Chevron signs 20-year power agreement for Microsoft data center in West Texas

Houston-based energy company Chevron has inked a 20-year deal to supply approximately 2.67 gigawatts of power to a large Microsoft data center in West Texas. The project, known as Kilby, is slated to be one of the largest gas-powered data center developments in the United States, providing enough electricity for about two million homes, primarily through GE Vernova turbines. This move signals Chevron's strategy to capitalize on the increasing electricity demand from the artificial intelligence sector.

Jeff Gustavson, Chevron's president of New Energies, stated that the company is "uniquely positioned" to deliver reliable power and aims for mid-teen returns on the investment. While the agreement with Microsoft is in place, Chevron has yet to make a final investment decision, which is anticipated by the end of 2026, with electricity supply expected to commence in 2028. Microsoft's president of Cloud Operations + Innovation, Noelle Walsh, emphasized the need for scalable energy infrastructure to support rapid growth in AI and cloud services.

Chevron projects that the Kilby facility will generate over $10 billion in state and local tax revenue and create around 2,000 jobs. The company also highlighted plans for advanced emissions-control technology, the use of non-potable brackish groundwater, and measures to minimize noise and light impacts on the West Texas community.