Lancium CEO addresses Abilene’s concerns

 

By Floyd Miller/West Texas Tribune

At a recent Kiwanis Club of Abilene meeting, Michael McNamara, the CEO and co-founder of Lancium, was serenaded with a song written for the event by song leader David Jones. It was to the tune of “Old MacDonald Had a Farm.”

One of the verses was, “With a gravel truck here and a gravel truck there. Here a truck, there a truck, everywhere a gravel truck. Old MacDonald had a farm, A-I A-I O.”

Other verses focused on the billions of dollars being spent in Abilene, the housing shortage, etc. After he finished singing the song, Jones told the crowd it was AI generated.

Despite the warm welcome, McNamara knew on that day his job was to address the concerns surrounding artificial intelligence, known as AI.

McNamara told members of the Kiwanis Club of Abilene on April 8 that the Stargate AI data center under construction in northwest Abilene is on track to become one of the largest projects in the United States, and he pushed back against what he called widespread misinformation about its water and power consumption.

McNamara, who co-founded Lancium nearly nine years ago, said the company originally identified West Texas as its anchor location because of the region’s unique energy advantages, including an abundance of wind and solar resources and the presence of negative-price electricity — a phenomenon that occurs when the grid overproduces power.

“The only place where wind and solar is equally good is the Atacama Desert in Chile and Inner Mongolia in China,” McNamara said. “So Texas is very, very special.”

McNamara said Abilene sits at the intersection of two interchanges of the CREZ transmission system, a statewide energy highway completed in 2014 that was filled with renewable energy within 18 months of opening. He described the location as “the world’s best location for large energy users.”

Water Use

McNamara directly addressed community concerns about the facility’s water consumption, calling persistent claims about excessive water use “misinformation that stays up.”
The Abilene facility has a water allocation of 500 gallons per minute, he said. Last month, it used 20 gallons per minute.

“I think in all the public venues of the city, they say it’s not even (in) the top 50 water users in the region, but it’s just misinformation that stays up. So I’m here to tell the truth,” McNamara said.

He said all Lancium projects are built around closed-loop water systems. “Here in Abilene, we have 500 gallons a minute of water allocation. Last month we used 20 gallons,” McNamara said. “That whole project uses less than (a) hotel, and that’s with 8,000 workers at the site.”

McNamara also described a broader water sustainability initiative for future projects in the Texas Panhandle. The company worked with artificial intelligence to design a system that would capture and recharge storm water into the Blaine Aquifer, a gypsum formation that currently requires reverse osmosis treatment. The company then engaged Jacobs Engineering, which designs desalination infrastructure throughout the Middle East, to validate the concept.

“Their conclusion was, ‘Yeah, the guy’s right,’” McNamara said.

Scale and Financing

McNamara said Oracle is the primary tenant of the Abilene facility under a 15-year lease and that Microsoft has also joined the campus for buildings nine and 10 under what he described as a 20-year arrangement. He said both tenants are fully financed and under active construction.

The company has pledged 40 permanent employees per building to the city and county — approximately 400 jobs across the 10-building campus. McNamara said Oracle has indicated in other venues that total workforce at the site could reach 2,000.

At full scale by 2028, McNamara said the project is expected to generate approximately $100 million per year for local schools and roughly $15 million to the city.

On the question of project scale, McNamara was direct.

“What’s under construction today — I think the Samsung semiconductor plant and the Taiwan Semiconductor plant could be bigger — but we’d be darn close to the biggest project in America,” he said.

He added that Lancium plans to announce two additional mega-scale projects in the Texas Panhandle within the coming weeks. Abilene, he said, will remain the largest of the company’s facilities.

Power and Security

McNamara said the vast majority of the campus’ power is delivered through substations connected to the ERCOT grid. Natural gas generation at the site is designated for reliability backup for buildings nine and 10 and is housed in an enclosed hollow designed to minimize noise on surrounding roads. He said that its noise level would be about the same as the noise a truck would produce on the interstate.

On cybersecurity, McNamara said the company participates in a regular task force with the FBI and the Department of Homeland Security and that Chinese-manufactured equipment is prohibited at the site regardless of cost savings.

“You can get Chinese transformers at half the price and half the lead time, and we would not do that,” he said.

Electricity Rates & Housing

When an audience member raised concerns that residents were effectively subsidizing the facility through higher utility bills, McNamara said wholesale power prices in Texas have been declining for two years and that Lancium is actively working on a program to offer county residents a retail electricity rate at least 20 percent below current rates.

On housing, McNamara acknowledged the strain the construction workforce has placed on the region’s housing stock and said the company is exploring multi-family and single-family solutions. He also said the industry is moving toward greater prefabrication of data center components, which he expects will cut on-site labor requirements by half to 80 percent.

Local Vendors

For businesses seeking to work with the project, McNamara said Lancium operates a public-facing website where local vendors can view open requests for proposals and quotes.
He said roughly 40 contractors are currently working at the site and that local and regional contractors are always the preferred option when project specifications allow.

Commissioner Williams

Taylor County Commissioner Randy Williams, for Precinct 1, told the group he sees the project as a long-term economic anchor for the region despite the short-term disruptions that have come with large-scale development, including increased heavy truck traffic on county roads.

“I’m always looking for ways I can offset what the property owners in our community are having to pay for taxes, and something like this comes up,” Williams said. “Yes, but sometimes you have to put a package together that entices a company you want to come to your area.”

Williams compared the data center’s potential halo effect to the development that followed a Walmart opening on the north side of Abilene, which he said drew Lowe’s and other retail businesses to the area.

“I think Abilene is going to be the center for AI investment,” Williams said, “because West Texas is going to have the majority of this investment.”

Williams said the company has been forthcoming in response to community concerns and encouraged residents to seek answers directly from Lancium rather than relying on secondhand information.

“They’re talking to each other about it, and not to the people that know the real answers,” he said.

The Lancium project is totally in Precinct 2, where Commissioner Kyle Kendrick serves.