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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, 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.
Microsoft has invested primarily in renewable energy to offset carbon-dioxide emissions from its data centers. But now it’s also searching for alternative power sources than can more reliably meet the 24/7 demand of its data centers. It turned, for example, to nuclear power in 2024 by investing in the restart of the Three Mile Island nuclear plant in Pennsylvania.
