Microsoft has signed a 20-year agreement with Chevron to power a massive new AI-focused data center campus in West Texas, underscoring the growing race among tech companies to secure reliable energy supplies, according to Bloomberg.
The project, known as Project Kilby, is expected to begin generating power in 2028 and eventually reach 2.67 gigawatts—enough electricity for more than 530,000 Texas homes.
Chevron is developing the project with Engine No. 1 and expects to make a final investment decision later this year. Despite the enormity of the deal and the inroads into powering AI directly, Chevron stock was little changed after the cash open.
Bloomberg writes that the site near Pecos, Texas, will use natural gas from the Permian Basin to fuel GE Vernova turbines and generate electricity directly for Microsoft’s planned data center campus. Because the facility will produce its own power, it will not draw from the grid.
“Consumers are concerned about and are already feeling the effect of power-demand growth,” said Jeff Gustavson, Chevron’s president of New Energies. “We specifically designed this, in this part of the country, to avoid any of that.”
The agreement comes as Microsoft accelerates its AI infrastructure buildout to compete with Alphabet and Amazon. The company has said it plans to double its data center footprint over the next two years, driving demand for large-scale, dependable power sources.
Chevron argues the project also creates a productive use for abundant Permian natural gas that is often wasted because pipeline capacity is limited. “This is the most abundant gas basin in the country, maybe the world,” Gustavson said.
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