South Korea is eyeing Texas for a new $22.6 billion investment in a natural gas-burning power plant.
The deal would mark the first chunk of change the nation will provide to the U.S. under South Korea’s new $350 billion commitment.
Last year, tariff talks between the U.S. and South Korea led to a 10 percent decrease in tariffs imposed on South Korea — a drop from 25 to 15 percent — provided the country invests $350 billion in the U.S. in exchange.
The power project would be set in Encinal, Texas, a small city in La Salle County.
According to The Korea Herald, talks initially began with South Korea proposing $19.8 billion for the project, and the U.S. countering with $25 billion. Negotiations will now proceed in the $22.6 billion range, although the exact amount will not be determined until the project is finalized.
The proposed gas combined-cycle project plant would total 6.3 gigawatts (GW) of power, built in stages. The first stage will consist of a 1.4-GW gas turbine power facility. Once the first stage passes inspection, the second stage, a 4.9-GW combined-cycle facility, will be built.
Though unconfirmed, the plant is expected to help meet the state’s booming demands for artificial intelligence (AI) computing capacity, data center development, and semiconductor development.
Recently, Gov. Greg Abbott announced new guidelines for data center companies pursuing building in Texas, and a swath of companies, including Skybox, Vantage, Meta, OpenAI, Google, and Oracle, have agreed to the rules. Abbott’s new guidelines urged data center companies to bring their own power generation to the Texas grid.
Last month, Amazon announced a massive natural gas-burning power plant called the GW Ranch Energy Center in Pecos County in order to power an AI data center facility on campus, according to The New York Times.
West and North Texas have recently become the state’s premier data center destinations. Encinal’s southwest location, near Laredo, currently lies in an area void of data center builds.
Although unconfirmed, the facility is expected to draw attention from data center companies in the planning phases of their projects. According to Maeil Business, a South Korean economic news outlet, South Korea and the U.S are currently considering selling the electricity directly to the state or “supplying it directly to nearby AI data centers.”
The Korea Herald also reported that a data center facility with a capacity of up to 5 GW is planned near the natural gas-burning power plant in Encinal.
The Electric Reliability Council of Texas (ERCOT) said in June it is currently dealing with a massive volume of large-load user requests. The amount totaled a requested 438 GW, and nearly 89 percent of those requests came from data centers.
ERCOT’s new group study process, called “Batch Zero,” includes provisions for companies wanting to invest in on-site power generation.
South Korea’s potential investment adds to Texas’ growing list of global gas investors. In April of this year, a joint liquefied natural gas (LNG) export project by QatarEnergy and ExxonMobil made its first LNG export, and the UAE recently announced an unconventional gas extraction project with help from Texas company EOG Resources.
As part of its $350 billion investment in the U.S., South Korea is also considering investments in several nuclear reactors both built within the U.S. and exported to the U.S. from South Korea. Additionally, the nation is considering a liquefied natural gas project in Alaska to meet its $350 billion commitment.