Chevron Signs 20-Year Microsoft Power Deal for 2.7 GW Texas AI Data Center
Updated
Updated · Financial Times · Jun 22
Chevron Signs 20-Year Microsoft Power Deal for 2.7 GW Texas AI Data Center
3 articles · Updated · Financial Times · Jun 22
Summary
Chevron agreed to supply Microsoft with electricity for a West Texas AI data center under a 20-year contract, marking the oil major’s push into power production.
Project Kilby, developed with Engine No. 1 in the Permian Basin, is planned to deliver 2.7 gigawatts; Chevron expects to decide later this year whether to build the gas-fired plant.
Permian gas oversupply is a key driver: constrained pipeline capacity has pushed Waha Hub prices below zero, and Chevron says the project creates local demand for stranded gas.
The deal places Chevron in a growing race with ExxonMobil and utilities to build off-grid gas power for AI campuses as Microsoft, Amazon and Alphabet pour billions into data-center expansion.
Can Microsoft reconcile this 20-year natural gas deal with its 2030 carbon-negative climate pledge?
Is Big Oil's new strategy to directly power Big Tech the future of the American energy industry?
The AI Energy Crunch: Chevron, Microsoft, and the Race to Double U.S. Electricity for Data Centers by 2026
Overview
The landmark agreement between Chevron, Microsoft, and Engine No. 1 highlights how tech companies are urgently securing reliable power sources to meet the rapidly growing electricity demand driven by AI and data centers. This deal aims to strengthen Microsoft’s AI capabilities, but it also draws attention to the company’s rising emissions and the broader challenge of building enough energy infrastructure to support AI’s expansion. As the industry grows, questions about energy sourcing and long-term sustainability become more pressing, showing the complex balance between powering innovation and managing environmental impact.