Latest / Conservation Stories / Data Centers, Water, and Responsible Development in West Texas with Kassandra McQuillen

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Data Centers, Water, and Responsible Development in West Texas with Kassandra McQuillen · Conservation Stories

• 0:00
  Speaker A: Foreign. Hello, friends. Tillery Timmins Sims here again with another episode of Conservation Stories. Conservation Stories is a podcast brought to you by Sarah. Sarah is a conservation organization based out of Lubbock. And as most of you know, we do all kinds of different overlapping ecosystem ideas and research and also bringing people in that know about those different things. And of course, water is a big deal and energy is a big deal and it impacts our economics and impacts our health. Those are the way these ecosystems overlap. And we look at those through triple bottom line, which is people, planet, profit. And I have my friend here, Cassandra McQuillan, and I have asked her to come today because we connected over solar energy, et cetera, et cetera. So as a landman at a conference, we met, I think it was in Albuquerque or somewhere, and had like a really great conversation and have had several since then, and in particular about data centers, because I've had some concerns like everybody else has about that. So this is going to be one of those conversations where, you know, we, we aren't telling people what they, what they need to believe. We're just saying here's the facts and decide what you want to do with it. We do that pretty often around here. And so, Cass, I'm going to let you give folks a little bit of your background and kind of some of how I get what you're doing in love, that kind of thing and that kind of stuff. And we'll go from there.
• 1:49
  Speaker B: All right. Thanks, Tillery. I'm excited to be here. My background is I currently teach at Texas Tech in the Rawls College of Business in the energy Commerce program. I was stolen about three years ago from engineering where I worked in the renewable energy program over there where I was teaching engineering students about commercial scale development of renewable projects. Solar, wind, batteries.
• 2:15
  Speaker A: Right.
• 2:16
  Speaker B: And as far as land use and planning, the energy commerce program at the Rawls Business School is usually oil and gas focused. They were having me come in and speak to their students about clean energy issues. And then they asked me to design some classes and a program, a certificate program specifically related to that. So my background is I'm an attorney. I'm licensed in California and Texas. I spent 15 years in California with my own firm representing landowners and communities when commercial scale wind and solar was coming into their communities and they didn't have zoning ordinances and they felt kind of overwhelmed. And also focusing on landowner representation.
• 3:00
  Speaker A: Yeah.
• 3:01
  Speaker B: So my perspective is I've never worked for a development company. I work with them and I work with communities just to figure out if something is right for them. Yeah, looking at all the sides of it. I came to Texas about nine years ago. My husband also works in renewables for GE Vernova.
• 3:20
  Speaker A: Okay.
• 3:21
  Speaker B: Those three big wind turbines you see out at the Reese center here in Lubbock, those are the prototypes for GE North America, the largest supplier of commercial grade wind turbines in North America. So in anything they're, anytime they're testing a new blade or software, it runs right here through Lubbock. Did not know that my husband is the guy in the white truck with the coffee mug telling everybody what they're supposed to do basically. So when we moved here, we moved for his job and I'm a mom so I just said I'll just be a mom now. But I did sit for the Texas bar and pass and I was asked to guest lecture over at Tech and then three days later, basically they offered me a position to develop some classes and that's how I became a professor. And I still do consulting and represent landowners, mostly large scale landowners and communities.
• 4:16
  Speaker A: I love that because I think that's, you know, as someone that works in that Landman field, which doesn't have anything to do with the cartel by the way. It is just researching property owners and the minerals are a property and so researching and then contacting them. And you know, in that situation, you know, a lot of times people have had bad experiences in the past with oil and gas companies and so you're, you're dealing with that. And I, I can remember, you know, visiting with an older man. He was like, I'm never going to lease my land, you know, and. Because he just had bad experiences. But you know, I he back, he did go ahead and lease with us because I'm like, listen, if I, I, you know, my, I have a fiduciary duty to the company that I'm working for. But part of that duty is they may want to come back and release you re lease you or at least another property of yours. And if we don't do a good job and you're not happy, then we've lost you. I mean for them I haven't created a long time relationship, you know, to me and I've actually lost the next time they need you, you know. And so I think it's part of, it's a really important part of having representation and having people that you trust. And I know there's a lot of. I didn't realize until I had a conversation this week with someone else from Tech that like we don't have like none of our counties have zoning. Like, we're just like, open. Really don't have any. We really. What defense do we have? I mean, like, you know, if you don't want it there or, you know what I'm saying? Like, it's really difficult. So let's maybe, maybe let's back up and let's talk about what do you know, what. What are the facts about what you know about data centers? Because it is really hard to get a handle on how much water they actually use. It's a lot. And then I have seen so many different numbers.
• 6:22
  Speaker B: Yeah, well, interestingly, I mean, data centers flow right into energy.
• 6:27
  Speaker A: Right?
• 6:27
  Speaker B: Because what is a data center? It's using electricity for a computing process. So a data center, in case you don't know, I mean, technically, everyone's computer is a data center. Right.
• 6:39
  Speaker A: Thought about that.
