with security, online presence, instant communication, cloud sharing, storage companies, entrepreneurs and families can share data now at a rapid speed.

[thud] But where is all that data kept?

Why do we need it and how does it get there?

Well, it's just a few of the questions we're going to tackle tonight with local experts.

And then we have a great panel tonight.

So please help me welcome Jonathan Harshman, Public and Government Affairs Adviser, Corporate Affairs, US southwest, Chevron USA, Inc.. Tom Manskey Director of Economic Development, Odessa Chamber of Commerce.

JJ Childress, Director of Strategy and Operations, Public Affairs, Americas Community Team, Microsoft.

Teresa Burnett, Executive Director, Monahans Chamber of Commerce.

And Judge Dustin Fawcett, Ector County judge.

Well, thank you all for being here.

We have lots to talk about.

So we're going to go ahead and get started.

It seems like data centers are fast approaching, but they've really been around in one form or another for decades.

So before we get into that, I want to first start with you, JJ.

People hear the term data centers, and I think some people are familiar with it, and I think others kind of wonder what the heck they are.

So let's start on a very basic level and say, what is a data center and why do we need them?

<<JJ>> Well, John, first of all, thank you for hosting us and having this conversation.

Uh, the entire, you know, Permian Basin region and Reeves County has really extended warm welcome.

And we're we're happy to be here.

But I thought you did a great overview.

When we think about data centers, data centers have been around for you know, a long time, uh, these were computers in rooms that that typically were housed in closets in office towers.

But as you kind of overlaid, the work that we do, the lives we live has demanded more and more computing power.

And as we've adopted these you know workloads the space you know required the computational power to uh to power modern life has really evolved.

So every time you go to the doctor, they pull up your chart.

They're using data center.

When your schools are taking attendance, typically going to be housed somewhere on the on the cloud.

Uh, again, this program is being streamed live on on YouTube and and Facebook uh Live, and and that is being powered by by data center.

So every you know aspect that we we touch, that [Cough] of our digital lives, that isn't happening directly on the phone or on a laptop is happening in the data centers.

So they're not new.

But what is new is the scale you know required.

And that's kind of what's driving you know this broader expansion that we have going on now.

- Because everything runs by data and I think people uh don't realize just we individuals use so much data every single day from the time we get up, the time we go to bed.

And so but these data centers also, um they housed different types of data, right?

Some run websites, some house banking information, somehow different types of information.

- Absolutely.

And that's one of the reasons why you need data centers have just the scale of infrastructure.

So one, as everything's got digitized, you need to place the store that, you know, think of your photos, think about your bank records.

It needs to be stored somewhere, but not just stored.

It needs to be secure.

And uh when you're talking about just physical security and and compliance, one of the big things that this infrastructure provides is the ability to have auditable security.

And it's one of the most secure facilities that you typically will step into.

Um, but yeah, there's multiple kinds.. There's traditional data centers, which is primarily storage and and broader you know cloud compute.

And moving into you know these broader scale uh investments in AI data centers, which uh is again, powering kind of this next wave of innovation that that we have as as AI, as a general purpose technology and like general purpose technologies that have come before, think, you know, the railroads, steam engine, electricity, it's kind of shaped how work is, is done, how how life has lived.

And uh we're we're at that that nexus here.

- And we really have to kind of be on a, in a position to really keep up with how fast the data is moving and, you know, sharing.

Right.

- Absolutely.

- Yeah.

All right.

State level moratoriums on data centers are also on the rise, including here in Texas.

Now, in August, Governor Greg Abbott directed ERCOT and state regulators to pause new grid connections for data centers, pending audits on water use, cooling and grid impact.

Now, the directive did not ban or restrict data centers based on physical size or megawatts.

Rather, it applies a regulatory pause to pending grid interconnection requests while state agencies evaluate resource demands.

Now, the order requires developers to disclose power generation plans, annual and peak electricity, water consumption, cooling types, tax incentives, and community impact reduction measures before moving forward.

Then, on Monday, September 21st, Governor Abbott directed the Texas Commission on Environmental Quality to halt all permits sought by data centers until uh ERCOT completes its audit.

Because the Public Utility Commission of Texas and the Texas Water Development Board require that information to make informed decisions, no state agency shall move forward with regulatory approvals related to data center development until it's acquired.

Simply put, “Texans must come first,” said Governor Abbott.

“Data centers must pay their own way, protect our grid, protect our water and complete the ERCOT and TWDB audits until they do.

TCEQ will issue no permits sought by data center projects.

So what is this new moratorium mean for new and existing uh projects Go to you Judge Fawcett.

<<Judge Fawcett>> Yeah.

So so great question.

And I'm glad we're having these discussions because there's a lot of challenges and trying to navigate what exactly is this moratorium.

And I think it's important to distinctly define the two different ones.

The first ones specifically applied to those that were trying to connect with the grid or ERCOT.

And I think the reason behind it really is one, we saw a Wild West approach.

It was kind of a combination of an industrial revolution with a gold rush coming here to Texas.

And for perspective, ERCOT currently operates at a capacity of about 100GW.

What we saw in the queue and what was being requested for capacity was over 400GW from data centers.

So seeing that, we knew that there's no way Texas can build out that level of infrastructure.

And so what the governor was trying to achieve, I think, is that is to define who is actually real in this market, who's wildcatters, who I equated to folks going uh uh into a grocery line, wanted to get a queuing spot in the line with an empty grocery cart and no money to pay for it, - Right.

