Chevron to fuel massive Microsoft data center in Texas with natural gas
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Chevron will fuel a massive Microsoft data center in West Texas with natural gas under a 20-year agreement, the oil major announced Monday.
The data center, called Project Kilby, is expected to consume nearly 2.7 gigawatts of electricity, which is equivalent to about 2 million homes.
A majority of the electricity will come from large gas turbines from Chevron’s partner GE Vernova. Caterpillar will also provide turbines. The power infrastructure will be located at the data center site.
Project Kilby has not started construction in Reeves County. Chevron expects to make a final investment decision on the project later this year. The data center would start receiving power in 2028.
Microsoft’s parternship with Chevron comes as it undertakes a massive buildout of data centers to power artificial intelligence applications. It plans $190 billion in capital expenditures this year, a 61% increase over 2025.
Microsoft’s embrace of natural gas through a partnership with the oil industry shows it is willing to invest in a fossil fuel to meet its electricity needs.
The rapid growth of AI “requires energy infrastructure that can scale quickly and reliably,” said Noelle Walsh, Microsoft’s president of cloud operations and innovation, in a statement Monday.
Chevron is positioned to quickly and reliably deliver natural gas from the Permian Basin to data centers at a competitive cost, said Jeff Gustavson, Chevron’s president of new energies.
Microsoft has invested primarily in renewable energy to offset carbon-dioxide emissions from its data centers. But it is searching for power sources than can more reliably meet the 24/7 demand of its data centers. It turned to nuclear power in 2024 with its investment in the restart of the Three Mile Island nuclear plant in Pennsylvania.
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