• 6:40
  Speaker B: Right? I mean, you. Historically, if you worked in an office before the Internet and all that, in the cloud and everything, you would have a central processing unit which would be your computer, which would have all your stuff. Or maybe someone down in purchasing had theirs with that information. What happened recently after the Internet and companies developed the cloud? The cloud is not up in the air. It's a data center. It's where we send all of our computing power and our knowledge to a big building full of computers that are holding it. It's not in the ether. Okay, So a data center is going to be hundreds of thousands of GPUs. So your computer is a CPU. Okay, a computer processing unit. A GPU is a graphics processing unit. If you have kids or someone, you know who's into gaming, they want a gaming computer. The reason they want that is they want a graphics card. A graphics card can simultaneously run those video games and the graphics as well as the rest of the program. So a GPU uses more energy because it's running across platforms. For data centers, we want those heavy computing capabilities that can run multiple processes. So that's why they have GPUs. Okay, so right out of the gate, it's not like a bunch of computers, like we think of them. It's basically a GPU that would probably fit in the palm of your hand and then there's hundreds of thousands of them running. And if you ever go next to a desktop computer, particularly a gaming computer, like if you. If you have someone in your household has one, they have several fans in them. All of our computers have fans. We feel them get hot. You know, you can put high fans. They require cooling, right? So a GPU that's much more powerful with its computing processes, consumes more electricity and it requires more cooling. So when we think of a data center, think of a big commercial warehouse that's just full of stacks of these GPUs. And those GPUs are. A data center isn't always just AI. It's all of your company's information, security information being held there. It's like a bank for data.
• 8:58
  Speaker A: So, like, just say there's two data centers side by side, and they're owned by two different companies. They're. They're storing two different types of their. The data is not overlapping, correct? Yeah.
• 9:17
  Speaker B: So whatever you're paying a server to hold or a.
• 9:19
  Speaker A: Okay, so let's talk about how much information that is.
• 9:23
  Speaker B: That's. I mean, it's terabytes. I mean, what's after terabyte? I don't know.
• 9:29
  Speaker A: I don't know.
• 9:30
  Speaker B: It's so much information. And if you think about how much we use a lot of us, you know, we're, especially here in West Texas, we're talking a lot about data centers. They're coming into these communities, like you say, that don't have zoning. And oftentimes because we have so many counties in Texas, 254 counties.
• 9:46
  Speaker A: Right.
• 9:47
  Speaker B: Some of these counties just have one commissioner who's also the judge, and then they've got an assistant or two, and it's three or four people. And they're not equipped to deal with this. And they don't have time to do the research and the background.
• 10:02
  Speaker A: Right.
• 10:03
  Speaker B: And even the community, if it's a bunch of ranchers, they're busy.
• 10:06
  Speaker A: Yes.
• 10:07
  Speaker B: Or they're not notified or they're not paying attention because nothing like that's ever come to their town. Why would it come here? You know, and before we know it, we're being told what's good for us. We're signing deals. Maybe our neighboring county is signing a deal for water for a data center that's going to go in our county. We've seen that happening in Texas. All kinds of things are happening and people are not communicating and the company is not obligated to tell my community that they've already got a deal to buy the water from the next community and they're not telling the next community what they're doing in mind. So a lot of the issues we're facing are communication and, and just doing our due diligence and understanding what we're doing.
• 10:55
  Speaker A: Right. And how. I mean, how would you even know where to start on, you know, something like this? If somebody's, you know, how would you even know which county to start? I mean, like, if you're the county judge, like, where do you, you'd have to go, like, okay, do you even think, like, I need to call the county next to me or the next and the next and the next, everybody around me, you know, like, I just, man, what a, what a burden.
• 11:20
  Speaker B: Yeah. It's kind of like when big wind and big solar have rolled through towns. Right?
• 11:25
  Speaker A: Yes.
• 11:25
  Speaker B: Come in and there's large landowners. You go to a landowner who's having trouble with their ranch, they see an income source or stream, they're looking at legacy planning.
• 11:34
  Speaker A: Right.
• 11:34
  Speaker B: I want my kid, my, my kids don't want to be ranchers. What do I do with this land? How do I continue? So you get a landowner who's thinking, I need to protect my legacy. I need to do what's best for my family. I'm going to lease for this.
• 11:50
  Speaker A: Yeah.
• 11:51
  Speaker B: And it'll be the company's problem to deal with the community and figure that out. Right. And it's just been a really difficult thing. Now, one thing with data centers that we really have to think about is there's two mentalities in building these. So you'll get a big company like say, Google, they're going to build their own data center. Right. They're going to buy the land and they're going to build the data center. And then you get other companies, like the big one up in Amarillo right now near the Payantex weapons site, you have Fermi, a relatively new corporation that says they're in the data center business.
• 12:28
  Speaker A: Okay.
• 12:29
  Speaker B: Well, what they're doing is they're speculating. They're like field of dreams in it. I'm going to get the land. So I procure in this case and
• 12:38
  Speaker A: this information that's an oil and gas model kind of. I mean, you'd see, you see that people like will put together. I'm going to buy, you know, packages of, you know, minerals from here, here, here, here, here, here, here, here, here, and put it together maybe. Or maybe it won't ever produce.