- and so we wanted to get those out of the way.

And so it's important to, to distinctly define exactly what that moratorium did.

I think the second part is, I believe, a little bit more concerning in my perspective uh in halting all permits.

uh I think that's a challenge.

Uh, any time that a statewide agency paints with a broad brush on a topic, um but that one specifically is halting all permits, and that's regardless of whether they're connecting to the grid.

So under that first one, there are certain projects that didn't plan on connecting to the grid at all.

They're doing what's called behind the meter.

- Right.

- And in fact, two projects in Ector County are looking that they're going to have behind the meter power generation, on site power generation not tying to the grid.

And so there's no concern for ratepayers, and there's not really an issue there, in my opinion, whenever it comes to ERCOT, they're not regulated by ERCOT.

The second one, though, is putting a halt on all permits.

And what we're doing is we're stopping a market for power generation coming.

And here in the Permian Basin, I believe that we need as much power generation, basel oad natural gas behind the meter, natural gas power generation.

We have an abundance of natural gas.

And right now I looked at it today, uh ERCOTs load demand is about, and what we're putting out is about 45% natural gas.

I want to see that number much greater.

And I think that the Permian has the capacity to do so.

And I think we need to be incentivizing this type of behind the meter power generation, because we need all the molecules and all the electrons on the grid as possible.

That's how we actually ultimately lower it.

And by sending market signals that we're putting a pause on it, the only ones that are sliding through are renewables.

And I think that's that's as a Permian Basin as a homeowner, I think that's an issue.

And certainly as one with two projects [Cough] that are looking at behind the meter power, I don't want ours getting caught on the ones that are tied to uh the grid interconnect.

- Well, that behind the meter.

So explain that just one more time because, you know, that expression has come up a lot in the conversation about data center.

So behind what is it behind the meter mean?

- Behind the meter means that they are not tapping into our overall grid infrastructure, not to the power lines that you're seeing gridded throughout the state.

They're not going to be tied to what is powering all of our communities.

They're going to be what is called a power island.

They're going to have their own dedicated power plant connected, providing power to their data center.

So there is no impact on your rates.

That is going to be its own power generation.

And so it's one that is it's outside of ERCOT.

It's one that you know, the state really has no regulatory oversight on it other than now we're going to see air permits and those are going to get caught up.

But we pass air permits all the time in the Permian Basin and in Texas.

And so to get all of those other things cut, I mean, what does this do for the oil and gas industry?

You know what does it do for other industries?

And so, you know, making blanket wide uh regulatory, environmental concerns uh that impact other industries.

We've got to be very careful in how we approach this topic, and certainly targeting one specific industry.

I personally don't believe in that, that kind of policy.

Um, but I do understand that there are concerns across the state.

But we have 254 counties.

What's best for some and the metroplex, you know, we're blessed that the two that we're looking at are in an industrial area.

They're behind the meter.

They're not going to be using what are all these other things, um, and so to have ours caught in this wide cast net is perhaps an issue.

- And currently there's not really a timetable for this to be lifted.

Correct?

- We're looking at what my understanding is that PUC is looking at an early December timeline whenever they complete the audit phase.

Um and the challenge is these state agencies are asking these state agencies to conduct an audit that was not in any type of rule making or any type of legislation.

This was a mid-year turn.

So you're asking regulatory agencies, which are very slow and very boggy to begin with, to conduct an action that they're not typically used to doing.

And so that's a challenge.

And then, you know, a company say you know, Microsoft, Chevron could have all their paperwork.

They could have submitted it all.

Everything is good.

They are a good actor.

And they get caught in the wash.

And now I understand we want to filter out the bad actors, those who have not engaged the communities, those who are utilizing our resources.

But I believe there were better in more strategic ways, in my opinion.

But I also am a homer for for the developments in our community and in the Permian Basin.

I understand that there's challenges across the state.

- So, uh Tom, on the data center is being proposed to state or local government entities.

What is that process that that you go through initially when someone approaches you know, a county government and says, hey, we want to bring a data center here.

<<Tom>> Well, I think it's different with every project.

And part of it is who did they reach out to first?

And so we've got a couple right now.

Like the judge mentioned.

Uh, uh, one of them reached out to us first.

We've been talking to him now for over two and a half years.

And I say us being uh the Chambe Economic Development office.

And so um a lot of it is filtering the project, finding out what their needs are this and that.

Um, you know, a lot of the information out there today that people are using against data centers is is old.

And and yeah, they did use a lot of water, uh, you know, 5 to 10 years ago, they used to use the old cooling towers, things of that nature.

And so, you know, as an economic developer, you you filter that.

And so when they call you the first call I got a data center was over three years ago.

And the gentleman tells me on the other end of the line, we're going to need 30,000 gallons a minute of water.

And and you know, I've told this story way too many times, but I'm trying to do the math on my phone.

I didn't have enough digits.

And so, you know, I said, I think you've got the wrong community.

[Laughs] Uh, we're out here in the desert and, you know, through technology, they they have uh limited that water use.

They've dropped it down uh enormously.

Now they don't use uh water cooling towers.

They use closed loop systems.

Um they have to charge it the first time, and then they use that water essentially forever.

And um uh there's no evaporation And, uh you know, like the judge said, with with electricity.

Now um most of these companies are being very responsible.

