While we hesitate to say no (and essentially be short human ingenuity), we believe the Permian Basin offers a unique mix of advantages compared to just about any other land in the world. Consider the Permian’s cheap energy (natural gas), unregulated energy grid, vast unpopulated acreage, and abundant water for cooling. We don’t believe there’s any other place that lies at the intersection of all those characteristics.
Why would TPL and LB capture a rent premium much higher than pasture land-use? Let's say data centers comprise 50 to 500 acres. With 55+ million acres in the Permian, why would a data center developer pay up for TPL and LB acres over the adverse neighbors?
Thanks for the question. We suspect a number of reasons: the efficiency of working with another company over a rancher and the ability to work with one entity that can easily provide water/power/land. Also, depending on how much supporting infrastructure goes along with the data center, 1000 acres or more could be required and there are few land owners with that amount. Once again, an argument for working with one owner over multiple.
Don’t forget the need for water to cool the data centers which due to drilling, the Permian Basin has plenty of.
I wonder if AMREP (AXR) could get involved with this…sitting on >10,000 acres of land outside of Albuquerque.
While we hesitate to say no (and essentially be short human ingenuity), we believe the Permian Basin offers a unique mix of advantages compared to just about any other land in the world. Consider the Permian’s cheap energy (natural gas), unregulated energy grid, vast unpopulated acreage, and abundant water for cooling. We don’t believe there’s any other place that lies at the intersection of all those characteristics.
Why would TPL and LB capture a rent premium much higher than pasture land-use? Let's say data centers comprise 50 to 500 acres. With 55+ million acres in the Permian, why would a data center developer pay up for TPL and LB acres over the adverse neighbors?
Thanks for the question. We suspect a number of reasons: the efficiency of working with another company over a rancher and the ability to work with one entity that can easily provide water/power/land. Also, depending on how much supporting infrastructure goes along with the data center, 1000 acres or more could be required and there are few land owners with that amount. Once again, an argument for working with one owner over multiple.
Good thinking, I agree. Deep pockets are racing to build these things so one-stop shop makes sense. Thanks!