• 12:54
  Speaker B: Right.
• 12:54
  Speaker A: But I'm going to sell it. But you're the one that's taking like, okay, they have a certain amount of value because they're minerals, but they may never drill on any of those places.
• 13:05
  Speaker B: Correct.
• 13:05
  Speaker A: So you're, you're actually. So what you're saying is that they're setting it up. Well, but they don't necessarily. They're not the ones that's going to come in and put in a data center.
• 13:20
  Speaker B: Correct. So we can. I think the best one for us to look at because the information is public, is up in Amarillo. So a lot of these projects going on throughout Texas, they're on private land, so it's hard to get the information right.
• 13:35
  Speaker A: Right.
• 13:37
  Speaker B: The project up in Amarillo, which is actually proposed to be the largest data center in the world. Okay. They're planning 11 gigawatts of behind the meter power. Behind the meter means when I build my data center, I'm going to build my own natural gas plant, my own solar panels, my own wind, and in this case, four nuclear reactors are proposed there. So doesn't it take like 20 or
• 14:01
  Speaker A: 30 years to build a nuclear reactor plant?
• 14:03
  Speaker B: Not to mention the billions of dollars. Yes.
• 14:06
  Speaker A: Yeah. Just for one. Right?
• 14:08
  Speaker B: Correct.
• 14:09
  Speaker A: Yeah. Because I. Because that's one of the reasons why we don't have much nuclear in the United States is because it cost way a lot of money and it takes a long time.
• 14:21
  Speaker B: Historically, they're at least five to seven years behind schedule on time and they're usually two to three times the anticipated budget. So the last reactors built in the US were in Georgia.
• 14:31
  Speaker A: Yes.
• 14:32
  Speaker B: Vogel. 2 and 3, I believe they're called. They just went online in the past couple of years. 10 years behind and three times the budget by billions. So if we look at the data center up near Amarillo and there's a lot of controversy around it, there's water issues, there's electricity issues.
• 14:51
  Speaker A: Sure.
• 14:53
  Speaker B: The standard things that go on. The thing that we can speak about this is it's public because the land is actually owned by Texas Tech.
• 15:00
  Speaker A: Oh, okay. So it's like state, basically state land.
• 15:05
  Speaker B: Correct.
• 15:05
  Speaker A: Right. Okay.
• 15:06
  Speaker B: And this is actually interesting land. We all know World War II and we made nuclear grade weapons for the first time. Well, one of those facilities was up there in Amarillo or outside of Amarillo, the Pantax site. So after World War II, they had procured all this extra land up there for the site. This was back when they didn't know how radiation worked and everything. After World War II, they were like, we really don't need all this land. So they went to Texas Tech. Somehow a relationship formed. And I'm trying to find these documents because I'm curious.
• 15:42
  Speaker A: Yeah.
• 15:42
  Speaker B: But in basically in 1949, Texas Tech purchased the 6,000 acres that is now the Fermi Data center proposed site from the US government for $1 and everything. I.
• 15:55
  Speaker A: Sweet deal.
• 15:56
  Speaker B: Yeah. It's 6,000 acres and it's immediately adjacent to that plan. It's just south of that weapons grade nuclear facility up there. At the time the purchase was made from the war Department or I can't remember the name. I'm trying to find the documents. Everything I've found says it was for use for our agricultural school for cattle ranching and agricultural research. So when I look at that as an attorney, if you want to gift something to my university, like we recently got a gift out in the big empty out by Crowley. Crowley. How do you say that?
• 16:35
  Speaker A: Crowley, Crowley.
• 16:37
  Speaker B: And it has a lot of astronomy stuff on it. And the person who gifted it to tech was like, this would be great for your physics and astronomy department. I haven't read that grant, but I would presume when someone gifts something to a public institution, it says yes, has a covenant for so long as you use this for astronomy and keep it a dark sky area.
• 16:57
  Speaker A: Yes.
• 16:58
  Speaker B: So something curious up there at Amarillo to me is our ag department did have a contract with a cattle rancher that was leasing part of that land. We did have facilities up there. Those are gone. We kicked the cattle rancher out for Fermi, a data center.
• 17:16
  Speaker A: So as a land mannequin, I know that at one point I was looking into there was a church on a piece of property and the church could have the property as long as that specific denomination was meeting in that church building. The building was belonged to the church, but the land belonged to the family. And that had to go back when that church closed. That land had to go back because that's still. It's in the deed.
• 17:46
  Speaker B: Yeah, it's called a covenant. And it runs with the land. You buy it and it's got a church on it that says it needs to be Baptist church.
• 17:54
  Speaker A: Right.
• 17:55
  Speaker B: If you try to convert that to a Methodist church, it will revert to the grantors heirs.
• 18:02
  Speaker A: So that's. So that's interesting. So there's some question then like that's what you're looking for is that original deed.
• 18:08
  Speaker B: I'm looking for why we got it for $1. And if the reason we got 6,000 acres for $1 was because it was going to a public institution for research and specifically a department that focused on ranching and ag.
• 18:22
  Speaker A: Yes.