They don't I will say they don't sell themselves real good sometimes.

But um electric is is going behind the meter.

They know that that you know the state of Texas is looking at all these things.

And so we need to play by the rules.

We think they're going to set in place uh so we can get this project through.

And and I think part of the problem we're dealing with right now, unfortunately, is, is uh we're also in an election year.

Um, a dislike of data centers is kind of popular, um, not with me or I think some of the people sitting here tonight, but but it's kind of popular.

And so people running for office have have uh kind of grabbed onto that.

And so now you have you know some of these, these midterm rules coming out that, that, you know, we have to deal with the, the data center developers have to deal with.

And uh and so you keep churning ahead, I guess until after November.

- I love how you put that though I'm going to start using that.

That not misinformation but outdated information.

That's a that's a that's a great way of looking at it.

Jonathan, Chevron's role is big in some existing data center projects.

A little bit about Chevron's role.

<<Jonathan>> Yeah, sure.

So, uh, we are going to be building a power plant in uh Reeves Count a remote area about 20 miles south of Pecos.

And uh to supply it's a it's a behind the meter, um, facility co-located with Microsoft's data center.

And we're so happy to have them as our, as our partner or as our customer on this project.

And um so yeah, it it uh will not tie into the grid and it won't require electricity from the grid for its initial operations.

And uh we I'm really excited.

I'm a Texan.

I uh have lived here in West Texas for the past five years, and I'm excited by the opportunity that this development can bring the investment, the uh jobs, the tax revenue and just economic opportunity for our fellow Texans.

Um, but I do realize that the communities are asking legitimate questions about things like power and water, and we have um at Chevron, our role is to be the power provider for Microsoft and hopefully other um future opportunities here and uh oh, one thing I wanted to mention earlier is JJ was talking about data centers and their growth and everything that is our our role, our um Chevron's role in this process is to supply the reliable, dedicated electricity that will enable these projects.

And that's why West Texas and the Permian Basin is such an attractive location u that uh Microsoft and others are considering.

Because we have we have these great natural resources.

We have uh workforce that has um been around in the oil and gas industry and other industries for many years, doing large, complex projects and know how to get things done.

So we're excited about this opportunity.

- Yeah.

And at least in the projects that you're involved with that kind of alleviate some of the concerns about electricity you.

know electricity.

- Exactly.

Yeah.

Another concern is about water.

And so our plan is to use brackish, uh non-potable groundwater to uh to cool our our power plant operations.

And uh because we know that water is a precious resource in our community, uh, especially out there and uh Reeves County, and we're also looking uh exploring the potential opportunity to possibly treat produced water, the water that comes up with oil and gas production um as a to um you know, further reduce groundwater withdrawals in the future.

So there are lots of great opportunities here.

- Wonderful well lands being sold to build data centers.

There's people who want the data center.

And some you hear the expression, not in my backyard, right?

Um, is there any regulation or guidelines for how close the facility can be to a community?

JJ are you aware of anything like that?

- You know, there's no, you know, state or federal you know guidelines that that really define how close a data center could be or what the setback is.

Right?

It is an inherently local uh issue, right?

It's driven by zoning standards at the local level.

So uh local government is a is a big, big player.

You know, within that, um even though there's no you know, local standards, there's also uh better ways to do it.

When you're making these larger investments in a community, um you're you're being able to do so because you have the license to operate uh that is granted by by the community.

So you need to be a good neighbor.

Uh and that is something that always you know should be taken into consideration when a data center is being, you know, invested in a community.

There are the things you can do and there's the things you should do um and um partially kind of the broader approach and some of the topics that that have already been been brought here, um Microsoft, when we build the data center, we we made a community first AI pledge uh for the community around us.

So one, we pay for all the power.

In the case with Kilby, um we're building a behind the meter um power plant to be able to uh uh to supply that to.

We don't seek local tax abatements.

Right?

So, uh if if we're going to you know, use that as an argument, it's going to bring lots of opportunity.

But then we're taking away the tax base for the hospitals and schools.

[clears throat] That's not a great way to to show up, um from a water perspective.

One, we use closed loop systems uh to to be able to minimize water use.

Think about also lots of innovation that's happened not just in the way data centers are built, but even down to the chip levels.

When uh Invidia, you know GPUs were first being used, they were about the size of a postage stamp.

Now, modern chips, they're about the size of a dinner plate.

And they're that big because they have cooling at the chip level, which makes it a lot more efficient.

So so just context, uh we we as a company, across our fleet of data centers, have gone from 2.9l/kW hour to [smacks lips] 0.9kW hours.

So, you know, seeing a vast, vast drop.

And a big part of it is just the efficiencies coming you know at that, that place.

Uh, the other thing is, again, we want to partner with with communities to uh oftentimes it's it's working with the nonprofit.

So looking at what we've done in San Antonio, uh Edwards Aquifer, we've actually acquired 1500 uh acres that have been set aside and protecting about you know 2 million people's you know water.

In terms of uh the set asides that we have you know for that, that water conservation and protecting the aquifer.

And then we want to create local jobs.

So when these jobs come to a community, um, it's not coming just from a broader, [smacks lips] broader pool.

We want to hire directly from from the community to fill these, these roles.

And all of these are, you know, in terms of keeping in mind that the state, federal you know and health safety requirements for a site to be built that includes you know, light pollution, right?

