By: Steve Hallstrom
North Dakota and big tech might appear to be unlikely dance partners, but a North Dakota State University researcher says it could be a match made in heaven.
President Donald Trump’s announcement that tech titans Oracle, Open AI, and SoftBank will combine to launch a new $500 billion artificial intelligence company called Stargate, is the latest development in the explosive growth in domestic AI. Others are already in the race. Meta CEO Mark Zuckerberg said recently that his company (which owns and operates Facebook and Instagram) plans to invest $60 to $65 billion on capital spending this year primarily on data centers and servers, up from $35-40 billion in 2024. Earlier this month Microsoft said it would spend approximately $80 billion this year, on AI data centers.
But without the power to run these centers, the facilities stand idle and empty. Enter the state of North Dakota. Dr. Robert Mayo of North Dakota State University’s Challey Institute recently spoke about the role that the Peace Garden State could play in the AI boom. Mayo’s research finds that current data centers use an average of 40 megawatts of electricity, but the new generation of large-scale AI data centers will need between 500 megawatts and five gigawatts. For reference, one gigawatt could generate enough electricity to supply 500,000 average-sized homes. This means these “hypercenters” will need to generate their own electricity because the local grid cannot supply that kind of capacity. These data centers need to run continuously, 24/7/365, says Mayo. That means newer, green-energy sources like wind and solar are not options because they are not able to run
uninterrupted, so traditional energy sources like coal, nuclear, and natural gas must be employed. This comes in handy for North Dakota because the supply of natural gas, especially from mature oil wells, is abundant.
“These trillion dollar companies such as Google, Amazon, and Meta are looking to build giant AI data centers where the physical brain of AI systems will live. But those systems are so big that the amount of electricity they need is massive. The small ones will need as much electricity as Fargo. The big ones will need as much as Chicago, and you can’t get that off the local grid. They’ll have to generate their own electricity on-site and for that they will need a tremendous amount of energy, like natural gas. So, we have a problem, they have a problem and if you put them together, the problems solve each other and we can be the new Silicon Valley of artificial intelligence, with all the prosperity and high-tech jobs that come along with it,” Mayo said.
The North Dakota problem Mayo is referring to is the new environmental push to eliminate venting and flaring of natural gas. On April 10, 2024, the Bureau of Land Management issued a long-awaited ruling on venting and flaring requirements on federal and Native American land leases imposing new requirements. For many drillers, natural gas flaring will need to decrease over time and eventually be eliminated, in order to remain compliant. The U.S. Department of the Interior declared, at the time, that between 1980 and 2024, as the pace of oil and gas development on public lands expanded, the percentage of natural gas lost to venting (the intentional release of natural gas) and flaring (the burning of vented natural gas) had more than doubled. It also found that between 2010 and 2020, the total venting and flaring reported by federal and Indian onshore lessees averaged approximately 44.2 billion cubic feet per year, enough to serve more than 675,000 homes.
President Donald Trump has promised to bring wide-scale deregulation to the U.S. energy industry but how far and how fast he might move on this particular issue remains to be seen. And there is always the lingering doubt of what future presidents might do, in regard to fossil fuel regulation. Mayo sees opportunity, for North Dakota, no matter who inhabits the White House.
“North Dakota is beautifully positioned to be THE leader in AI data centers. We have plenty of land, we have a business-friendly regulatory environment, we have tons of energy and believe it or not, our weather is a big draw because a lot of the electricity these data centers need doesn’t go to actually powering the computers, it goes to cooling them. And if you can just open a window and turn on some fans, that can save them a tremendous amount of money. So, if they can get the energy here, we are a natural fit,” Mayo said.
While the Bakken could be the source of the energy, it won’t likely be the location of the data centers themselves.
“These giant data centers; they will not build them unless they are a reasonable commuting distance of a decent sized city where their employees can work. That means Bismarck and Fargo. But the natural gas is produced on the western edge of the state, in the Bakken. We need a large cross-state gas pipeline to take the gas from where it’s produced to where these data centers can use it. We need to get that built,” Mayo explained.