• 18:23
  Speaker B: Can we use it for this?
• 18:25
  Speaker A: Right. Yeah.
• 18:26
  Speaker B: Right.
• 18:26
  Speaker A: Good question.
• 18:27
  Speaker B: So that's one fundamental question. I look at a piece of land when someone is, is planning development is what's the intended use?
• 18:35
  Speaker A: Right.
• 18:36
  Speaker B: You know, also what's it zoned for and everything. Now this Amarillo site, one of the reasons they, they like this is because it's Next to a nuclear weapons facility.
• 18:44
  Speaker A: Yeah.
• 18:45
  Speaker B: That means there's a pipeline somewhere there. Not like a traditional pipeline that we think of, but there's a manner to get nuclear materials to that site. If you look at the proposal for this data center that behind the meter energy generation with four nuclear reactors, it makes sense. If I want to build a nuclear reactor, I would love to have the infrastructure in place to not only receive the uranium, but also to hold the waste.
• 19:13
  Speaker A: Right.
• 19:14
  Speaker B: So very smart on Fermi's part. Hey, here's this facility. There's a substation where we process our electrons to send them to the grid. There's some infrastructure. There's natural gas pipelines. If I want to put natural gas generators. We've got a lot of things as a. And Fermi went in and got a deal with Amarillo for water. So the water they're promised is two and a half to five and a half million gallons of water a day from the water district up there.
• 19:46
  Speaker A: Okay, wait a second. That's a lot of. First of all, that's a lot of a. That's a wide gap.
• 19:51
  Speaker B: That's a wide gap. And it, it leaves the option for expansion there. Right, right. Also, if you look at the lease agreement between Texas Tech and Fermi, they have access to all the groundwater rights. And, and what do they sit above? The Ogallala Aquifer. Right. So there's a possibility to drill and tap that aquifer that many people in West Texas rely on. So if I'm already getting five and a half million gallons a day from Amarillo, how much am I going to take from the aquifer? So when we have these, I mentioned the GPUs, the little computers, and they run hot traditionally in a data center. How they're going to cool it is basically, if anyone's ever lived in a mobile home, a swamp cooler. You know.
• 20:41
  Speaker A: Lord.
• 20:42
  Speaker B: You know, the old evaporative.
• 20:43
  Speaker A: I do know.
• 20:44
  Speaker B: Yes. The old evaporative coolers.
• 20:46
  Speaker A: Yes.
• 20:46
  Speaker B: That's how they cool data centers with. And that's why there's so much water use. Right. If you think about. If you've ever. I know I, I grew up living.
• 20:55
  Speaker A: Yes.
• 20:56
  Speaker B: And it's always dripping and you've got a water line to it.
• 20:59
  Speaker A: Yes.
• 20:59
  Speaker B: And it's not 100% efficient, but it's more energy efficient than air cooling.
• 21:07
  Speaker A: Okay.
• 21:08
  Speaker B: So that's why we have the water use. It's not really running like to the GPUs and things, but that you have a lot of evaporative cooling on A large scale in these buildings to kind of suck that heat away from those fans, bring it up through the roof or ever how evaporative cooling works. So that's the main water use.
• 21:29
  Speaker A: So I've heard, like someone will talk about like, well, they'll be recycling or. But we don't have. Currently, there's, to my understanding there's no, like, requirements for them, like from the state. Can the state say, you have to recycle, you can't use more than X amount of water. You, you know, like, do they have any guardrails in place that would protect communities?
• 21:49
  Speaker B: I'm not aware of any guardrails for water use. And you remember, we like our independence here. So if a county wants to do something, it's going to do something. Right. And we have to be careful with water restrictions in Texas because the oil and gas industry is the number one contaminant in the state. And if we make one industry clean up or act responsibly, we're going to have litigation. So.
• 22:15
  Speaker A: Right.
• 22:16
  Speaker B: Sorry, Frackers. You're going to figure. Have to figure something out. Right. So we, we run into some issues if we try to put a restraint on one industry on their water use.
• 22:26
  Speaker A: Right.
• 22:26
  Speaker B: As opposed to another. So in Texas, I cannot see it flying to regulate that. And I've seen some of the current people running for office saying, hey, if I'm on the railroad commission, I'll make sure we're going to use the produced water at the data centers. Well, think about putting salt water in your swamp cooler.
• 22:49
  Speaker A: Right? Yeah.
• 22:50
  Speaker B: And also, just environmentally, the things that are in our produced water, they might corrode.
• 22:57
  Speaker A: The equipment would have to be cleaned. And I mean, and that's. That means, you know, you have all of these. We've done a lot of stuff on produced water. Yeah. So I mean, you can clean it and you can actually get it to drinking quality. But like, the amount of salt that will be left, I mean, there's things that are left over, you know, So, I mean, I do think, I don't know, I hear a lot of people be like, we're going to turn Midland into and, you know, Garden of Eden with this water. And I'm like, I've been hearing that for a long time now, you know, so anyway, I think it'll be used, but. But it's going to be expensive. That's expensive water.
• 23:37
  Speaker B: Well, and let's say we say, okay, data centers, you and Amarillo have to use produced water.