Um, when you're you're a neighbor, we want to make sure, again, light isn't going you know past, you know, an easement.

So you're not not too close.

We have downward facing light.

Not not a lot of, you know, up lighting.

And typically we're putting light uh a lot lower than what is commercially you know allotted just because we've been able to be a good, good steward.

So when you think about data center coming into the zoning requirements are a baseline.

But being a good neighbor, you know, includes taking all these other considerations in place to to make sure you're building responsibly.

- Right.

And it should be noted that Microsoft has about two decades uh with data centers.

Right?

So you've you've you've had the opportunity to uh experience a lot of data centers and how they run, how they operate.

And probably that helps.

Now fast forward to what you're doing now.

- No.

Absolutely.

So, you know, a good, good analogy was looking we just had uh some data come from Quincy, Washington, which was a similar you know, community size, about 13,000 people of what we have in in Reeves County over that 20 20 year period, their tax revenue went from $60 million to $180 million.

Over that period, poverty rates was down from 29.4% to 13.1%.

Right.

And so this is a good opportunity to to be a rising tide to to lift all boats.

But one of the things 20 years you know of experience shows you how and the importance of engaging with the community, uh being a not just a good neighbor, but an accountable partner.

Uh, when you're dropping billions of dollars into an investment um and not only the investment, but putting our employees, which are our greatest assets um, in in these facilities and and living in these communities, we want to be a great partner there.

- Teresa, Monahans Chamber of Commerce.

You've had lots of discussions with uh, not only folks bringing data centers in, but but I want to zero in on on the ranchers and those are who are being approached to you.

know sell land.

Um, one of those conversations like that that you have experienced with them.

And how can landowners, you know, protect themselves to make sure that, um, you know, their environment is kept intact and the land is appreciated and respected?

<<Teresa>> Yes.

So obviously, I have been working with several of the ranchers in our area.

And, you know, with the drought that we have here, a lot of our ranchers have to sell off their cattle and stuff and can't run their cattle anymore.

So they're looking at ways to supplement their income to survive just to keep their land.

So some of the things that we've done is being able to research how the data centers can be on the ranchers land and how you can continue the agriculture and be, uh, you know, economically friendly with each other.

And there have been ways that we have found out that do that, such as, you know, some of the data centers that want to build their own power source, some of them are putting in the solar farms, you know, the panels and everything.

And we've learned through other technology that they can actually build those those panels up in the air.

So you can still use the ground for grazing, growing or anything else that you might want to do agriculture wise.

So we're learning that there are so many different ways that you can share the land together and still make good use of it and be good partners with each other, you know, because obviously, you know, anytime you get a new industry, like years ago, you know, when the sand mines came around us, you know, there's are hardships that are placed on small communities.

So my job as a chamber is to try to figure out ways that we can, you know, all live together and provide for our communities.

So this is one way that I've been trying to work with our ranchers to assure them the water situation.

You know, that they're not going to run out of water because of the closed loop systems.

And, you know, just the different things like that, that they fear the power and things like that.

Like they said, most of them are doing their own power source right now.

So that's been my job is to educate myself on new technology and the new things that the data centers are doing.

That wasn't even like five years ago.

The technology has advanced so much.

So my job is to protect our community, to alleviate their fears and have us all working together in the same space.

- One, it's really important that that they have that really solid, good knowledge to be able to ask those questions, because obviously it starts with a negotiation, right?

It's always going to start there.

And so the more well-equipped they are with good information, the better that negotiation is going to go to alleviate everybody's fears.

- Right.

And they and they need to know upfront that that's their land.

They can set those terms.

They just need to know what their rights are and things that they need to ask for in the first place, to be able to survive and keep their land and their their agriculture going.

So that's that's one thing that I focused on is, is trying to do the education to educate my community and to find the answers so that we can alleviate some of the fears and the unknown about the data centers come into our community.

- And what's the reaction that I'm sure you've had some conversations that probably started off with, for lack of a better word, a fearful tone, and then and then were you able to provide, you know, assurances or information and watch them kind of turn the tide and go, okay, well, at least now I know what to ask or what to do here.

- Absolutely.

And I think that a lot of things, just like, you know, JJ was saying the data centers are coming in and they are not asking for abatements.

And that was the biggest fear, you know, is that they were going to come in.

They were going to get the, you know, the tax abatements asked for that.

And then our communities were going to suffer that to.

So we we've been assured, you know, that that's not what they're coming in and doing.

I don't think we've had anybody ask us for a tax abatement.

And probably I'm working with like four data centers within our county right now.

So, you know, the things that I have learned is they really do want to be good players.

They just didn't do a good job at letting us know that in the beginning.

So they've they've realized that.

So they're coming back around and being very transparent with what they're doing and how they want to do it.

Well.

And that's that's very good.

- Well, we need to take a short break right now.

And so we'll be back with more of the program and more of the conversation.

And we'll continue with our expert panel on our conversation on data centers and the impact on West Texas.

- Welcome back to Basin PBS.

Let's continue our conversation on data centers and the impact on West Texas.

Now, according to The Texas Tribune, Texas has 596 existing facilities, which includes approximately 100 projects being actively built and another 156 to 248 additional facilities proposed on an early development.

A lot of facilities just for Texas.

Now, it doesn't include the facilities throughout the US.

So, uh Jonathan, what's the impact these facilities have and potentially will have on the landscape of Texas?

- Oh thanks, John.

