South Korea's industry ministry says reports that it has finalized a $22.3 billion deal to build a massive gas-fired power complex in Encinal, Texas are inaccurate, even as the project's estimated cost keeps climbing and Seoul and Washington continue talks on how it would actually get built. The proposed 6.3-gigawatt facility would supply electricity directly to artificial intelligence data centers in South Texas, but according to the ministry, no final agreement has been reached, and South Korea has not even determined how much of the project it would finance.
Ministry Pushes Back on Reports of a Done Deal
The clarification came after Reuters reported details of the arrangement, prompting South Korea's industry ministry to say the reporting was inaccurate, as detailed by the Dallas Express. The ministry said Seoul and Washington are still in consultations about the project, and that South Korea plans to make an official announcement only after negotiations and required procedures are completed. Any investment also requires parliamentary consideration in South Korea before it can be finalized, the outlet reported.
The estimated cost of the Encinal project has moved from roughly $19.8 billion to $22.3 billion, according to the Dallas Express's reporting, a jump that BigGo Finance ties to U.S. negotiators requesting additional funding for water infrastructure and site setup — costs that have sparked commercial viability debates in Seoul. The $22.3 billion figure, according to the same reporting, represents terms currently under negotiation rather than a completed investment agreement confirmed by both governments.
Who Would Actually Build It
Lewis Energy Group has been identified as the proposed project owner, per the Dallas Express. The San Antonio-based company was founded in 1983 by Rodney Lewis with a $13,000 loan to buy a single natural gas well, and it has since grown into one of South Texas's top natural gas producers, controlling over 500,000 acres in the Eagle Ford Shale, according to background compiled by Grokipedia. The company sold a 45% stake in its dry gas assets to TotalEnergies in September 2024. Lewis Energy operates more than 2,500 wells across Webb, La Salle, and Dimmit counties and has worked around Encinal for more than 40 years, engaging in natural gas production, oilfield services, and midstream gathering operations, the Dallas Express reported.
South Korean reporting adds another layer to the ownership picture: Mail Business Newspaper told parliament on September 7 that the plant would be governed by an Investment Special Purpose Vehicle operating agreement, with the accompanying data center project led by U.S. developer Related Digital, an AI infrastructure platform tied to Stephen M. Ross's Related Companies. Ross founded Related Companies in 1972 and serves as its non-executive chairman.
Built to Dodge Texas's Grid Freeze
The Encinal project would be developed in stages. An initial phase would add approximately 1.4 gigawatts of gas-turbine generation, with a later phase adding 4.9 gigawatts of combined-cycle capacity if demand and financial performance support expansion, according to the Dallas Express. One possible arrangement includes supplying electricity directly to nearby AI data centers through an off-grid model, while another would involve selling power through the Electric Reliability Council of Texas grid.
The off-grid approach matters because Texas Governor Greg Abbott ordered state regulators and ERCOT on August 3 to pause new grid connections and audit every data center project sitting in ERCOT's 474-gigawatt interconnection queue, according to the Office of the Texas Governor. Data centers account for roughly 90% of all new power generation requests pending in that queue. Following the directive, ERCOT postponed large-load classifications and suspended its Batch Zero transmission planning study, pushing interconnection review timelines for projects over 75 megawatts beyond April 2027, per a client alert from WilmerHale. Islanded, or off-grid, facilities that supply power directly to data centers without relying on ERCOT transmission fall outside that freeze — which is why Encinal's off-grid direct-supply model could reduce the project's dependence on the ERCOT grid, according to the Dallas Express.
A Slice of a Much Bigger $350 Billion Bet
Korean news outlets reported on September 7 that Encinal was selected as the first project under South Korea's broader U.S. investment commitment, part of a $350 billion package that also includes $150 billion directed toward American shipbuilding. The strategic trade and investment deal was reached by President Donald Trump and South Korean President Lee Jae Myung, with the U.S. offering South Korea more favorable tariff treatment under the framework, the Dallas Express reported. Sedaily reports the package also includes a framework-level agreement to explore building eight large nuclear reactors in the U.S. valued at $80 billion to $120 billion, with Encinal chosen as the inaugural gas project ahead of that larger nuclear ambition, which remains in early discussions.
Notably, memory chip investments by Samsung Electronics and SK hynix were excluded from the $350 billion deal despite requests from U.S. Commerce Secretary Howard Lutnick, according to KED Global, with Seoul determining those chip investments will proceed separately as private foreign direct investments. Meanwhile, major South Korean firms including Samsung C&T, Hyundai Engineering & Construction, DL E&C, and Doosan Enerbility are competing for construction and turbine contracts on Encinal under a so-called Team Korea initiative, KED Global also reported.
What Reports Are Still Missing
Project reports reviewed by the Dallas Express did not identify any power-purchase agreements, a construction schedule, or a final financing structure for Encinal. Texas already had roughly 6.5 gigawatts of data center capacity under construction as of early 2026, and the state's rapid buildout has raised ongoing concerns about electricity costs, water consumption, grid reliability, and effects on neighboring communities, per the same reporting.
That backlash has become a flashpoint in Texas politics, as Hoodline previously reported on Meta's El Paso data center becoming a campaign issue in the 2026 governor's race between Abbott and Gina Hinojosa. Abbott has said he will seek legislation requiring disclosure of data centers' electricity and water demands and requiring facilities to contribute to Texas power capacity, and he has directed state regulators to prevent data centers from shifting infrastructure costs onto households and small businesses, according to the Dallas Express.
For now, the core facts remain unsettled on both sides of the Pacific: South Korea has not said how much of the Encinal project it would finance, and whether its National Assembly will condition financing on return guarantees, how Webb County water permits will be handled, and whether Related Digital lines up long-term power-purchase agreements with major tech tenants all remain open questions tied to a south Texas power project still described as under consideration.
