Chevron, Microsoft Partner on 2.7 GW Texas Power Project

Chevron is making a big bet on AI-driven power demand, striking a 20-year deal to supply dedicated electricity to a Microsoft data center through a new co-located generation project in West Texas.

The company said Energy Forge One LLC, a wholly owned Chevron subsidiary, has signed an agreement with Microsoft to develop Project Kilby, a large-scale power facility that will sit alongside a Microsoft-operated data center and provide contracted power under a long-term PPA. Chevron has been developing the project in partnership with Engine No. 1.

Project Kilby is expected to deliver about 2.67 gigawatts of capacity. Most of the output will come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity supplied by Solar Turbines, a Caterpillar subsidiary. The scale underscores how cloud and AI workloads are reshaping utility-style demand profiles and drawing in traditional energy majors as partners.

“AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fueling that transformation,” said Jeff Gustavson, president of Chevron New Energies. Microsoft’s Noelle Walsh, president of Cloud Operations + Innovation, said the company’s rapid AI and cloud growth requires power infrastructure “that can scale quickly and reliably.”

Chevron estimates the Kilby project will generate more than $10 billion in state and local tax revenue, support nearly 2,000 jobs, and spur broader economic development across the surrounding communities.