• 23:43
  Speaker A: Where. How they gonna get it?
• 23:44
  Speaker B: Well, how are they Gonna get it there. And there's issues with surface rights and produced water and legal. It's all being litigated right now because people think there's trace elements in it. So if there becomes a value to produce water because there's trace elements of lithium in it.
• 24:01
  Speaker A: Right.
• 24:02
  Speaker B: How does the data center fight that? Like, it's so complex and the easiest, fastest thing to do is just to put that straw right in the ground and suck out what's there. And we're. The state and the counties move so slowly.
• 24:16
  Speaker A: Yeah.
• 24:17
  Speaker B: We've been sucker punched before we even know, you know, what happened.
• 24:20
  Speaker A: Well, and I'm like, okay, you put a wind, you put wind farms in and people hate them. They hate the way they look, you know, and there's some, you know, like a little evidence that they can cause like localized weather changes so that people are farming right under them. Can have like, you know, like hadn't rained here in forever, you know, and then. But they're. We're not talking about something that. And, and if they aren't recycled like they're supposed to be, then of course they. We have these boneyards. Right. So. But we're not talking about decades of negative impact on or just going somewhere and extracting a limited resource until it's gone.
• 25:10
  Speaker B: Well, not only a limited resource, but a resource required for life.
• 25:15
  Speaker A: Yes.
• 25:16
  Speaker B: Required for our farmers, for our ranchers, for our households.
• 25:20
  Speaker A: Right.
• 25:21
  Speaker B: So we're kind of losing sight that what are humans. We're like 80 some percent water.
• 25:27
  Speaker A: Right? Yeah.
• 25:28
  Speaker B: Why are we giving away the water? And they're often getting reduced rates when they get these mass purchase. You know, when we buy in bulk, we save money. That's why we go to Costco.
• 25:38
  Speaker A: Right.
• 25:39
  Speaker B: Same thing with water.
• 25:40
  Speaker A: Right.
• 25:41
  Speaker B: You know, so will they have a system to recycle it? I don't know that that's possible with that type of evaporative system. Right. Because you're.
• 25:51
  Speaker A: Yeah.
• 25:52
  Speaker B: Pulling the water through and, and how it works. I don't know that you can make it a circuit. So what do we do? I know with bitcoin miners, there's kind of similar with the GPUs that are the mining machines. Some were submersing them in to keep them cool. They were, they made submersible ones that were in maybe like some kind of, I would guess like antifreeze type solution. I don't know how that turned out.
• 26:21
  Speaker A: Yeah.
• 26:22
  Speaker B: So technology, you know, when we build rapidly and at a high cost, sometimes technology emerges that can solve a problem.
• 26:29
  Speaker A: Yeah.
• 26:31
  Speaker B: So I don't know where that is, though. There's no incentive right now for them to do anything other than come in and take everything and use it.
• 26:40
  Speaker A: So I don't know, sometimes it feels like you, you know, just as an ordinary citizen, like we really have so little say over what happens or control over, you know, I don't want that in my backyard, you know, because I know people in Amarillo have, I've seen just back and forth, you know what I mean about people? Just average people are like, I don't want this. You know, and so, and it does seem like it's. I mean, I, I wonder, I mean, I know it's like cooling it, but is it cooling it enough that like, the environment around it is still not being impacted? Because like cities already have that heat dome and so would it not be contributing to the heat dome at some point?
• 27:31
  Speaker B: Well, it is outside of Amarillo a ways, right?
• 27:35
  Speaker A: Yeah.
• 27:36
  Speaker B: So it's not going to be part of that heat dome.
• 27:38
  Speaker A: Yeah.
• 27:39
  Speaker B: And probably there's not much near it because it's near a nuclear weapons facility.
• 27:44
  Speaker A: Yeah.
• 27:45
  Speaker B: So I don't know that that concern is there.
• 27:47
  Speaker A: Yeah, I'm not exactly sure. I mean, I know where because it's out kind of by the airport, right?
• 27:50
  Speaker B: Yeah. It's kind of northeast of town.
• 27:53
  Speaker A: There's not a lot of building going that on during that direction.
• 27:56
  Speaker B: And, and I do think there's restrictions because of the facility that's there. There's security issues.
• 28:01
  Speaker A: Sure. Yeah.
• 28:02
  Speaker B: There's a lot of security up at that site.
• 28:05
  Speaker A: Yeah.
• 28:05
  Speaker B: So I know we're going all over the place, but to get back to this.
• 28:09
  Speaker A: Yeah.
• 28:09
  Speaker B: You build it, they'll come. Scenario.
• 28:11
  Speaker A: Yes. Okay. Yes.
• 28:12
  Speaker B: So a company like, firm, like I said, Google, they'll build their own and they'll own it.
• 28:15
  Speaker A: Okay.
• 28:16
  Speaker B: Manage it. Fermi's business plan is to get the land to build the behind the meter power generation and then to find a tenant that's a data center. So right now everything they're doing, they've cleaned, cleared a bunch of land, they've laid some gas pipeline. They've got six smaller Siemens natural gas generators. I believe they're on site and getting ready to go online. And then they've got a power purchase agreement with SPC up there to buy 200 megawatts of power.
