{"id":3510002,"date":"2025-03-05T12:32:12","date_gmt":"2025-03-05T12:32:12","guid":{"rendered":"https:\/\/www.resilience.org\/?p=3510002"},"modified":"2025-03-05T12:32:12","modified_gmt":"2025-03-05T12:32:12","slug":"the-wheels-are-falling-off-albertas-gas-powered-ai-data-centre-proposal","status":"publish","type":"post","link":"https:\/\/www.resilience.org\/stories\/2025-03-05\/the-wheels-are-falling-off-albertas-gas-powered-ai-data-centre-proposal\/","title":{"rendered":"The Wheels Are Falling off Alberta\u2019s Gas-Powered AI Data Centre Proposal"},"content":{"rendered":"

Northern Alberta\u2019s Wonder Valley development seems somewhat less wonderful lately. Celebrity investor Kevin \u201cMr. Wonderful\u201d O\u2019Leary recently hyped the\u00a0$70 billion<\/a>\u00a0AI data center proposal to be powered by \u201c200 trillion cubic feet of sweet natural gas.\u201d<\/p>\n

Less than two months after O\u2019Leary launched what he\u00a0called<\/a>\u00a0\u201cCanada\u2019s biggest-ever real estate deal\u201d and \u201cthe world\u2019s largest AI data centre industrial park,\u201d the wheels appear to be falling off on several fronts. Aside from an apparent complete lack of Indigenous consultation and a bizarre development involving Alberta Premier Danielle Smith, the most immediate setback involves a new AI technology that has upended the entire North American natural gas market \u2013 especially speculative projects like Wonder Valley that may be more about selling fossil fuels than powering data centres.<\/p>\n

Chinese start-up DeepSeek recently\u00a0disrupted<\/a>\u00a0the multi-billion-dollar global AI market by releasing an open-source language model that could match or\u00a0surpass<\/a>\u00a0the most advanced AI offerings like ChatGPT for a fraction of the cost and electricity use.<\/p>\n

This has huge implications for global energy markets since AI data centers already consume over 4 percent of U.S. generated power and were projected to balloon up to\u00a012 percent<\/a>\u00a0by 2028. Those projections are now out the window, as are the valuations of many leading AI and natural gas companies that hyped the need for massive generation buildout. The day the DeepSeek news dropped, U.S. stocks lost\u00a0$1 trillion<\/a>\u00a0in investor value with chip manufacturers and energy companies bearing the brunt of the market bloodbath.<\/p>\n

Forbes\u00a0declared<\/a>\u00a0that \u201cthe AI-energy demand bubble may just have burst.\u201d Morningstar shared similar analysis of the natural gas rout,\u00a0stating<\/a>, \u201cwe view the selloff as overdue. Gas-heavy midstream and upstream stocks are still among the most overvalued in the sector.\u201d<\/p>\n

How this will all play out remains to be seen but at the very least this market volatility will undermine investor confidence in enormously expensive projects like Wonder Valley that also have huge carbon footprints and long timelines.<\/p>\n

Over\u00a017.5 gigawatts<\/a>\u00a0of new natural gas capacity is planned in the U.S. with emissions of more than 60 megatonnes of CO2 per year. Much of this was driven by presumed demand for AI data centers, now called into question by DeepSeek. Will these trends deep-six Wonder Valley, too?<\/p>\n

Indigenous Nation \u2018Completely Disrespected\u2019<\/h3>\n

Even if O\u2019Leary can somehow convince investors to pony up $70 billion given this market uncertainty, other important requirements appear to have been overlooked or completely ignored. The Sturgeon Lake Cree Nation sent a\u00a0cease and desist letter<\/a>\u00a0to premier Smith stating they received \u201czero consultation from O\u2019Leary Ventures Inc and\/or the Greenview Municipality on the proposed use of our traditional territory for this AI Data Centre. We learned about this proposal through a press release.\u201d<\/p>\n

