Armstrong County commissioners voted unanimously Tuesday to approve an amendment to Crusoe Energy’s tax abatement agreement for its planned artificial intelligence (AI) data center project south of Claude. The amendment adjusts the payment schedule and clarifies the scale of the project, which officials say may be smaller than initially proposed.
The decision follows months of discussion between the county, Crusoe Energy, and other local stakeholders. While the overall financial value of the tax abatements will remain the same, the updated terms are expected to provide the county with greater flexibility and potentially accelerate revenue collection.
Revised Plans: Smaller Complex, Same Total Value
County attorney Scott Sherwood told commissioners that Crusoe Energy had requested changes to the abatement terms for the planned 3.5-million-square-foot data center complex. The project, originally envisioned as a seven-building campus covering roughly 350 acres, may now include only three or four buildings.
“The total money wouldn’t change under the new proposal, and some payment money might actually be received sooner,” Sherwood explained. Under the revised terms, Armstrong County will receive payments in lieu of taxes of $1.35 million per year per building once each becomes operational.
The original abatement structure was designed around two major construction phases, with payments totaling $5.4 million per year for ten years per phase—amounting to $10.8 million annually when both phases were complete. The new system shifts to a building-by-building approach, enabling the county to begin collecting funds as individual facilities come online rather than waiting for entire phases to be finished.
According to Sherwood, the first payment could arrive as soon as June or July 2026, depending on the pace of construction and operational readiness.
Construction Progress and Development Outlook
Crusoe spokesman Tyler Hunt provided an update on construction efforts, telling commissioners that four buildings are currently under construction at the site, located off Lima Road just east of Highway 207. The company estimates that these buildings could be completed within two years.
Hunt also said Crusoe Energy is in negotiations with a tenant, though no firm commitment has been secured yet. The company’s goal is to lease all buildings to a single tenant, but Hunt acknowledged that a second tenant could be considered if necessary.
While the exact size of the final buildout remains uncertain, officials emphasized that the amendment does not reduce Crusoe’s financial responsibility under the abatement. Rather, it adapts to current market and construction realities while ensuring that the county remains positioned to receive consistent revenue from the project.
Water Usage and Environmental Concerns
Concerns about the potential impact of the data center on local water resources were addressed during the meeting. Data centers, which require significant cooling to maintain optimal operating temperatures for their equipment, have sometimes drawn public scrutiny over water consumption.
Hunt confirmed that Crusoe’s facility will employ a recirculating cooling system, which significantly limits water draw from the underlying aquifer. “Once completed, the buildings will not draw more water from the aquifer than needed for basic office-type plumbing to meet employee needs,” Hunt told commissioners.
The reassurance came as welcome news to residents who had expressed concerns about the potential strain on local groundwater. Armstrong County relies heavily on aquifer water for agriculture and municipal supply, making conservation a recurring topic of local government discussions.
County’s Perspective: Revenue Flexibility and Risk Management
County Judge Adam Ensey said the amendment was a practical adjustment that benefits both the developer and the community. “The amendment makes sense from the county’s perspective because it allows revenue collection to begin with each completed building rather than waiting for multiple buildings to be finished,” Ensey explained.
He also noted that the approach reduces financial risk to the county. “Tax abatements don’t guarantee payment if projects aren’t built,” Ensey said, referencing previous examples in which wind projects secured abatements but were never constructed. By linking payments directly to completed and operational buildings, the county ensures that incentives are tied to actual development progress rather than projections.
The commissioners voted unanimously in favor of the amendment after hearing input from several elected officials representing other taxing entities and members of the public.
Transparency and Public Access
Following the vote, Ensey announced that the signed amendment agreement will be posted on the county’s website, allowing residents to review the details for themselves.
“We want people to see exactly what’s in the agreement and understand how this project will impact local revenue,” Ensey said. Transparency has been a key point of focus for county officials throughout the negotiation process, particularly given the scale and visibility of the Crusoe Energy development.
Context: A Growing Regional Competition for Data Centers
The amended abatement comes as West Texas sees increasing interest in large-scale data infrastructure projects. The region’s wide-open land, stable geology, and proximity to renewable energy generation make it an attractive location for energy-intensive operations such as data centers and cryptocurrency facilities.
Armstrong County’s data center project, while significant in local terms, may soon be overshadowed by neighboring developments. Ensey said he plans to attend a Carson County public meeting on October 27, where officials will discuss proposed Fermi tax abatements for a massive 18-million-square-foot project—a facility that would dwarf Crusoe’s Armstrong County plan.
The growing competition among counties for high-tech infrastructure investment has raised questions about how communities can balance incentives with long-term fiscal responsibility. Advocates argue that such projects bring jobs, spur secondary development, and diversify rural economies. Critics, however, caution that overly generous abatements can erode tax bases without delivering promised economic benefits if projects fail to materialize or underperform.
Local Impact and Unanswered Questions
For Armstrong County, the Crusoe Energy project represents one of the largest private developments in its history. Even at a smaller scale than first proposed, the facility could bring significant economic activity to the area, including construction jobs, support for local service industries, and potential infrastructure upgrades.
Still, some details remain uncertain. Crusoe has not disclosed the identity of its potential tenant, nor the number of permanent employees expected once the data center is operational. The company has also not provided a detailed project timeline beyond the two-year construction estimate for the first set of buildings.
Residents have expressed cautious optimism. While many welcome the prospect of new economic growth, others remain watchful about environmental impacts and the long-term financial trade-offs of tax incentives.
Looking Ahead
As construction continues south of Claude, Armstrong County officials appear focused on maintaining a balance between encouraging investment and protecting public interests. The amended abatement structure signals a shift toward a more adaptive approach—one that rewards tangible progress while safeguarding county revenue.
With the first payments potentially arriving by mid-2026, and with four buildings already under construction, the project appears to be advancing steadily despite scaled-back projections. Whether it grows to its originally proposed size or remains smaller, the Crusoe Energy data center could mark a turning point in the county’s economic landscape—ushering in a new era of digital infrastructure development in the Texas Panhandle.