Yeah.

So from the power side of our uh Kilby project with Microsoft, which uh just to recap, it's a over two gigawatt co-located power natural gas power generation behind the meter for to power Microsoft Data Center.

Um, uh so you know like I said it's it is um it's going to bring opportunity jobs investment.

Um it is a large facility in terms of the landscape um, we were going through, you know, state permitting for our power plant with the queue that uh ensures that we meet uh National Ambient air quality standards, which we do, or we will, of course, um and um but one one thing about this is, you know, it's sited you know in a remote area of Reeves County, about 20 miles away from the nearest, you know, city, Pecos.

Right?

Um, so that that for a large facility like this, perhaps that is a, you know, siting is an important consideration.

Um it doesn't remove the controls or the requirements that we're going to meet.

But but it does naturally.

You know, be further away from people so should cause less impact.

Like JJ was saying, you know, light is a big issue actually out there because it's a dark sky preserve.

The McDonald Observatory is, you know, in the, in the vicinity, I don't know, 100 miles away or less, um And so we are uh on both the power and the data center side are going to follow those requirements and have the downward facing uh light, lights.

And, to, to preserve that uh wonderful resource for the community out there.

- Uh, JJ why are so many companies choosing Texas for data centers?

- Texas offers great opportunity I think primarily it's it's the people, uh the workforce, to be able to build out and operate these data centers.

Um also, again, the power um coming from uh the energy capital of the world.

So yes, there's natural gas when you're thinking about uh power to and what the power required for for these data centers and to kind of be good stewards of the environment, um.

Geography matters when you're talking about renewables and when you think about the geothermal and solar you know opportunities that we have here in Texas, there's a big reason why we're coming here.

I think the the other opportunity and you know mind you, there's, you know, uh some some wrinkles in this equation.

But, you know, in Texas, you can still get things built in a reasonable amount of time once you kind of kind of commit.

It's a it's a business friendly state.

And we're happy to, to to be here.

- Judge Fawcett.

- Yeah, I'd like to say that I've, I've been keeping up with the interim hearings uh in the Texas House and the Texas Senate.

There's been over 20 hours on this topic.

I've unfortunately watched all 20 hours.

[Laughs] And and a lot of what, what what we're hearing from the developers is that it was power.

It was power and relatively cheap land.

And so those were two of the main drivers, because essentially these are just computers that need an outlet to plug into.

And ERCOT, our grid.

Texas is the only state that has its own grid.

And so with that comes a less uh burdensome regulatory environment than dealing with the federal government whenever you're tapping into the national grid.

So that's a big part of it.

But to your other question about the size of these, I've been in three of these different facilities.

One right here uh in Midland.

Big Bend Telco was at the front end of this in 2021.

Uh, I was working with them in a prior line of work whenever they were first coming in.

And this is an under four megawatt facility, a tiny little facility.

Now, I've also been over in Garland at another size facility of 40 megawatt facility.

Now, this is what we think of when we think of large Walmart style looking big builds uh that has a data hall inside.

And then I've also been on a site in Ector County, and uh it goes back to our conversations about what does this look like for the locals and the engagement.

I called up the CEO, he answered, and I said, I want to come see your facility.

He said, come on.

And I went out there.

We got on the PPE, hard hat, vest, all the good stuff, looking goofy.

[Laughs] And and we went into the site.

We literally wore little booties, uh little, little covers over our feet, - Right - and we're able to walk into the data hall.

And I can tell you that was loud, uh.

That was loud.

The compute was loud.

You step outside of it, couldn't hear anything.

Um and that site is a small site now, but it's scaling up and that one is not going to be a large scale big box set out there, uh.

That one's a different style set up.

There's factory made um systems.

It's just a different model.

And so there's all different sizes and shapes of these.

So again it goes back to my previous comments about painting with a broad brush.

This is a new and exciting industry.

And we do want good players.

And I'm fortunate to have to two good actors but we don't know what innovation can can take place.

Is Jonathan mentioned on the produced water and I think we're going to talk about water.

There's exciting things that are happening in this space.

We're tapping into brackish water, water that hasn't been tapped into for millennia, actual millennia.

Same thing with produced water that's that's causing earthquakes that we're identifying ways to actually use that for cooling and perhaps getting it to potable scale.

So there's a lot of neat innovation.

But all these facilities, not every single one is different.

You have a number of different hyper scalers, you have Microsoft, you have your Googles, your Meadows and all of those.

But then the developers themselves have all kinds of different models, some that have been here traditionally, and some new guys who are coming up with innovative new ways, new cooling techniques, new building techniques to bring speed to market.

And so it's it's a new age, a new era.

And so it's we need to be cautious but also excited because innovation happens.

And that's the American way in my opinion.

That's why I get excited about this is because we're seeing innovation and this is what innovation looks like.

And it is exciting.

- Well, and particularly Tom, great to wind up on innovation because I always think about our area here in the Permian Basin and surrounding areas.

We have the, the a large amount of brainpower around here.

And we have great smart people and great smart companies.

So we're really kind of well equipped to come up with answers for some of these issues.

Right?

- Well, I think we have all the infrastructure.

The energy infrastructure fits in great with what they're doing because they're doing energy.

And so, you know, that's why Chevron's getting into it, uh Diamondback is getting into this and ExxonMobil, among others.

And and so um the fit is perfect the judge mentioned we we took a community group to Garland a while back and toured a 285,000 square foot facility.

