The energy giant announced this Monday that it has signed a 20-year cooperation agreement to provide natural gas-fired power to a large data center operated by Microsoft in West Texas.
The data center project, codenamed "Project Kilby," is projected to have a total power demand of nearly 2.7 gigawatts, which is roughly equivalent to the electricity consumption of about 2 million households.
Most of the power will be generated by large gas turbine units supplied by Chevron's partner, GE Vernova. Caterpillar will also supply gas turbines as part of the package. The entire power generation infrastructure will be built directly within the data center campus.
Currently, Project Kilby, located in Reeves County, has not yet begun construction. Chevron plans to make a final investment decision on the project later this year, with the data center expected to be powered up and operational in 2028.
This energy partnership with Chevron comes as Microsoft is massively expanding its data centers to provide computing power for various artificial intelligence applications. The company plans capital expenditures of $190 billion this year, a 61% increase from 2025.
Microsoft's choice to partner with an oil and gas company and rely on natural gas for power supply demonstrates the company's willingness to utilize fossil fuels to meet its enormous electricity needs.
Noelle Walsh, Corporate Vice President of Cloud Operations and Innovation at Microsoft, stated in Monday's announcement that the rapid development of the AI industry "requires energy infrastructure that can be scaled quickly and is reliable."
Jeff Gustavson, President of Chevron New Energies, stated that the company can deliver natural gas to the data center from the Permian Basin in a stable, efficient, and highly cost-competitive manner.
Previously, Microsoft primarily relied on investments in renewable energy to offset the carbon dioxide emissions from its data centers. However, the company has been seeking power sources that can reliably meet data center electricity demand around the clock. As early as 2024, Microsoft ventured into the nuclear power sector by investing to help restart operations at the Three Mile Island nuclear power plant in Pennsylvania.
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