Chevron announced on Monday, 22, a 20-year energy supply agreement with Microsoft to power a data center operated by the technology giant in West Texas, in a project aimed at meeting the growing demand generated by artificial intelligence (AI) and cloud computing.
The supply will be carried out through Project Kilby, developed by the wholly-owned subsidiary Energy Forge One in partnership with Engine No. 1. The project is expected to have a capacity of approximately 2.67 gigawatts (GW), built in a modular and phased manner, with generation mainly based on natural gas from the Permian Basin region. The project will also feature turbines and electrical infrastructure from GE Vernova and additional capacity provided by Caterpillar subsidiary Solar Turbines.
According to Chevron, Kilby is among the largest integrated natural gas electric generation and data center projects in the United States. The company stated that the project seeks to provide dedicated and reliable energy directly to Microsoft, reducing impacts on the regional electricity grid.
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Microsoft President of Cloud Operations + Innovation Noelle Walsh said the accelerating growth in demand for AI and cloud services requires energy infrastructure capable of scaling “quickly and reliably.” According to her, the agreement will help ensure dedicated energy supply to support the evolution of the company’s advanced computing systems.
Chevron expects to make the final investment decision (FID) by the end of 2026, subject to the fulfillment of necessary conditions. The first energy delivery is scheduled for 2028. The company estimates that the project could generate more than US$10 billion in state and local tax revenue, in addition to supporting around 2,000 jobs and diversifying its cash flow with revenues that are less dependent on oil and gas price cycles.