Um, you couldn't hear any noise outside.

Um, it would probably be one of the cleanest work environments in Ector County uh, if it was there today.

Um, one thing they undersold us on in the beginning they said, well, it's going to be 35 to 50 employees.

Well, you know, once we actually sat down and did numbers, it's going to be 200 plus full time employees, not the construction side.

Um you know, there were a lot of things that happened in Abilene that uh uh data centers, uh operators, hyper scalers, everybody's correcting the things that that happen there because it all came in so quick overnight.

And and, you know, out here, I think we're better situated with the ups and downs of the oil and gas industry, workforce, housing, all of those things.

You know, during the construction phase, I think we we would do very well with that, uh, I don't think you're going to see another project like what they had to the east of us, where they had 7500 people on site at one time, uh.

Well, you know, the the companies we're talking to, we're talking maybe 1000 to 1500, uh which will be great.

And and uh one thing I, I can't lose my patience with, I try not to, but um you know, a lot of people locally say a lot of things and they say a lot of things online.

And nameless, faceless people, um all of us.

I don't know where J.J.

lives, but I know, I know the four of us live here in the area.

You might - El Paso, - El Paso, far west, um - Greater Permian.

Greater West Texas.

- We're not out just trying to bring anything, and I my family's here.

I've made an investment in a in a nice home.

And, you know, I'm not here to.

Well, let's just put anything in Ector County.

You know, we we want good quality business uh that's going to that's going to be a good investment in the community.

That's going to help, you know, no one wants to raise their taxes anymore.

Okay.

Well, this can be a generational investment in Ector County.

And so, you know, I think we're all being very responsible.

We've done a lot of research.

We've conducted some uh public and community meetings.

There will be more uh and there will be more research involved.

And so I, I think what you're hearing, both at the local level and from uh companies involved in this, is that everybody wants to be responsible.

And, and you know, we seem to be a good fit.

We've we've got wind, we've got solar.

Um, Odessa is the second sunniest community in the state of Texas per full sunny days.

El Paso's number one.

We're behind it.

- Right - I think we're like number seven in the nation, which means y'all would be above that.

But um but you know, it fits.

And the energy infrastructure works well with that.

We're flaring natural gas.

You know when I hear well you know it's going to wreck the environment.

This can help take a lot of that away because they want to use natural gas.

And and they know that that regulations eventually are going to make them, you know, generate their own power, do it behind the meter so that because no one wants to affect the reliability of our grid and our power system and and obviously looking at prices going up today with inflation, nobody wants to pay more for power.

And so, you know, people want to be responsible.

I think really to be honest.

And this is just my personal opinion, the irresponsibility or some of the people on social media that say some of the things they do and they do it without doing any research on it.

- Knowledge is power, of course.

Yeah., and Teresa, lets talk about let's talk about your your local community uh and communities like yours in that region, um And how transformative of the great word data centers can be uh over a long period of time.

I mean, we're talking about the possibility of transforming a community like they've never seen before.

- Right.

And that's what I want to expand on, what Tom was saying.

You know, the thing about it is that the all of them that have come in and visited with me, they they want they're asking, what do you need?

How can we improve the quality of life?

Obviously when you bring something in of this magnitude and you're bringing 1500 extra workers during the build out phase of this, it's going to be impactful on the small community like Monahans, right?

But they're coming in with like, what can we do to make it easier?

You know, I've got um man camps that are coming in and like, how can we do this?

We'll build this up and we'll put this here during the construction phase and we'll put the infrastructure in.

But whenever the construction phase is over, we can leave and you have the infrastructure and you can use it for your community, for permanent homes, you know, or apartment complexes or whatever.

So those are things that really improve the quality of life in our communities.

They're looking to see what our needs are.

As far as health care goes, as far as education goes, you know, uh any type, dealings with our law enforcement, because we all know it's hard to get workforce in our area.

So if they can come in and help and see the need in our communities, then, you know, it's nice to get to embrace that because they want to help us be that.

And that's going to long term.

Give us, you know, economic build out.

And it's also going to sustain us for the for the long haul.

So that's you know, that that's what I'm looking for is quality of life and good players that really want to be a part of and contribute.

That's going to make our community stronger.

- Jonathan, you had something.

- Yeah.

I mean, I just wanted to uh to chime in on what Teresa was saying or or uh like, agree with you.

Like, it's just so important um to understand.

I'm so happy to hear that.

That's what the data center developers who are speaking with you are, are saying, because that's exactly what we and Microsoft, that's the approach we're taking out in Reeves County.

Um, you know, there's no question that with large projects there are some impacts.

So what we are trying to do is mitigate those work with the communities.

I mean, we've learned that Chevron, through being in the Permian Basin for over a hundred years, that successful projects um start with uh, listening to our community and taking their concerns seriously.

So like for the Kilby Project, there are going to be a lot um of construction workers that will be living in Pecos during the construction.

Um, but to minimize the traffic and the impacts on the roads, we're going to be, our contractor will be busing those employees from Pecos to the site each day so that there will be less you no individual cars and trucks on the roads.

And so it's just things like that working with with our with our communities, listening to their concerns and trying to find solutions that allow this amazing growth and opportunity to take place while still minimizing the impact on the on the residents.

- Judge Fawcett.

- Yeah, I think it's an important conversation, as Teresa said, is the good actors and we keep bringing that up and and wanting to be good partners.

