Chevron signs 20-year natural gas deal with Microsoft for AI data center

Chevron signed a 20-year powerfulness acquisition statement with Microsoft connected Monday to proviso energy from a earthy state works to a information halfway the tech institution plans to physique successful West Texas.

At afloat build-out, Project Kilby is designed to make astir 2.67 gigawatts — a fig the institution says is astir equivalent to the energy needs of 2 cardinal homes — rolled retired successful phases, the institution said. Power is expected to statesman flowing to the information halfway successful precocious 2028, with the site's improvement extending done the 2030s. The tract spans much than 2,000 acres successful Reeves County, adjacent the metropolis of Pecos, according to The Wall Street Journal.

GE Vernova turbines volition relationship for the bulk of the plant's output, supplemented by units from Solar Turbines, which operates arsenic a Caterpillar subsidiary. Rather than connecting to the determination transmission system, the on-site works volition run independently — a plan Chevron says was deliberately chosen to insulate section ratepayers from immoderate outgo impact. Chevron is collaborating connected the improvement with Joulent, an vigor institution launched by concern steadfast Engine No. 1.

Chevron has not disclosed a outgo estimation for the project. Those with cognition of the woody person estimated full costs astatine astir $7 billion. The task is targeting mid-teen returns, Chevron said, and expects to marque a last concern determination by the extremity of 2026. Under the arrangement, Engine No. 1 holds an enactment to instrumentality connected fractional the project's ownership and lend a matching stock of the superior investment, according to Bloomberg.

The works volition gully connected earthy state from Chevron's existing Permian Basin production. Natural state volumes successful the Permian routinely outrun what determination pipelines tin carry, forcing operators to flare the excess — a dynamic that depresses section state prices. Chevron said that dynamic gives Project Kilby a competitory outgo advantage.

"AI is reshaping the planetary economy, and abundant, affordable, reliable vigor is indispensable to fueling that transformation," Jeff Gustavson, Chevron president of New Energies, said successful a statement. "Chevron is uniquely positioned to present powerfulness to customers with certainty, velocity and astatine a competitory cost, leveraging Permian earthy state and our proven execution capabilities."

Noelle Walsh, Microsoft president of Cloud Operations and Innovation, said successful a connection that the accelerated maturation successful AI and unreality computing requires vigor infrastructure that tin standard quickly.

The tech giant's superior expenditure fund for the twelvemonth stands astatine $190 billion, up 61% compared with 2025. Historically, Microsoft has leaned connected renewables and, much recently, atomic vigor — including a woody tied to reviving the Three Mile Island works successful Pennsylvania — to code the c footprint of its information centers, according to CNBC. The Chevron statement signals the company's readiness to adhd fossil substance procreation to that mix.

Chevron said the task is expected to make much than $10 cardinal successful authorities and section taxation gross and enactment astir 2,000 jobs successful the region.