Chevron to Supply Natural Gas for Microsoft's Massive AI Data Center in West Texas
Quick Look
- Chevron and Microsoft have signed a 20-year agreement for Chevron to supply natural gas to Microsoft's Project Kilby data center in West Texas.
- The facility, designed to power AI applications, will require nearly 2.7 gigawatts of electricity, with power infrastructure provided by GE Vernova and Caterpillar.
AI-generated summary
Why It Matters
Chevron will supply natural gas to Microsoft's Project Kilby data center in West Texas under a 20-year agreement. The data center will require nearly 2.7 gigawatts of electricity to power AI applications.
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, equivalent to the power needed to run about two million homes.
A majority of the electricity will come from large gas turbines supplied by 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 partnership 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, 61% more than in 2025.
Microsoft's embrace of natural gas through a partnership with the oil industry shows a willingness to invest in fossil fuels to meet its electricity needs.
The rapid growth of AI "requires energy infrastructure that can scale quickly and reliably," Noelle Walsh, Microsoft's president of cloud operations and innovation, said in a statement Monday.
For its part, Chevron is positioned to quickly and reliably deliver natural gas from the Permian Basin, located in west Texas and southeastern New Mexico, to data centers at a competitive cost, said Jeff Gustavson, Chevron's president of new energies.
What to Watch
AI outlook — possibilities, not facts
Chevron to make final investment decision on Project Kilby later this year.
Likely · Within months
Project Kilby data center begins receiving power in 2028.
Likely · Within years
Open Questions
- Final investment decision details
- Specifics of GE Vernova/Caterpillar turbine integration
- Environmental impact of increased natural gas use
