Chevron to fuel massive Microsoft data center in Texas with natural gas

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, which is equivalent to about 2 million homes.

A majority of the electricity will come from large gas turbines from 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 parternship with Chevron comes as the tech company undertakes a massive buildout of data center infrastructure to power artificial intelligence applications. It plans $190 billion in capital expenditures this year, a 61% increase over 2025.

Microsoft has invested primarily in renewable energy to offset the carbon-dioxide emissions from its data centers in an effort to address climate change. It turned to nuclear power in 2024 with its investment in the restart of the Three Mile Island nuclear plant in Pennsylvania.

Microsoft’s embrace of natural gas through a partnership with the oil industry shows it is also willing to invest in a fossil fuel to meet its electricity needs.

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