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4h ago

Chevron Signs 20‑Year Deal to Power Microsoft’s West Texas AI Campus

The agreement ties Chevron’s Permian gas and on‑site turbines to Microsoft’s AI build‑out, signaling a new model for hyperscalers that need always‑available power.

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HOUSTON, TEXAS - FEBRUARY 21: The U.S. and Texas flags fly in front of high voltage transmission towers on February 21, 2021 in Houston, Texas. Millions of Texans lost power when winter storm Uri hit the state and knocked out coal, natural gas and nuclear plants that were unprepared for the freezing temperatures brought on by the storm. Wind turbines that provide an estimated 24 percent of energy to the state became inoperable when they froze. (Photo by Justin Sullivan/Getty Images)
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Overview

  • The companies announced the 20‑year power purchase agreement on Monday, June 22, to develop Project Kilby, a co‑located natural gas power plant and Microsoft data‑center campus in Reeves County.
  • Chevron says the project will ramp to about 2.67 gigawatts using GE Vernova and Solar Turbines equipment, with a final investment decision targeted by the end of 2026 and first power expected in 2028.
  • Chevron projects more than $10 billion in state and local tax revenue and roughly 2,000 jobs while partners including Engine No. 1 and Joulent will help finance and build the phased, modular development.
  • Independent analysis cited in coverage estimates the plant could emit over 13 million tons of CO2 per year and other air pollutants, and Chevron plans to use brackish groundwater and treated produced water for cooling, drawing scrutiny from regulators and environmental groups.
  • The deal reflects a wider shift where hyperscalers secure behind‑the‑meter, dispatchable generation to avoid grid delays and where oil majors act like power producers to capture long‑term, stable revenue streams.