We're we're fortunate that the trend is now that they're going to pay 100% of the property tax.

And I don't think people understand what that means.

This level of investment, we think Will and gas is great on the mineral values for the county of our 22 billion in taxable value, 2 billion of that is and gas a gigawatt investment, which is what each of these sites are looking at is $50 billion for Ector County's tax rate at $0.41.

That's over $200 million a year that they are agreeing to, that we are working on a pilot payment to that pay every single year, $200 million.

For context, it takes us $100 million in my general fund to run county government, and that is a $200 million check from each one at the end of this cycle.

So that's, why, - Imagine what that could do.

- Imagine imagine what that means for law enforcement.

Imagine what that means for at the county level, for prosecutors.

Whenever we can bring the best and brightest and and minimize the docket levels, imagine the road system.

We know how many people pass away on our roadways.

I'm a passionate road nerd.

This is a lot of roads, and I'm conducting a road master plan that now we can actually fund these types of projects.

And so I think it would be one thing to not receive that tax benefit.

But we are.

But then what are we giving away?

Are we giving away any local water?

No one site is going to be utilizing produced water and is in conversations with the Research Institute at the University of Texas Bureau of Economic Geology.

That's a real outfit.

And we're going to we're hoping to be the first commercial grade project that utilizes this produced water that otherwise would be injected back down hole and would be causing earthquakes.

And we're running out of poor space, by the way.

Um so there's one of them.

And then the other one is not not utilizing any local water.

They're bringing in factory made glycol water mixtures.

So no local water, no impacts.

There there's very little cons to this in my understanding, and the benefits are tremendous.

- Yes - Imagine what that does for a school district.

- Mmhmm.

- And the economic diversification.

I mean, we are um proud.

I'm proud to live in an area that us that the energy industry is so strong and such a strong contributor to our communities and has been for decades.

It's the bedrock, but there are cycles in our industry and uh my understanding, at least you know with how the growth in this technology and it's less I mean, these facilities, once they're built, they're going to keep running and the power is going to keep being generated and the taxes are going to keep being paid and the jobs are going to remain there like regardless of what commodity prices are doing.

So I think that'll be a great another benefit for the community.

- Yeah and there's broader halo effects to for every permanent job within a data center, there's three and a half jobs of the surrounding community because that that requires transportation, logistics, security and all the retail services, you know think restaurants to be able to support these, these jobs.

There's a broader halo effect.

And one of the broader I mean, opportunities we see is this is kind of a once in a generational opportunity from um a, you know, of, of America, right, in terms of the supply chains that are being built out, all of the inputs that go into it, um We're just talking before the program about, um you know, sand, right.

And what that does and what what a critical component it is you know for uh the production of of chips.

Now let's think about all of the other uh businesses that can provide real tangible services at a tier three, tier two, tier one level to go into this data center and you start seeing a broader halo effect of of impact uh to these tax bases beyond what the initial site may be as well.

- Well, water, electricity, nuclear power, medical, banking, daily life, all being stored in data centers in one way or another.

And we hear industry and elected officials say we need data centers for national security.

When you hear that question, what is that?

JJ what does that mean?

We need it [smacks lips] for national security.

- I mean.

See it from really two lenses, right?

The first lens is the critical importance of all of the the utilities that we're talking about, power, water, land, those are all systems that require computing to be able to to reach you know citizens every day.

Um we want to make sure that data is stored safely, um.

If that data gets into the wrong hands, it could be exploited.

Right.

Also, you know, we think about data and cloud sovereignty.

Uh you want it domiciled in your country.

Um if you don't house that data locally and it's not subject to to laws, there could be broader uh you know repercussions for the mishandling of that, that data.

But the other thing, too, is when you look at threat actors, particularly the nation state actors, but also uh just sophisticated criminal organizations, they're leveraging AI to go further and faster with, you know, their their work.

And so you need to be able to defend at the scale of AI with AI to prevent you know those, those uh threat actors from you know having exploitatio So part of it is one we want to make sure we protect our data, - Right.

- keep it safe, um support all of the work we need to protect our critical infrastructure.

And the data center provides you know the physical security.

Lots of the the the very rigid uh security to to support critical workloads, but then you know the ability to to defend you know the very real threats that uh are are out there that we're all becoming more and more you know familiar with um just in this kind of changing global landscape.

- Well, back in February 2021, of course, Texas power grid failed when the ice storm hit.

Now, with all of these data centers coming into Texas, where or how is the data centers power coming from?

Is the electricity grid natural gas a combination, and will Texans be fitting the bill?

- Yeah, two, very 2 uh or 2 parts of that.

Question of one where's uh uh the power coming from?

Uh our particular project what we're doing is a behind the meter project, um so that that is is capacity and power, that it's not going to be on the grid.

And so ratepayers don't have to worry about that.

But even then, um Microsoft in particular is always looking if we are going to have an interconnection with the grid, lobbying for policies so that we make sure we pay our fair share.

You know, sometimes it's creating a new rate class.

Or you know in cases like Nevada, um we've actually helped pioneer ratepayer protection tariff uh that that really, you know, secures that.

Um but but the big thing so the power is coming behind the meter.

Who's paying for it?

Microsoft is we're in a 20 year contract with uh with Chevron to en ensure that um we have our power needs to to support our workloads, um and the broader community isn't having to shoulder the burden of a tech giant uh and meeting our commercial needs.

