Force majeure clauses, common in energy and commodities contracts, excuse a party from contractual obligations when events outside its control intervene. Oracle is not seeking to exit as the campus’s main tenant, according to Bloomberg’s sources, but the notice provides protection against potential cost increases should construction timelines slip.

“Project Jupiter remains on our planned schedule,” Oracle said in a statement to CNBC. “We are fully committed to New Mexico and confident in our path forward.”

Blue Owl Capital, whose unit received the notice, responded with its own statement to CNBC asserting that “this notice does not change the financial commitments to this multi-year project.” The company seeks to reassure stakeholders that the multi-year development remains financially viable despite the formal notice.

Energy Supply Challenges Plague Construction Timeline

The notice follows a string of setbacks at the site, with many tied to energy supply concerns. The campus, designed to handle 2.45 gigawatts, is meant to run on gas-powered fuel cells from Bloom Energy, making a reliable gas supply central to meeting deadlines.

An Energy Transfer pipeline intended to deliver gas to the site has been delayed nearly six months, now scheduled for February 1, 2027, after regulators repeatedly denied permits for the line. Bloomberg reported in August that the pipeline’s route had been changed following those rejections, adding complexity to an already troubled timeline.

A separate air-quality permit for the fuel cell system that would power the campus remains pending. The state’s environment department faces a November 23 deadline to decide on the permit, creating another potential bottleneck for the ambitious project.

Market Reaction and Financial Concerns

Oracle shares fell more than 3% on Thursday following news of the force majeure notice. Bloom Energy, which is slated to power the facility with its fuel cells, also saw its shares fall 3% on the news. In a post to X, the company said it remains “committed” to the contract and following the “planned timeline.”

Blue Owl shares also declined Thursday as investors processed the implications of the notice. The 1,400-acre Project Jupiter campus secured $18 billion in loans from a consortium of banks, making it one of the largest data center financing deals in recent history.

Concerns have mounted over Oracle’s $18 billion in debt tied to the data center, which is already trading at stressed levels, according to the Financial Times. The debt situation adds another layer of complexity to a project already facing regulatory and logistical challenges.

Stargate Initiative Faces Political Headwinds

Project Jupiter is one of the flagship sites of Stargate, the AI infrastructure initiative Oracle, OpenAI, and SoftBank announced with President Donald Trump early in his second term. The broader Stargate project represents a massive commitment to artificial intelligence computing capacity across multiple sites.

The campus has drawn opposition from residents and environmental groups and has become a political flashpoint ahead of the midterm elections. Local opposition to data centers has intensified in recent months, with concerns ranging from environmental impact to energy consumption and community disruption.

Oracle has responded with a public outreach campaign in the state aimed at winning over the project’s critics, according to Bloomberg. The company seeks to emphasize economic benefits and job creation while addressing environmental concerns raised by advocacy groups.

Executive Reassurances on Financial Impact

Oracle co-CEO Clay Magouyrk told analysts on the company’s earnings call on September 10 that Project Jupiter would not affect its previously stated fiscal 2027 revenue or earnings guidance. The statement aims to separate near-term financial performance from longer-term infrastructure investments.

“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,” Oracle added.

The 1,400-acre campus is part of Oracle’s broader agreement with OpenAI to provide AI computing capacity. The partnership represents a strategic move by Oracle to position itself as a key infrastructure provider for next-generation artificial intelligence applications, particularly as demand for AI computing resources continues to surge.

Broader Industry Context

The notice comes as AI data center construction faces growing scrutiny nationally, with developers taking on steep costs to build capacity for customers like OpenAI. The industry confronts challenges ranging from energy availability to regulatory approvals and community acceptance.

Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control, a move that can raise concerns among lenders and investors. However, Oracle emphasizes that such notices are standard practice in large-scale infrastructure projects and do not necessarily signal fundamental problems.

Despite the regulatory hurdles and financial market reaction, Oracle maintains its commitment to the project and the state of New Mexico. The company’s public statements emphasize confidence in meeting deadlines and delivering on promised economic benefits, even as it takes contractual steps to protect itself from potential delays outside its control.

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