8-K: New Era Helium and Sharon AI Plan 250MW Net-Zero AI Data Center in Permian Basin

New Era Helium and Sharon AI's joint venture, Texas Critical Data Centers, intends to acquire a 200-acre site in Ector County, Texas, to develop a 250MW net-zero energy AI/HPC data center.

Summary

• New Era Helium, Inc. and Sharon AI, Inc. plan to develop a 250MW net-zero energy AI/HPC data center in the Permian Basin through their joint venture, Texas Critical Data Centers, LLC (TCDC).
• TCDC has signed a Letter of Intent (LOI) to acquire a 200-acre site in Ector County, Texas.
• The LOI is contingent on due diligence and negotiation of definitive documents expected within the next ninety days.
• The site is near key infrastructure, including fiber optic cable, natural gas transmission lines, and CO2 pipeline infrastructure.
• The project aims to utilize Carbon Capture Utilization Storage (CCUS) and energy transition technologies.
• The initial phase of the project is expected to be online in late 2026.
• TCDC expects to finalize a natural gas supply contract with New Era Helium in Q2 2025.
• The project will include a natural gas-fired power plant and fiber connectivity.

Sentiment

Score: 7

Explanation: The announcement is positive due to the potential for growth in the AI infrastructure market and the focus on sustainable energy. However, the project is still in the early stages and subject to various risks.

Positives

• The project aims to create a large-scale, net-zero energy data center, aligning with sustainability goals.
• The location in Ector County offers access to key infrastructure, including fiber optic cable and natural gas pipelines.
• The use of CCUS technology can help reduce carbon emissions.
• The project is expected to attract top-tier partners due to access to cheap and reliable power.
• The project is expected to be a first mover to initiate a behind the meter Data Center Campus with an intended pathway to Net Zero Energy.

Risks

• The acquisition of the site is contingent on completing due diligence and negotiating definitive documents.
• The project's success depends on securing necessary entitlements and selecting appropriate power generation and CO2 capture technology.
• The project relies on finalizing a natural gas supply contract with New Era Helium.
• The project relies on securing offtake partners, which may include hyperscalers and other large energy users.

Future Outlook

The joint venture aims to complete due diligence, finalize the site acquisition, select technology partners, and secure offtake agreements to bring the initial phase of the data center online in late 2026.

Management Comments

• E. Will Gray II, CEO of New Era Helium, stated that the company is poised to execute its planned power strategy for the data center campus.
• Wolf Schubert, CEO of Sharon AI, expressed excitement about developing large-scale data center infrastructure in the U.S.
• Russell Tippin, President of GROW Odessa, stated that Ector County is the perfect fit for the net-zero energy data center project.

Industry Context

The announcement aligns with the growing demand for AI infrastructure and the increasing focus on sustainable energy solutions in the data center industry, as highlighted by the Stargate Project.

Comparison to Industry Standards

• The Stargate Project, involving companies like OpenAI, Softbank, and Oracle, aims to invest hundreds of billions in building new AI infrastructure in the United States, indicating a significant demand for large-scale data center and power capacity.
• Other companies such as Switch, Equinix, and Digital Realty Trust are also investing heavily in data center infrastructure, but the net-zero aspect of this project differentiates it.
• The project's focus on CCUS aligns with industry trends towards reducing carbon emissions in data center operations, similar to initiatives by Microsoft and Google.

Stakeholder Impact

• Shareholders may benefit from the company's expansion into the growing AI infrastructure market.
• The project could create jobs in the Ector County area.
• Customers of Sharon AI may benefit from increased access to AI/HPC resources.
• The project could provide a new market for New Era Helium's natural gas production.

Next Steps

• Complete due diligence on the 200-acre site.
• Negotiate and finalize definitive documents for the site acquisition.
• Finalize a natural gas supply contract with New Era Helium.
• Select power generation and CO2 capture technology.
• Appoint technology partners.
• Continue conversations with potential offtake partners.

Key Dates