Economic boom or environmental disaster? Rural Texas grapples with pros, cons of data centers
Local leaders see data centers, which help power the world’s shift to artificial intelligence, as a way to keep their towns open. Residents worry their way of life — and water — is at stake.
Subscribe to The Y’all — a weekly dispatch about the people, places and policies defining Texas, produced by Texas Tribune journalists living in communities across the state.
LUBBOCK — Kendra Kay loved growing up in the quiet of West Texas.
She enjoyed the peacefulness brought in by the open lands. She appreciated how everyone in her community had a purpose and contributed to their way of life. She never wanted the busy noise that came with living in a bustling big city.
“That’s why we live here,” Kay, an Amarillo resident, said.
Now, Kay and others who have chosen the simpler life are worried that the emerging data center industry that has set its eyes on towns across the Panhandle and rural Texas might upend that agrarian bliss.
“What will we have to give up to make sure these data centers can succeed?” she said.
Data centers have been around since the 1940s, housing technology infrastructure that runs computer applications, internet servers, and stores the data that comes from them. More recently, data centers are powering artificial intelligence and other internet juggernauts like Google, Amazon and Meta.
Related Story
Sept. 11, 2025
These newer sprawling data centers have been sold to communities as a boon to their economic development. Rural Texas has become a prized spot for the businesses rushing into the state.
Virginia is the only state with more data centers than Texas, which has 391. While most are concentrated in North Texas and other major metro areas, they are increasingly being planned in rural areas.
Affordable property rates, wide open spaces, and welcoming local officials have made remote areas attractive. However, the people who live in those areas have grown worried about what incoming centers — which can sit on thousands of acres of land — mean for their lands, homes, and especially, their limited water supply.
From the Panhandle to the Rio Grande Valley, Texas’ water supply is limited. The strain is particularly acute in rural West Texas and other areas of the state that face regular drought. Data centers, especially those used for artificial intelligence, can use an extraordinary amount of water. The state does not yet require most data centers to report their water usage.
Related Story
Sept. 25, 2025
And with new, bigger data centers coming to the state regularly, there are unanswered questions on where the data centers will get the water they need to stay cool.
“These new data centers are enormous,” said Robert Mace, executive director of the Meadows Center. “I don’t know where you get the water to do that in a state that’s already water-stressed, not only from drought, but also rapid population growth in both the population and industry.”
The concern already exists in the Texas Panhandle, where droughts are common and groundwater supply is declining. There are four data centers planned for the region, including in Amarillo, Turkey, Pampa and Claude. Outside the Panhandle is no different, as AI campuses are expanding in the Permian Basin and 30 data centers are planned for Sulphur Springs, a small town in East Texas. Those plans have residents just as worried.
The Amarillo skyline on April 9. The city is considering selling some of its water to a data center.
Credit:
Eli Hartman for The Texas Tribune
In Amarillo, the City Council is considering a water deal with Fermi America, a company co-founded by former U.S. Energy Secretary and Texas Gov. Rick Perry. The campus would span 5,800 acres in nearby Carson County and include 18 million square feet for data centers.
Perry said in June that the project is part of a national push to stay competitive in the global energy and technology sectors.
A group of residents, including Kay, see the deal as a threat. They protested the deal in front of the Potter County courthouse in late September.
“We’re ready for more community conversations about the use of this and with Fermi,” Kay said.
Trent Sisemore, a former Amarillo mayor who Fermi tapped to lead community engagement, said the data center will offer good jobs. The Panhandle was also chosen, the company said ealier, because of its proximity to natural gas pipelines, high-speed fiber and other infrastructure.
“The deployment brings tremendous growth and economic stability to our community,” Sisemore said.
Part of Amarillo’s water supply comes from the Ogallala Aquifer, which is also the main water supply for farmers and ranchers in the region, and it is being drained at rates faster than it can be replenished. Agriculture production is the lifeblood of the High Plains, and the success of the region depends on the success of farmers and ranchers. Organizers of the protest at the Potter County courthouse have stressed that incoming data centers are dangerous because of the ripple effect that could happen in a region already under water restrictions.
Kay pointed to similar communities, such as Lenoir, North Carolina and Henrico County, Virginia, where there is a constant expansion of data centers pushing into rural areas. The expansions bring the likelihood of noise and water pollution, along with a jump in electricity prices with it.
“We would never move somewhere that’s more busy and loud,” Kay said. “We like our quiet streets.”
“It’s exciting when it comes to data centers”
Economic success in Ector County, which includes Odessa, has long been dependent on oil rigs. For local officials, a 235-acre data center in Penwell is a chance to diversify the economy. The abundance of natural gas, untapped land and untreated water, makes the region ideal, said County Judge Dustin Fawcett.
“It’s exciting when it comes to data centers,” said Fawcett. “Not only are we using that produced water, we’re also using the excess natural gas we have, so we get to be more efficient with the products we’re mining.”
With one planned near Odessa, where water supply has been a consistent problem for both quantity and quality, some residents aren’t so sure.
“We don’t have an abundance of water out here,” said Jeff Russell, an Odessa resident and former vice president of the Odessa Development Corporation. “We have an abundance of bad water, but we don’t have an abundance of good water.”
