Chevron explores more data center power deals across the U.S.
Growing electricity demand from AI-driven computing is pushing energy producers to seek new long-term supply arrangements with large technology customers. Chevron is now looking beyond its newly announced Microsoft project in West Texas to pursue similar data center opportunities in several other U.S. regions.
Highlights
- Chevron agreed to develop Project Kilby, a 2.67-gigawatt natural gas power facility for Microsoft's Pecos, Texas data center, with operations expected in 2028.
- Chevron is exploring additional data center power deals in the Midwest, Rockies, Gulf Coast, and Utah, targeting both Microsoft and other customers.
- Chevron expects a final investment decision on Kilby by year-end and plans to expand capacity beyond 2.67 gigawatts over several years using GE Vernova and Caterpillar turbines.
Expansion plans after Microsoft agreement
As reported by Reuters, Chevron is exploring additional data center agreements in the Midwest, Rockies and Gulf Coast after signing a 20-year contract tied to Microsoft's data center campus in Pecos, Texas.The company said on Monday it agreed to develop Project Kilby, a natural gas-fired power facility with 2.67 gigawatts of capacity dedicated to the Microsoft site. Chevron president of new energies Jeff Gustavson said in an interview on Wednesday that the company also sees room for more projects in West Texas, part of the Permian Basin, where natural gas resources are abundant.
Gustavson said Chevron is also considering deals in Utah, where it has a hydrogen facility, and is open to working both with Microsoft and other customers. He said more announcements could follow over time if the company can meet its return targets.
Revenue potential and project timeline
The push into data center power gives Chevron a potential revenue stream that is less exposed to commodity price swings than its core oil and gas business. Still, analysts said this week it is too early to determine whether supplying electricity to data centers will become a meaningful contributor to the company's earnings.Chevron expects to make a final investment decision on Kilby by the end of the year. First power is expected in 2028, and the project is likely to take several years to reach full capacity.
The facility will require seven GE Vernova turbines and several smaller turbines from Caterpillar. Chevron said the project can eventually expand beyond its initial 2.67-gigawatt capacity.
In our earlier article on Microsoft’s stock outlook, we covered how regulatory and legal pressures—particularly an Italy antitrust probe tied to Microsoft 365 pricing and AI add-ons—were weighing on investor sentiment. We also noted bearish technical signals and a forecast trading range that suggested elevated downside risk, even as short-term buying interest offered intermittent support.
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