Chevron, Microsoft Sign 20-Year Deal for Texas Gas-Fired Data Center Power

Chevron Corp. signed a 20-year agreement with Microsoft Corp. to supply electricity from a natural-gas plant to a proposed data-center campus near Pecos, Texas. The facility, called Project Kilby, is scheduled to begin generating power in 2028 and scale to 2.67 gigawatts, enough to serve more than 530,000 Texas homes.

Chevron is developing the plant with investment fund Engine No. 1. The partners have placed orders for seven GE Vernova natural-gas turbines. Engine No. 1 holds an option to acquire 50 percent of the project and to fund half of its capital costs.

Chevron plans a final investment decision later in 2026. People familiar with the project estimated its total cost at about $7 billion as of April. The plant will draw gas from the Permian Basin and operate off-grid, avoiding connection to the regional electricity network.

Gustavson, Chevron’s president of New Energies, said the design prevents additional demand on the existing power system.

U.S. data-center capacity is projected to reach 77 gigawatts by 2030, according to BloombergNEF, while Texas accounts for 33 gigawatts of planned projects. Microsoft has a target to match 100 percent of its hourly electricity use with renewable-energy purchases by 2030 but is considering delaying or abandoning that goal.

Gustavson noted that the Permian Basin produces abundant natural gas that is sometimes flared for lack of pipeline capacity.

“This is the most abundant gas basin in the country, maybe the world.”