Amarillo business owners and community leaders tour the Edge Data Center at the Region 16 Education Service Center on March 19. The data center is much smaller than some of the new ones planned for other parts of rural Texas.
Credit:
Angelina Marie for The Texas Tribune
Fawcett said as officials look into these agreements with data centers, they don’t want to pull water from the municipal supply — they want to tap into brackish and produced water, which is a byproduct of oil and gas extraction. He hopes that data centers can help them get closer to harnessing produced water on a large scale instead of shooting it back into the earth.
Just like the Panhandle, there are a slew of data centers either planned or already in dry West Texas. Sweetwater and El Paso have projects in the works, while small towns like Snyder are actively promoting their land as a good site for interested businesses.
Yi Ding, an assistant professor at Purdue University in the School of Electrical and Computer Engineering, said some states have started introducing regulations that prevent data centers from using drinking water. Texas doesn’t, which could become a problem in the near future.
“This is a concern in other states,” said Ding, who has researched the environmental impact of data centers. “You don’t want data centers competing for water used in people’s daily lives.”
While state planners don’t have a concrete way of tracking how much water data centers are using in Texas or how much will be needed in the future, some centers are already looking to make their systems more efficient. This includes using different cooling methods, such as gels, which would decrease the amount of water they use. However, Ding compared it to a theory that says techniques can be improved over time, but it opens the door for more consumption.
“When something becomes more efficient, people use it more,” Ding said. “So total water consumption doesn’t significantly drop, unless there’s a significant paradigm shift in terms of cooling.”
Sisemore, who is Fermi’s ambassador to Amarillo, said they want to use water efficiently and protect the resource, and will be using a system that continuously circulates cooling fluid, which uses less water.
“If there's better technology, that’s what we’re going to use,” Sisemore said.
“Wealth here is the water”
Will Masters has spent the last decade working on ways to replenish the Ogallala Aquifer. His efforts focus on conservation and using other methods, such as playa lakes, to restore the groundwater that’s been drained for more than 50 years.
The Panhandle area sits on one of the deepest parts of the aquifer, which means it likely has more water than regions further south. Masters, who lives in Amarillo, wants to ensure the Panhandle doesn’t push its geographical luck.
“Wealth here is the water,” said Masters, one of the founders for Ogallala Life, a nonprofit in the region. “If the water is not here, this area is impoverished.”
When Amarillo residents held their protest last month, it was to both fight against data centers coming to the city and inform others of the potential risks facing their water supply — including the risks to the Ogallala Aquifer. Masters said the idea of accepting the water being drained more in exchange for a limited amount of jobs is a bad deal.
Will Masters, the co-founder of Ogallala Life, listens to community members speak during an event on water usage by the Fermi America data center on Sept. 20.
Credit:
Phoebe Terry for The Texas Tribune
“City leaders are trying to find a way to keep their cities alive,” Masters said. “So we have developers coming in with ideas to bring in money and jobs, temporarily, but it’s causing more problems.”
Amarillo Mayor Cole Stanley said the council’s priority is protecting the city’s water and to get a good deal if they decide to sell any of it to Fermi for its data center, which will sit about 35 miles north of the city’s limits in Carson County.
The company has asked for 2.5 million gallons of water a day, and there’s talks it could go up to 10 million gallons. By comparison, Stanley said the city uses 50 million gallons a day.
“We’ll charge them more than a regular customer because they’re outside the city and require them to put in their own infrastructure,” Stanley said. “Then we’ll be the beneficiary of the additional jobs that pay well, new residents who build homes and put in additional businesses. It’ll be really good economically for the growth of Amarillo.”
Stanley acknowledged there will be challenges.
“The cons are how fast do you grow? Can those growing pains be forecasted?” he said in an interview with The Texas Tribune. “Can we plan strategically so we’re ready for that amount of growth?”
Stanley said he has spoken with residents and heard their concerns. At the same time, he said Fermi America will need to lead the conversation since it’s outside city limits. His role comes later, he said, as the business finalizes its plans.
“Fermi America is going to need to step up and hold their own forums and engage with those citizens directly,” Stanley said. “Just like any business deal would be handled. It would be very unfair for me to take a lead in any of those conversations, not knowing who the players are or what the full potential is.”
Latest in the series: Running Out: Texas’ Water Crisis
Loading content …
Sisemore, the community lead for the project, said the U.S. is being outpaced by China when it comes to coal, gas and nuclear generation. He said the next war will be won because of AI, and this is an opportunity for the community to help America win it.
He said he understands where the trepidation from residents is coming from — comparing it to when people were concerned about Bell Helicopter, a company focused on producing military aircraft, came to Amarillo. Sisemore wants to help inform them by bringing in experts to give them more information.
An attendee holds a sign boycotting a proposed data center at a protest in front of the Potter County Courthouse on Sept. 20.
Credit:
Phoebe Terry for The Texas Tribune
“Everybody has a right to their opinion, and we can all learn from each other,” Sisemore said.
Town halls are expected to begin in November.
Disclosure: Google has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.
Shape the future of Texas at the 15th annual Texas Tribune Festival, happening Nov. 13–15 in downtown Austin! We bring together Texas’ most inspiring thinkers, leaders and innovators to discuss the issues that matter to you. Get tickets now and join us this November.
TribFest 2025 is presented by JPMorganChase.