To get that done, Mayo recommends five steps that state leaders should take. First, the state should increase funding to the North Dakota Pipeline Authority Capacity Purchase Program to facilitate construction of a West-to-East natural gas pipeline from the Bakken to Bismarck and Fargo. This program has a $30 million credit line with the Bank of North Dakota, but Mayo says that will likely not be enough to get a pipeline builder to pull the trigger on the kind of pipeline that would be needed. Second, reduce site-permitting risk, via a pre-determined go/no-go map, to mitigate the risk of local municipalities denying the necessary permits to a company that has already incurred significant expense on advance work. Third, clarify the sales-tax exemption for data center equipment. Mayo contends that since advancements in technology happen at a fast pace, the computers and components will need to be replaced often, and there needs to be clarity on whether replacement or upgraded equipment would qualify for the same tax breaks that newly installed equipment currently receives. Fourth, develop a marketing strategy to show potential data center developers the advantages of expanding to North Dakota. Fifth, encourage the state’s colleges and universities to expand programs to train workers for AI jobs, by enhancing course offerings in information technology, facilities management, and cybersecurity. Mayo says there may also be opportunities to partner with these large tech companies to collaborate on curriculum that would produce “ready-made” employees for these facilities.
“A good number of the employees, at least at first, will have to be brought in from other sites,” says Mayo. “But they’re going to need a very large workforce here to work in their facilities. We already have IT and computer science programs at UND and NDSU, but if we want to get ahead of this, we should reorganize a bit to make sure that we’re producing the kind of people and education these data centers are going to need. That means not just computer science, that means specializing in AI.”
The time is now to move fast and decisively, says Mayo.
“In North Dakota, they have not made the decision to build the giant data centers yet. But they’re coming and they’re coming fast, if we give them what they need. For example, Meta has already broken ground on a $10 billion data center in Louisiana. That’s going to provide 3,000 construction jobs and 500 permanent high-tech jobs and $125 million in local infrastructure with roads and things like that. That’s very small compared to the data centers that Google and Amazon and X will be building in the next few years,” Mayo said.
As first reported online by TheInformation.com, North Dakota Commissioner of Commerce Josh Teigen revealed during a Public Service Commission meeting in August that two companies had approached him and then-Governor Doug Burgum about developing AI data centers. The facilities would start between 500 megawatt and 1 gigawatt projects but could eventually scale up to five to 10 gigawatt facilities. Burgum has been nominated by President Trump to be the Secretary of the Interior and the chairman of the newly formed National Energy Council. Burgum has been approved by the Senate Energy and Natural Resources Committee but has not yet been voted on by the full Senate. Burgum gets it, says Mayo.
“Burgum, in his confirmation hearing, spoke to this issue about how North Dakota can and should be a leader in this new industry that’s growing so fast. So, he’s aware of it. And he has ties to Microsoft. I spoke to a number of government officials in the state, and they confirmed…that there are two separate trillion-dollar market cap companies who are looking to invest in North Dakota, and there are only six of those in the world. They are both looking to invest north of $100 billion in North Dakota, but they haven’t pulled the trigger to do it. The government officials would not disclose the names, but it’s been reported elsewhere that one of those two companies is Microsoft,” Mayo said.
According to DataCenterDynamics.com, North Dakota has only seven data center facilities. Despite this, it saw the highest relative growth in electricity demand caused by data centers; 37 percent in four years according to a July 2024 report from the Energy Information Administration. Crypto mining/AI provider Applied Digital is building a 350,000 square foot facility near Ellendale, which is expected to open sometime in 2025. The build cost has not been released, but a $200 million round of financing was secured in June of last year to help fund the project.
Editor’s note: Dr. Robert Mayo is a Research Specialist at the Challey Institute for Global Innovation and Growth. His report can be found by clicking here.