• 28:50
  Speaker A: Okay.
• 28:51
  Speaker B: But they don't have anyone to use the power. Their business model is I'm going to secure the land, I'm going to build the infrastructure and I'm going to build a warehouse and then, hey, Xai come in here and rent from me and bring your computers in, bring your GPUs in and then you're going to buy electricity from me that I've built these generators. So if you're the tenant, you also have to buy electricity and I'm going to sell you the water too.
• 29:20
  Speaker A: Okay. So this is completely different model than what I was saying a while ago about. Because. Right. They're becoming a, they're, they're going to be a landlord. So they bought the land from Tech.
• 29:32
  Speaker B: They didn't buy it, they leased it. They have a 99 year lease with Texas Tech.
• 29:37
  Speaker A: Okay.
• 29:38
  Speaker B: This.
• 29:39
  Speaker A: So, so, well then Tech is going to make money off of that lease. Like.
• 29:42
  Speaker B: Well, tech.
• 29:43
  Speaker A: Is it good?
• 29:44
  Speaker B: It does have. There are provisions in there. I mean, as I see it, when I look at the lease, which I have copies of the lease and the amendment, you can get it from the Freedom of Information Act.
• 29:53
  Speaker A: Okay.
• 29:54
  Speaker B: Or you can email me and I'll send it to you. Yeah, It's a fascinating lease, especially for people interested in land issues.
• 30:00
  Speaker A: Okay.
• 30:02
  Speaker B: It kind of gives carte blanche to Fermi to do whatever they want with their tenants and sub tenants and electricity and everything. It's basically all of the land up there. I believe it's a little below market in my estimation. If I look at it just for a commercial scale solar or wind developer to come in, not necessarily a data center. The terms are not what I would argue for my client.
• 30:28
  Speaker A: Yeah.
• 30:29
  Speaker B: And there's some interesting provisions that are tied to the assessor's value of the property, but specifically exclude any of the data center equipment and the electricity equipment. So when we look at getting revenue from assessed value and the assessment excludes any improvements, we're not getting anything.
• 30:54
  Speaker A: Right.
• 30:55
  Speaker B: You know, when you look at it, there's some terms and there's, and they build that out like this assessed value could be, you know, 30 billion a year for which tech would get 3, you know, 300 million. That's not going to happen because it expressly excludes them. Those GPUs. Those GPUs are about $20,000 each. So of course if you stack tens of thousands of them, the value is going to be huge. So I can only imagine when Fermi came into Tech and said, look, these things cost this much and they're going to go in the buildings and it's all going to be part of the value. But then it says it's excluded. But there's specific language in there that concerns me where they're saying if it gets over 30 billion, you're only going to get 1% instead of 3%. It's not going to get that high because we're not entitled to that. It's crazy.
• 31:42
  Speaker A: How interesting. So it's like these two pieces of this are kind of contradictory each other and they're in this lease.
• 31:49
  Speaker B: Yeah.
• 31:50
  Speaker A: And. Oh, how interesting. Yeah, I'd love to see that.
• 31:52
  Speaker B: One really fascinating thing about the lease. Fermi was an LLC created in January 2025 and it's created by two companies. The principals of those companies are Toby Nagebauer and Griffin Perry, some sons of some influential people in Texas. Rick Perry's son and then Randy Nagebauer son. They formed this LLC in January 2025. In May of 2025, after an executive session of the Regents of the Board of Texas, which means it's a closed door session, no minutes are required. They signed a lease. Yeah. Texas Tech.
• 32:37
  Speaker A: Okay.
• 32:37
  Speaker B: Signed the lease with a company that was five years old or five, five months old. The company, after securing the lease, turned into a corporation, it Texas Corporation. And in October 2025, Fermi did an IPO, an initial public offering valued at something like 17 billion and went public.
• 32:58
  Speaker A: Wow.
• 32:58
  Speaker B: And the only thing Fermi had was a, a dream and a lease with Texas Tech and The valuation was 17 billion. There's currently at least two shareholder derivative actions against Fermi for representations made.
• 33:12
  Speaker A: Oh no.
• 33:14
  Speaker B: It's kind of become.
• 33:15
  Speaker A: Oh no.
• 33:16
  Speaker B: A mess. And so what Fermi is doing, they've bought these of that. So when they went public, they made about 750 million in their, in their IPO selling shares to people. They used private equity. Right. To fund this and get all of this. We're not privy to that information.
• 33:34
  Speaker A: Okay.
• 33:35
  Speaker B: When we get private loans, this is what leads to some financial collapses and bubbles. Right. When the public doesn't know how something is being subsidized or financed.
• 33:45
  Speaker A: Okay. Okay.
• 33:45
  Speaker B: So there's private money that we're not privy to, what's going on, but they're buying these generators, they're building infrastructure, they're doing dirt work. Currently there's an argument over the permitting because they didn't get their EPA quality permit.
• 33:59
  Speaker A: I did see something about that. Right.
• 34:01
  Speaker B: Yeah.
