Chevron, Microsoft deal fuels West Texas data center expansion

• Chevron and Microsoft have signed a 20-year power agreement for a data center in West Texas.
• The new power facility, Project Kilby, will be co-located with the Microsoft data center in Reeves County.
• Project Kilby is expected to generate about 2.67 gigawatts of capacity, primarily from natural gas turbines.
• The project aims to deliver power directly to the data center to reduce strain on the regional grid.

Chevron has signed a 20-year power agreement with Microsoft to support a West Texas data center in the Permian Basin.

The energy company announced Monday, June 22, that its wholly owned subsidiary, Energy Forge One LLC, signed an agreement with Microsoft to develop a co-located power facility for a Microsoft-operated data center in Reeves County.

“Our agreement with Chevron helps ensure we’ll have dedicated, large-scale power to support the evolution and reliability of advanced computers. Through this partnership, we’re delighted to grow with and become a deeper part of the West Texas community,” said Noelle Walsh, Microsoft's president of cloud operations and innovation.

The large-scale power generation development — known as Project Kilby — is expected to deliver about 2.67 gigawatts of capacity, built in phases to enable incremental expansion over time.

According to Chevron, a majority of the generation will come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar Inc.

By locating Kilby next to the Microsoft data center, Chevron said Kilby will be able to deliver power directly to Microsoft while aiming to mitigate impacts on the regional grid that consumers rely on.

“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 statement. “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."

According to Chevron, Kilby is expected to generate significant economic benefits for the region, including more than $10 billion in state and local tax revenue, support for almost 2,000 jobs and broader economic growth.

Chevron also said Kilby will use non-potable, brackish groundwater for power plant operations instead of freshwater.

Mateo Rosiles is the Texas Connect reporter for USA TODAY and its regional papers in Texas. Got a news tip for him? Email him: [email protected].