TL;DR · 30-second read
The Short Version
Two companies want to build a giant artificial intelligence computing complex in West Texas that makes its own electricity instead of plugging into the public power system.
At full size, it could use more power than two large nuclear reactors produce. It would run on natural gas from a pipeline and a second fuel from a plant next door, with first power planned for 2027.
The companies say going it alone avoids a new state review. But the project is still a plan, and they have not named a customer or said who is paying for it.
Data Center Dynamics reported on August 21, 2026 that AI data center developer Prometheus Hyperscale has partnered with Istmo Energy to develop a campus of up to 2.5 gigawatts (GW) in Pecos, Reeves County, Texas. Phase 1 is planned at 1.5GW, with later phases taking the site to 2.5GW.
The campus would generate its own electricity “behind the meter,” meaning on-site rather than through the public grid, using piped natural gas and ethane from Istmo Midstream’s co-located fractionation facility, a plant that separates natural gas liquids into individual products. First power is slated for 2027 through modular deployments, with an option to add custom-built facilities in 2028.
Executive Summary
Prometheus and Istmo are proposing a large AI campus designed around a simple premise: if the grid is the constraint, do not depend on it. The companies pair on-site generation with two fuel sources and expect to use closed-loop cooling to limit concerns about local water use.
The timing gives the plan added relevance. Earlier in August, Texas Governor Greg Abbott ordered state regulators and ERCOT, the operator of most of the Texas grid, to audit all data centers in the state’s interconnection queue, the line of projects waiting to connect. That audit could subject up to 20 percent of US data center projects to delay. The companies contend that their project will not be affected because it is not seeking a grid connection.
The announcement matters less as proof of a finished solution than as a clear example of a trade-off. Leaving the queue removes one set of risks, while making fuel supply, on-site generation and the campus’s own operations the factors that determine whether its computers stay on.
Skipping the Queue Moves the Risk Rather Than Removing It
The case for building off the grid is straightforward. A project with no grid connection does not wait for one, cannot be held up at that stage, and, according to the companies, would sit outside the Texas audit. Istmo CEO Alex Gutierrez argues the design will “insulate compute from grid constraints and curtailments,” referring to the power reductions grid operators can require when supply is tight.
The trade-off is that the campus effectively becomes its own utility. At 1.5GW in Phase 1 and up to 2.5GW at full build, its uptime would rest on on-site generators, fuel deliveries and the people running them, without a public grid connection to absorb a problem. For a prospective tenant or lender, the central question shifts from when a utility will connect the site to how much fuel is contracted, how much spare generating capacity exists and who carries the risk when equipment fails.
This is one proposed project, not evidence of an industry-wide shift. It does match Prometheus’ own approach elsewhere: its Evanston, Wyoming campus is planned as a fully islanded microgrid, which the company says eliminates “interconnection queue exposure and ratepayer impact as regulatory risk factors.” Those benefits are real if the plans are delivered, but they are benefits of avoiding the grid, not proof that the replacement power system will perform.
Dual Fuel Is a Sensible Idea With a Strong Claim Attached
Siting beside Istmo’s fractionation assets is the most distinctive part of the plan. Rather than relying only on a pipeline, the campus could also draw on ethane, a component of natural gas liquids, produced next door. The companies say this adds fuel security and operational flexibility by reducing dependence on any single fuel or supply route. A short supply path and a second fuel option could plausibly offer those benefits.
The stronger claim is Gutierrez’s statement that the arrangement “eliminates single-point fuel risks” and is “unique and unprecedented” in behind-the-meter data centers. Two fuels and two delivery paths do reduce some failure modes, but they may not be fully independent. Both are hydrocarbons tied to regional energy production, and a fractionator can supply ethane only if liquids keep arriving for processing. A regional production or infrastructure disruption could therefore affect both, which makes “reduces” easier to support than “eliminates.”
Commercial terms matter as well. Ethane is also a petrochemical feedstock, so fuel burned for electricity may have a competing use and price. Whether the dual-fuel design delivers resilience at an attractive cost will depend on contract terms, on how much of the campus’s load each fuel can carry and for how long, and on generating equipment able to switch between them.
First Power in 2027 Is Not the Same as 1.5GW in 2027
The 2027 target applies to first power through modular deployments, meaning prefabricated units that can typically be installed faster than conventional buildings. That sequencing could allow a developer to begin serving customers before larger facilities are finished. But the initial modular capacity has not been stated, and the custom-built facilities planned for 2028 are described as an option, not a commitment.
Readers should therefore treat first power and full Phase 1 capacity as separate milestones. The headline 2.5GW figure is also explicitly “up to,” with 1GW of it assigned to unspecified future phases. Prometheus president Trevor Neilson describes the project as adding 2.5GW to the company’s “existing project pipeline,” which is an accurate frame: a pipeline is a list of intended development, not contracted or operating capacity.
That pipeline is now sizable. Evanston is planned at an initial 1.25GW with potential to reach 5GW, so Evanston and Pecos alone total as much as 7.5GW on paper, before a further 500-acre development planned in Kaufman County, Texas. Evanston did secure planning approval in June, a concrete step. Execution across several very large sites, each needing its own power system, is the test still ahead.
Water Gets an Answer; Emissions Remain an Open Question
The companies expect to use closed-loop cooling, which recirculates coolant rather than continually consuming water, and frame the choice as a response to local concerns. That is a relevant commitment in a community-facing debate, though the wording is an expectation and no water-use figure accompanies it.
Emissions are the less developed part of the story. Prometheus was described in early 2025 as pursuing a network of carbon-neutral data centers, while the Pecos campus would be powered by burning natural gas and ethane. Carbon capture, offsets or other measures could in principle bridge that gap, but the companies have not explained how, or whether, the earlier ambition applies at Pecos.
Background
Prometheus Hyperscale launched around 2020 as Wyoming Hyperscale Whitebox and relaunched in September 2024. In June 2026 it secured planning approval for its 506-acre Evanston, Wyoming campus, planned at an initial 1.25GW with potential expansion to 5GW and designed to run as a fully islanded microgrid using natural gas engines and turbines. It is also planning a 500-acre development in Kaufman County, Texas, outside Dallas.
Istmo Energy is an independent midstream and downstream energy infrastructure company headquartered in Texas and operating in the Permian and Delaware basins. The partnership comes as AI developers treat power as a defining constraint, a view Gutierrez summed up by calling power availability and long-term reliability “the primary bottlenecks for the AI transition.” Source: Prometheus Hyperscale partners with Istmo to develop up to 2.5GW gas powered data center in Reeves County, Texas, Data Center Dynamics’ report on the planned gas-powered campus in Pecos.Sources