Chevron has entered a 20-year deal to provide natural gas–fueled power to a large Microsoft data center in West Texas, a move that highlights growing activity by energy companies to meet rising electricity demand from AI infrastructure.
The initiative, named Project Kilby, is projected to draw almost 2.7 gigawatts of electricity - roughly equivalent to the consumption of about 2 million homes - and will occupy more than 2,000 acres in Reeves County in the Permian Basin.
Chevron will collaborate with Joulent, an energy firm backed by the activist investment company Engine No. 1, to construct a power-generation complex that will be supplied with natural gas sourced from Chevrons existing fields in the region. Large portions of the power will come from gas turbines supplied by GE Vernova, with additional turbines provided by Caterpillar. The power infrastructure is planned to be located directly on the data center site.
Chevron indicated it expects to make a final investment decision on the gas-fired plant after securing the required permits later this year. The company has targeted initial power delivery for late 2028, while the full build-out is expected to continue into the 2030s. Chevron did not disclose a cost estimate for the project.
Jeff Gustavson, president of Chevrons New Energies unit, commented on the deal: "AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fueling that transformation. Our agreement with Microsoft through Project Kilby represents Chevrons unique ability to deliver power to AI customers with certainty, speed and at a competitive cost, leveraging Permian natural gas supply, infrastructure and our proven execution capabilities."
Project Kilby is the first major data center collaboration between Chevron and Joulent. The arrangement is consistent with a broader movement among energy producers to capture the rapidly growing electricity needs of technology companies that are turning to regional natural gas resources to power AI-focused facilities.
Summary of key details
- Project name: Project Kilby.
- Planned power demand: nearly 2.7 gigawatts, enough to power roughly 2 million homes.
- Site size: more than 2,000 acres in Reeves County, Permian Basin.
- Partners: Chevron and Joulent (backed by Engine No. 1).
- Equipment providers: GE Vernova and Caterpillar supplying large gas turbines.
- Timeline: final investment decision after permits later this year, initial power targeted for late 2028, full build-out into the 2030s.
- Project cost: no estimate disclosed.
The announcement came alongside a modest premarket increase in the oil majors shares, which rose 1.3% by 08:27 ET (12:27 GMT).