Oracle Halts Utah Data Center Project
July 8th, 2009 By: Rich Miller
Oracle has halted construction on a $300 million data center project in West Jordan, Utah in a move that appears to be tied to the company’s pending acquisition of Sun Microsystems. The construction stoppage was reported this morning by the Salt Lake Tribune, with Utah economic development officials saying the company has “put it on hold for a little while” while waiting for the economy to rebound.
Oracle unveiled the West Jordan project last May, when company president Safra Catz said the new facility “will allow us to support our growing On Demand business, as well as the technology infrastructure to support our research and development and customer service requirement.” Oracle touted its Project Sequoia design at industry trade shows last summer, and broke ground in October.
Oracle apparently halted construction around the time it offered to acquire Sun Microsystems for $7.4 billion. The deal presents a “buy vs. build” choice for Oracle, as Sun operates dozens of data centers. It’s possible that Sun’s On Demand business could be accommodated by Sun’s high-efficiency Broomfield, Colorado data center or Sun’s high-density installation at the SuperNAP in Las Vegas.
The $285 million facility was designed to feature a 179,000 square foot data center, and is projected to employ 100 workers. The state of Utah offered Oracle a tax rebate of more than $15 million, and local government incentives are expected to total nearly $10 million. The facility is expected could result in $73.6 million in new wages over 10 years and $50.4 million in new state revenue over 12 years. Oracle must complete the facility and create the jobs to collect on the incentives.
Then Utah came out and said the project isn’t dead… Coma maybe?
I’ve seen those articles. Utah officials are basing their optimism entirely on Oracle’s use of the word “postpone” in their communications with Oracle. It could indeed be that this is just a postponement. But if Oracle is in decision mode and evaluating the options presented by the Sun deal, it will nonetheless want to keep its options open for retaining the incentives in the Utah deal. If Oracle is weighing its options, it’s going to use the word “postpone” rather than “cancel” with Utah officials, lest the hard-fought incentives disappear. Utah’s public position is that “postpone” means “we’re definitely building it, just not now.” It seems to me this situation is more fluid than that.
There are several data centers are being build here in Utah right now. I imagine the large scale projects to be put on hold but as the local demand stays strong the smaller data centers will continue to be built. C7 Data Centers recently completed a new world-class data center just a year ago and it is already at over %50 capacity. See http://www.c7dc.com/facilities/utah-colocation-data-centers.htm.