- Right.

And so you've really checked all, you know, all the boxes that that typically come up in conversations about why you wouldn't want to have a data center.

And so I think that's really important is, is that that distinction between and you refer to good actors and bad actors is because uh in any industry, especially one that's evolving as fast as this one, there are going to be bad actors.

But it's really important, I think, for people considering uh at any level, whether they like or want a data center in their uh communities, to realize it is not a one size fits all, or it's not a big, broad brush where all data centers operate, act, do the same because they obviously we've established that they don't and um Judge Fawcett, it's important really, really very quickly at the local level to to flesh those things out as you're starting those negotiations.

Right?

- It is.

And that's where the produced water conversation came up.

I've been on the produced water side for a long time, and that was one of my initial conversations with New ERA.

They were the ones that spoke with us two and a half years ago.

I said, I would love you all to look at this and really invest in that type of cooling.

That doesn't make sense in East Texas.

They don't have the produced water issue, but we are producing a billion gallons of this produced water every day, bringing above surface and shooting it back down.

There are critical minerals in that product.

There are so many things lithium, a bunch of other things, and we're not harnessing that.

And so I really like that we're utilizing that.

The other side is we have CO2 offt ake pipelines that go through Ector County.

And the other site that I've been talking to, they're actually going to use the CO2 emissions that would be from the on site power generation, and they're going to be putting it into that CO2.

It's going to be they're working towards being the first green data center.

And that's right here in Ector County.

And those were through conversations looking at the pipeline maps and through their site.

And what's extremely exciting is both of these sites were on very challenging pieces of property.

One of them was on the previously pretty much condemned brownfield site of the Flint Hills property that had a massive spill, a site that TCQ had had huge issues with.

And we're not only going to turn that from a previous natural disaster facility into something that's a massive benefit to our community.

The other side, they clean up over 300 miles of essentially abandoned pipe, and they've now turned that into something productive.

And so speaking with these folks and having those conversations about our community, talking through what our wants and needs are, we have a new library, um, I'm the son of a public school teacher, so I believe in literacy.

We're going to invest in those things.

We're having those conversations, and they've asked us the same things that you were saying, what does your community need?

And and they're being those good actors.

They want to to do those things.

And I think those conversations are good.

We can't stop it.

At I read a bad Facebook article.

I'm not in favor.

- Right My position demands more of me.

And I think that to have these critical conversations about a very uh huge topic that is uh has the ability of being generational.

It really is generational for us and vital to modern infrastructure, um.

It's important for us to have these conversations.

- Well, I'll just mention when you look, I mentioned earlier ten years ago, you know, with the outdated information, think about what's going to happen in ten years, ten years from now, because look at the water in just the last three years and how they become so efficient.

The advancements that are going to be made because of data centers, the the advancements in power generation, you know, I think at some point they're going to be generating a lot of excess power, and then they're going to put it back on the grid.

And and so it's not happening right now.

- Potentially lower rates.

Corre - That would lower rates.

And and plus it would it would increase reliability of the grid.

You wouldn't have those issues.

And you know we're looking down the road.

Oh how we how are we going to have the power we have.

He mentioned the Q and how much is in the Q for ERCOT right now.

But ten years from now, I think I think we're going to look back and go, wow, they a lot of those problems were solved through the advancements that came about with the development of data centers.

- Mmhmm.

- The demand incentivizes more generation.

- Yeah.

- JJ how many data centers real quickly, how many data centers do we really need before we've quote unquote reached the limit?

[Laughs] - Yeah, it's um a tough number.

What I would say is is kind of the conversation that we're having now, um I think, you know, of a test that can put it through, uh if a data center is going to add value to the community in terms of pay for its way for power, be responsible user of of water, um, going to add to the tax base create jobs uh and opportunity for the community around it.

Um that's a net positive for for the community.

We're seeing our our demand for our data centers being driven by our customers.

These are um we're not building them just to build them.

We're having a big, [Laughs] you know, pressure from our customers - Right.

- to kind of meet their needs for for broader.

- It's all my copilot usage.

- Yeah.

No.

Jonathan - You need your own data center Jonathan Harsh [Laughs] Driving this specific team.

But you know, so to to that point um I think these are positive investments for for communities, if done responsibly and and done from a principled based approach that puts the community first.

- Right.

Well, this could have been a three hour conversation, right?

Lots of ground to cover.

I think, though, it's the most important uh takeaway for those who might be uh questioning or fearful about data centers is just get the right information, ask the questions, um, source your knowledge, and make sure that you're equipped to to get into a discussion like that before, you know, before making any big, big decisions like that.

I want to thank each one of you.

It was a wonderful conversation tonight.

Unfortunately, that's all the time that we have for tonight's show, and I'd like to thank our panelists, Jonathan Harshman, um Tom Manskey, JJ Childress, Teresa Burnett, and Judge Dustin Fawcett for sharing your time and your knowledge.

We'd also like to thank Diamondback Energy for generously sponsoring tonight's program.

Basin PBS board and staff, along with the Elizabeth Reed Yeager family and the Anwar family for their generous support of Basin PBS.

And we thank you are valued viewers.

You know, if you'd like to know more about our local programing or to become a member of Basin PBS, please visit our website.

It's at basinpbs.org.

Thank you very much for joining us tonight.

I'm John Moesch.

Good night.

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