• 34:01
  Speaker A: Right.
• 34:02
  Speaker B: So they've just been kind of steamrolling through this process to get this data center and the generation built, but they don't have a tenant yet, so they're building all of this and their expectation
• 34:13
  Speaker A: is they're going to sell the tenant the electricity and the water.
• 34:16
  Speaker B: Yeah. And have to pay Rent. Right.
• 34:19
  Speaker A: And rent.
• 34:20
  Speaker B: Right.
• 34:21
  Speaker A: So they're gonna buy water wholesale, I
• 34:24
  Speaker B: guess from Amarillo or drill using Texas tax water rights.
• 34:29
  Speaker A: Okay. And then they're building these. So they need the money to. To build these generators. Generators?
• 34:37
  Speaker B: Yeah, they've got four nuclear.
• 34:39
  Speaker A: Nuclear generators. Because didn't they just. I think I saw something the other day that said they'd raised like another 500 million or something. But that's not even near. That's not a dropping the bucket for what they're going to need. Right.
• 34:49
  Speaker B: That 4. That 500 million that they got some alone. Oh, and the loan is to buy three more Siemens natural gas generators, I believe. Higher capacity than the six they've gotten.
• 35:04
  Speaker A: Okay.
• 35:04
  Speaker B: The six they got, they. I believe they have paid over market value because there's a long line to get a generator right now.
• 35:11
  Speaker A: Oh.
• 35:12
  Speaker B: Because we need more electricity to support our grid. So you can't just form a company and then get in line. There's a five to seven year wait for a natural gas generator. So what they do is. I mean, what you do as a smart business person. I need this now. I'll just pay extra to get it here. I need this. So that has to be what happened because there's no way they had a deal to get any of this a year ago.
• 35:36
  Speaker A: Right.
• 35:36
  Speaker B: They'd still be in line. So they got those six probably at over market value. I'm guessing they spent a couple hundred million on that. These three that they say that this loan. I looked at the loan document that came out.
• 35:51
  Speaker A: You've read everything.
• 35:52
  Speaker B: I love it. You know me, I just like get in a rabbit hole.
• 35:55
  Speaker A: Like give me the original source also.
• 35:57
  Speaker B: Yes. I want the source and the facts. I don't want.
• 36:00
  Speaker A: This is exactly what we need.
• 36:01
  Speaker B: Yeah. I don't want you to tell me what's in it. I'll just go look at it.
• 36:04
  Speaker A: Right.
• 36:05
  Speaker B: This money is specifically earmarked for those three generators.
• 36:08
  Speaker A: Okay.
• 36:08
  Speaker B: The market value of those three generators is more than 500 million. So they're going to have to get additional financing.
• 36:16
  Speaker A: Okay.
• 36:16
  Speaker B: So maybe they can buy two or one and a half with that. But they're going to have other funding, so it'll be interesting. And remember, they're spending all this money and they don't have anyone yet who's going to bring their little computers to run the data center. This business model is much worse for a community than the Google comes in and buys the land and builds it. Because you know you're going to get what you're going to get.
• 36:41
  Speaker A: Yes.
• 36:41
  Speaker B: And if you have someone. This is like speculation. Right. I'm going to come in and build. And they're saying they're going to build the largest center in the world without a single tenant because they don't even
• 36:51
  Speaker A: know what a tenant would be that would want what they would want a tenant would want.
• 36:55
  Speaker B: Well, and the least contains a list of tenants that are allowed. So they're kind of limited too. If a new.
• 37:03
  Speaker A: Interesting.
• 37:04
  Speaker B: It is interesting. It's got certain tenants that are listed that are on there and it excludes some big names. It's very interesting.
• 37:14
  Speaker A: That's really interesting. So you, you have. You just said I want, I want to see these documents. And obviously you did Freedom of Information act and. And you got them. So we're going to put all your information on the.
• 37:29
  Speaker B: I can give you the PDF of the lease.
• 37:31
  Speaker A: Yeah.
• 37:32
  Speaker B: When I saw the. The loan I. I don't know where I found that, but I think I have that in PDF as well. The recent loan. And then yeah. I just did a FOIA request mostly when I heard about it. And ironically I was looking for funds Last year or 20, 24 I guess there was a grant that I was going after.
• 37:51
  Speaker A: Yes.
• 37:52
  Speaker B: Through the Department of Energy to do cattle agrivoltaics at Tech where we would put solar panels up but with a like a seven foot leading edge.
• 38:00
  Speaker A: Yes.
• 38:00
  Speaker B: So that ranchers could still work. And I was working with the ag. The Davis College provide shade also forage. We were going to do some fence line research. If we put them along straddling a fence line if that would bring the cattle to the fence line where they traditionally don't graze as much.
• 38:16
  Speaker A: Interesting.
• 38:16
  Speaker B: We had all these proposals. I had 18 letters of support from industry, from everyone. That funding was pulled by the current administration or it's in hold because a
• 38:28
  Speaker A: lot of things that happen to a lot of things.
• 38:29
  Speaker B: But that's how I became curious about these Texas Tech property. I was looking at. Looking for the ideal location.