They are also demanding clarification around alleged permits issued by the province \u2013 which O\u2019Leary appeared to be bragging about in the media \u2013 or any applications filed with regulators impacting their treaty rights. Chief Sheldon Sunshine\u00a0told<\/a>\u00a0CTV news, \u201cwe feel completely disrespected with the development of this project.\u201d<\/p>\n

The story also seems to be shifting on how the Wonder Valley project even started. Many in the public may have originally been under the impression it was O\u2019Leary\u2019s idea. However, he recently\u00a0stated<\/a>\u00a0in the media he was approached by Premier Danielle Smith about the project, who even suggested sites to prioritize during a helicopter tour. Alberta also launched their\u00a0AI Data Centre Strategy<\/a>\u00a0on December 4, 2024 \u2013 a mere five days before O\u2019Leary Ventures put out their press release.<\/p>\n

\u201cProjects like these don\u2019t happen by accident. They happen by design,\u201d\u00a0said<\/a>\u00a0Minister of Technology and Innovation Nate Glubish in a December op-ed. \u201cAlberta\u2019s Data Centre Strategy played a significant role in securing [the Wonder Valley] commitment. My concierge team from the Ministry of Technology & Innovation has been working with the O\u2019Leary team for several months to assist in navigating Alberta\u2019s regulatory framework.\u201d<\/p>\n

A $70 billion project that will have obvious impacts on water use and Indigenous rights should require rigorous permitting and public oversight. Has the UCP put themselves in a conflicted position? This question was raised in the letter from\u00a0Sturgeon Lake Cree Nation<\/a>: \u201cwe would like to know whether and how the Crown has been advising this proponent on how to navigate the regulatory framework. These statements raise at least the appearance of a conflict of interest.\u201d<\/p>\n

Pensions and Purse Strings<\/h3>\n

Where would the Wonder Valley development access $70 billion? When Premier Smith abruptly fired the senior leadership in AIMco last year, many observers expressed\u00a0concern<\/a>\u00a0that over $160 billion in public pension fund investments might be managed for political rather than fiduciary reasons, particularly for the benefit of the oil patch. Were the Wonder Valley backers wondering if they could access this capital to expand local markets for burning natural gas?<\/p>\n

If so, the prospect of AIMco also getting access to hundreds of billions of additional assets from repatriating the Alberta portion of the Canada Pension Plan looks decidedly more dim. Recent polling shows that less than\u00a025 percent<\/a>\u00a0of Albertans support this longstanding pet project of Danielle Smith.<\/p>\n

While it helps to have allies in high places, Premier Smith may have more immediate issues to worry about. An unfolding scandal regarding alleged political interference in over\u00a0$600 million<\/a>\u00a0of procurement at Alberta Health Services has led to calls from the opposition leader for an RCMP investigation and for her to step aside. If Smith\u2019s support for the Wonder Valley project was key to moving it forward, it may now be mired in political mud. And maybe that is a wonderful outcome.<\/p>\n","protected":false},"excerpt":{"rendered":"

Celebrity investor Kevin \u201cMr. Wonderful\u201d O\u2019Leary recently hyped the\u00a0$70 billion\u00a0AI data center proposal to be powered by \u201c200 trillion cubic feet of sweet natural gas.\u201d Less than two months after O\u2019Leary launched what he\u00a0called\u00a0\u201cCanada\u2019s biggest-ever real estate deal\u201d and \u201cthe world\u2019s largest AI data centre industrial park,\u201d the wheels appear to be falling off on several fronts.<\/p>\n","protected":false},"author":128238,"featured_media":3510007,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[79716,213529,79718],"tags":[],"class_list":["post-3510002","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","category-energy-featured","category-environment"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/posts\/3510002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/users\/128238"}],"replies":[{"embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/comments?post=3510002"}],"version-history":[{"count":4,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/posts\/3510002\/revisions"}],"predecessor-version":[{"id":3510006,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/posts\/3510002\/revisions\/3510006"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/media\/3510007"}],"wp:attachment":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/media?parent=3510002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/categories?post=3510002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/tags?post=3510002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}