Chevron has entered into a long-term agreement with Microsoft to supply electricity to a major data center development in West Texas, marking a significant step in supporting the growing energy demands of artificial intelligence and cloud computing.
Under the arrangement, Chevron’s subsidiary, Energy Forge One LLC, will develop a large-scale power generation facility that will provide dedicated electricity to a Microsoft-operated data center through a 20-year power purchase agreement.
The project, known as Kilby, is being developed in partnership with investment firm Engine No. 1 and is expected to become one of the largest integrated natural gas-powered data center developments in the United States.
Planned capacity for the facility is approximately 2.67 gigawatts, with construction expected to take place in stages, allowing additional generation to be added over time. Most of the power will come from natural gas turbines supplied by GE Vernova, while additional generation equipment will be provided by Solar Turbines, a subsidiary of Caterpillar.
Chevron said the project aligns with the rapid expansion of AI technologies, which require large and reliable energy supplies to support advanced computing operations.
Jeff Gustavson, Chevron’s president of New Energies, said the company is well-positioned to meet rising electricity demand by leveraging natural gas resources from the Permian Basin and its experience in delivering large energy projects.
Microsoft’s President of Cloud Operations and Innovation, Noelle Walsh, said the agreement would help ensure reliable power for the company’s expanding AI and cloud infrastructure while strengthening its presence in West Texas.
The facility is designed to generate electricity directly for the data center, reducing pressure on the regional power grid and helping maintain reliability for other consumers.
Chevron expects to make a final investment decision on the project before the end of 2026, subject to the completion of key requirements. Initial power delivery is targeted for 2028.
The energy giant said the development is expected to generate substantial economic benefits, including more than $10 billion in state and local tax revenue and support nearly 2,000 jobs.
To reduce its environmental footprint, the project plans to use brackish groundwater rather than freshwater for plant operations. Chevron is also exploring opportunities to reuse produced water from oil and gas activities. The facility will incorporate emissions-control technologies and measures aimed at minimizing noise and light impacts on nearby communities.
The company expects the project to create a new source of revenue that is less dependent on fluctuations in oil and gas prices while supporting growing demand from the technology sector.
