Chevron signs 20-year deal to power Microsoft data center in Texas
Chevron locked in a 20-year gas power pact with Microsoft for a West Texas AI campus that could draw 2.67 gigawatts, roughly the power of 2 million homes.
Chevron has stepped directly into the AI power market with a 20-year agreement to supply natural-gas-fired electricity for Microsoft’s planned data center in West Texas. The deal puts one of the country’s biggest technology buyers and one of its largest oil companies on the same side of a wager: that artificial intelligence will need vast, reliable power long before the grid can build enough cleaner alternatives.
The project, called Kilby, is being developed through Chevron’s wholly owned subsidiary Energy Forge One LLC in collaboration with Engine No. 1. Chevron said the facility is expected to deliver about 2.67 gigawatts of capacity through a phased, modular buildout, with first power delivery anticipated in 2028 and a final investment decision expected by the end of 2026, subject to other conditions. At full scale, the project would consume nearly 2.7 gigawatts of electricity, a load roughly equivalent to the power used by about 2 million homes.
Chevron said most of the generation will come from large GE Vernova turbines and related electrical infrastructure, with additional capacity from Solar Turbines, the Caterpillar subsidiary. The company described Kilby as one of the largest co-located natural gas power and data center developments in the United States, designed to deliver dedicated electricity directly to Microsoft while limiting pressure on the regional grid.
The economics are as striking as the power demand. Chevron said the project could generate more than $10 billion in state and local tax revenue and support almost 2,000 jobs. For Texas, where land, fuel access and transmission constraints have made the state a magnet for large industrial projects, the deal shows how AI infrastructure is now shaping energy investment as much as software development.
The agreement also extends a partnership Chevron and Engine No. 1 announced in January 2025 to build scalable power solutions for U.S. data centers using U.S. natural gas. That earlier plan targeted up to 4 gigawatts across multiple projects, underscoring how quickly the data-center race has moved from a chip shortage story to an energy story.
Microsoft has been expanding aggressively in Texas as it seeks enough capacity for cloud services and AI tools such as ChatGPT and Copilot. Earlier plans included 900 megawatts of data-center capacity in Abilene, while a separate campus there brought the site’s projected total to 2.1 gigawatts. Chevron president of New Energies Jeff Gustavson said AI is reshaping the global economy and that abundant, affordable and reliable energy is essential to that shift, while Microsoft cloud chief Noelle Walsh said the rapid growth of AI and cloud requires energy infrastructure that can scale quickly and reliably.
The deal signals a broader turning point for the national grid. AI may be driving the next wave of digital growth, but in West Texas it is doing so with long-term gas contracts, not just cleaner promises.
This article was produced by Prism’s automated news system from verified source data, official records, and press releases, then run through automated quality and moderation checks before publishing. The system is built and supervised by the people who set the standards it runs under. Read our full AI policy.
Did this article answer your question?