• 38:35
  Speaker A: Yeah.
• 38:36
  Speaker B: To put this. And I was looking as a developer, you know, where's the substation? Where do we have the land, the sun and where can we put cows?
• 38:44
  Speaker A: Right.
• 38:44
  Speaker B: And one of the sites was Pantex. So I kind of developed an affinity for this site.
• 38:49
  Speaker A: Okay. So you were already curious and knew all about. That's so interesting.
• 38:53
  Speaker B: So I knew quite a bit about that site and we were told then something else was going on there and it wasn't this Fermi thing, it was something else that was. And they said try somewhere else. So we had settled on the Idaloo site, the beef unit. But when I heard that this happened, I thought, wow. And that made me wonder if that was what was happening and why. I was told, stay away from that site.
• 39:15
  Speaker A: Right. Yeah. Yeah.
• 39:16
  Speaker B: And then I just got more curious about it. And I've learned a lot about Texas Tech and how to use our properties that have been donated to us. Because obviously, if I'm going to put this Cattle, AG or Voltaic, I have to go through operations and the Regents and everyone to get permission to build something.
• 39:35
  Speaker A: Well, I know. I mean, just the. Just a little that I've done with tech. You know, it's. I. I've, like. I know I don't know how to deal in that world. You know what I mean? So I know that it is. There are certain, like, chains of command that you follow now that I have figured out and. And I figured out, like, being careful how to say things so that I'm not assuming that this person can help me or that this. Anyway, it's so I. It's surprising to me that you can do something in five months.
• 40:04
  Speaker B: It's very. So I can't even get a laptop in five months. As a professor, you know, I mean, like, yes, to procure something. But I've also looked into those rules and anything valued over a million, which. The lease, the first year term is conveniently just over a million.
• 40:19
  Speaker A: Yeah.
• 40:21
  Speaker B: Doesn't require the standard procurement process.
• 40:24
  Speaker A: Okay.
• 40:25
  Speaker B: Or approval.
• 40:26
  Speaker A: Okay.
• 40:27
  Speaker B: So that's, I think, how they were doing the executive session.
• 40:32
  Speaker A: Yeah. Yeah. That sounds. But for very lawyerish.
• 40:36
  Speaker B: Right. Yeah, I know.
• 40:39
  Speaker A: Yeah. Okay. So we're gonna have to. We're have to continue this conversation, so we will maybe reschedule so that we can continue to talk about the. I think what's interesting to me, like, I learned. I've just learned just so much about, like, data centers, but I like the actual basics, I think is. You know, I've had this general idea, but, like, what we were talking about at the beginning, you were explaining how all this. I would like for us to, like, come back again, revisit this conversation and talk about are there anything positive that they bring? Because I know what I've seen is, like, there's not a lot of jobs. I mean, after the initial construction, et cetera, et cetera. So not to. We won't talk about now. Okay.
• 41:25
  Speaker B: We're gonna do the pros.
• 41:26
  Speaker A: We're gonna do the pros.
• 41:28
  Speaker B: Yeah.
• 41:28
  Speaker A: If there. And that might be a shorter one. I don't know. It's it's feeling like it might be really short. Although I will say, like, I do like, I do like AI, But I think it's interesting. I've always thought of data centers just as AI, but they're not.
• 41:42
  Speaker B: It's not, in fact, the majority. If you go home and watch Netflix tonight, where do you think your movie's coming from? Yeah, it's a data center. It's at a data center. And if I say I want to watch Lonesome Dove tonight, it finds the data center where Lonesome Dove is stored and that GPU sends it over to my tv and I see Ricky Schroeder.
• 42:07
  Speaker A: Ricky Schroeder. That's a whole nother story.
• 42:11
  Speaker B: That's an insane joke.
• 42:14
  Speaker A: Well, friends, thanks for being here again and I hope you learned as much as I did. And we are going to continue this conversation with Cass and this and many more. We talk some more about solar farms and things that people are getting asked. And if you are a landowner, you know, this is a great opportunity to learn some things about what you should ask. And even if you're on the city council in a community that's being targeted for one of these places, one of these data centers, like, hopefully this will be helpful. Might put some resources up on the website too, to make some things available.
• 42:51
  Speaker B: Yeah. And just so people know, I'm not opposed to this kind of development. I am about responsible development and making sure everyone is informed. So I don't represent one side or the other. I just like people to be informed.
• 43:03
  Speaker A: Yeah, that's kind of how we are. Like, we just say we just want people to know what the facts are and you can decide what to do with those facts. And we don't think people that are listening in or are unintelligent and that they can't take the facts that they're given and decide what they believe like it is. We believe they're capable of it and responsible to do it. So anyway, friends, if you've enjoyed this, I hope that you will come back and listen next time. Cass is here. And also we now have a donation page on our website. You can go to donate if you've enjoyed this. So we would appreciate any investment into covering the cost of the production for all of these. And we really love doing it for you and we got plenty of listeners now, so it's pretty exciting. And we have some exciting things coming up also. That's going to be on a weekly basis that we'll be announcing soon. So talk to you soon. Thanks, friends.