Chevron struck a 20-year agreement with Microsoft on Monday to power a massive West Texas data center with natural gas.
The data center development, otherwise known as Project Kilby, is set to start receiving power in 2028. Construction in Reeves County has not started yet.
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Chevron, one of the largest U.S. oil companies, expects to make a final investment decision on the project by the end of this year.
“AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fueling that transformation,” Jeff Gustavson, Chevron’s president of New Energies, said in a press release. “Chevron is uniquely positioned to deliver power to customers with certainty, speed and at a competitive cost, leveraging Permian natural gas and our proven execution capabilities. This project links Chevron’s traditional strengths to emerging demand, creating differentiated value for our shareholders and the communities where we operate.”
The 2.7-gigawatt campus will be located on more than 2,000 acres in the oil-rich Permian Basin, which is responsible for over 45% of total crude oil production in the United States.
Project Kilby combines large-scale natural gas generation with the data center, providing constant power for artificial intelligence without straining the regional grid.
Most of the generated electricity will come from gas turbines powered by GE Vernova, a Chevron partner. Additional turbines will be operated by Solar Turbines, a Caterpillar subsidiary.
“The rapid growth we’re experiencing in AI and cloud, driven by customer demand, requires energy infrastructure that can scale quickly and reliably,” said Noelle Walsh, Microsoft president of Cloud Operations and Innovation. “Our agreement with Chevron helps ensure we’ll have dedicated, large-scale power to support the evolution and reliability of advanced compute. Through this partnership, we’re delighted to grow with and become a deeper part of the West Texas community.”
Microsoft is proceeding with rapidly developing data centers that can power its AI and cloud services across large areas.
Once operational, Project Kilby will be among the largest co-located natural gas power and data center developments in the U.S.
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While there has been local opposition to data centers in recent months, leaders in the West Texas county appear to be in favor of the new data center. Reeves County Judge Leo Hung welcomed Microsoft’s investment.
“We are excited to welcome Microsoft to Pecos,” Hung said in a statement. “This investment reflects the strength of our region and its ability to support innovation at a global scale. It will create new opportunities for local businesses, support workforce development and reinforce Pecos as a place where forward-looking companies can grow and thrive.”
