When a Major Industrial Project Requests Reservoir Water: The Cedar Creek Example

Reservoirs are built for demand, and demand can arrive suddenly, in forms planners did not itemize. In 2025 and 2026, a proposed data center near Cedar Creek Reservoir in Henderson County became one of the most closely watched examples in Texas of what happens when a single industrial project asks a small water system for a very large amount of water. This guide uses that example not to argue for or against the project, but to show how to read a request like it.

The reservoir behind the story

Cedar Creek Reservoir (widely called Cedar Creek Lake) in Henderson County is owned by the Tarrant Regional Water District and stores more than 644,000 acre-feet of water. It is one of two East Texas lakes that together supply the large majority of the district's raw water, reporting puts the pair at roughly 80 to 85 percent, which is why a lake an hour southeast of Dallas matters to taps in Fort Worth. One reservoir; many communities; a single shared supply.

What has been proposed

According to reporting by KERA News and the Fort Worth Report published July 1–2, 2026, Kansas-based Diode Ventures has proposed a data center in Henderson County and, as of that reporting, was still evaluating potential sites, with acreage, cost, and many other details not yet determined. The company told reporters its review was “in the very early stages.”

The water numbers come from records, not approvals. Per the same reporting, December 2025 email communications between a Diode project manager and the West Cedar Creek Municipal Utility District described a potential need of between 1 million and 5 million gallons of water per day; a company spokesperson said the projected figure does not mean that as much as 5 million gallons per day would ultimately be used. Earlier records from May 2025 indicated the utility did not then have the capacity to meet the described cooling needs, and that expanded or upgraded pump stations would be required.

Range, not commitment; request, not permit. Both halves of each phrase matter.

How the local utility responded

In May 2026, the West Cedar Creek Municipal Utility District's board adopted a resolution temporarily suspending new service commitments to high-intensity water customers, described in coverage as projects projected to exceed 250,000 gallons per day, while the district evaluates capacity and drought reliability. Reporting in early July 2026 indicated the company had an incomplete application on file and that no service contract had been issued. The suspension is temporary and time-limited; its current status, and the application's, should be confirmed in the district's own records.

Why data-center water demand is hard to plan for

Three structural reasons, none unique to this project:

• Facilities vary enormously. Water use depends on cooling technology, size, computing purpose, water source, climate, and operations. Two data centers that look alike can have very different water profiles, a point developed further in our Land, Water & Development primer.
• Statewide planning does not itemize them. The Draft 2027 State Water Plan does not separately identify data centers as a statewide water-demand category; some existing use may be embedded in municipal or industrial figures, but rapidly proposed future demand is not clearly captured.
• Requests can outscale local systems. A demand that is modest against a 644,000 acre-foot reservoir can still be many times the treatment, pumping, or contractual capacity of the small utility asked to serve it. The reservoir is rarely the first bottleneck; the local system usually is.

The question of how much water data centers use statewide has also reached the Legislature, where a Texas House committee has examined data-center water use and conservation. That review is ongoing as of this page's date; its outcome should not be assumed.

Questions any community can ask about a large water request

• What is the requested volume, and is it a peak, an average, or an annual figure?
• Is the stated number a maximum, an estimate, or a contractual commitment?
• What water source would actually supply it, and under whose water right or contract?
• Does the local utility have the treatment, pumping, and storage capacity, or would upgrades be needed, and who pays for them?
• How would the request perform under the utility's drought contingency plan?
• What has actually been filed, an inquiry, an application, a contract, and with which body?
• Which decisions remain, before which boards, on what schedule, with what public-comment opportunities?

Every one of those questions can be pursued through public records, board agendas, utility filings, and public-information requests, using the method in How to Track a Texas Water Project.