Chevron and Microsoft Sign 20-Year Natural Gas Deal for Texas AI Data Center
On June 22, 2026, Chevron announced a landmark 20-year power purchase agreement to supply natural gas for Microsoft’s Project Kilby, a massive AI data center in Reeves County, West Texas. The off-grid plant will generate approximately 2.7 gigawatts—enough to power 2 million homes—using GE Vernova and Caterpillar turbines, with first power expected in 2028. The deal underscores surging energy demands from AI infrastructure, bypasses the ERCOT grid, and is expected to generate over $10 billion in tax revenue and 2,000 jobs for Texas.
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Chevron-Microsoft Off-Grid Power Deal Boosts GE Vernova Amid AI Data Center Demand
Chevron announced a long-term energy purchase agreement with Microsoft to power a massive new AI data center in West Texas via an off-grid natural gas plant dubbed Project Kilby. The plant, located in Reeves County, will deliver approximately 2.7 gigawatts of capacity using GE Vernova turbines, avoiding strain on public grids. The deal serves as a major proof of concept for behind-the-meter energy projects, boosting GE Vernova amid industry challenges including political resistance, increased turbine competition from Mitsubishi, and a potential slowdown in the AI trade. Despite a 7% stock drop, GE Vernova shares remain up 60% year-to-date. Wells Fargo maintained a buy-equivalent rating with a $1,259 price target, citing the company's 25% global electricity market share and pricing power. The project underscores a broader supply crunch, with GE Vernova sold out of heavy-duty turbines through 2028. Analysts expect more hyperscaler deals like this to follow.
US Top News and AnalysisChevron Secures 20-Year Power Contract for Microsoft's Texas Data Center
Chevron (CVX) has signed a 20-year agreement to supply natural-gas-fired power to Microsoft's (MSFT) $7 billion data center project in West Texas, known as Project Kilby. The facility, located in Reeves County, is expected to reach 2.67 gigawatts of capacity with first electricity targeted for 2028. Chevron will use GE Vernova and Caterpillar turbines for power generation. The deal ties Chevron's cash flows to long-term AI infrastructure demand, as data centers are projected to consume nearly 3% of global electricity by 2030. Chevron's stock has gained 15.6% year-to-date, and the company reported Q1 2026 earnings of $1.41 per share, beating expectations by 53.26%. Microsoft is planning approximately $190 billion in capital expenditures for 2026, up 61% from 2025. The article explores how this contract could reshape Chevron's growth and valuation profile.
Yahoo FinanceChevron and Microsoft Sign 20-Year Deal for Gas-Fired Data Center Power in West Texas
Chevron and Microsoft announced a 20-year power purchase agreement on June 22 to build Project Kilby, a 2.67-gigawatt natural gas-fired power plant in Reeves County, West Texas, dedicated to supplying electricity to a Microsoft data center campus. The behind-the-meter installation will bypass the ERCOT grid and convert stranded natural gas from Chevron's Permian Basin operations into baseload power. The project will be built in phases with first power targeted for 2028. Chevron expects a final investment decision by end of 2026, with the initial phase costing approximately $7 billion. The deal is one of the largest between a US oil major and a hyperscaler, addressing the critical need for reliable electricity in the AI infrastructure race. Chevron expects the project to generate over $10 billion in state and local tax revenue for Texas and support nearly 2,000 jobs.
Yahoo FinanceChevron and Microsoft Announce 20-Year Natural Gas Power Deal for West Texas Data Center
Chevron and Microsoft announced a landmark 20-year power purchase agreement on June 22 to build a 2.67 GW natural gas-fired power plant in West Texas, dedicated to supplying electricity to a Microsoft data center campus. The project, named Project Kilby, will sit on over 2,000 acres in Reeves County within the Permian Basin. Designed as a behind-the-meter installation, it will bypass the ERCOT grid and convert stranded natural gas - which would otherwise be flared - into baseload electricity for AI infrastructure. The project will be built in phases, with first power targeted for 2028 and development extending through the 2030s. Initial phase costs are estimated at roughly $7 billion, with investment firm Engine No. 1 holding an option for half ownership. Chevron projects mid-teen returns and expects the project to generate over $10 billion in state and local tax revenue while supporting nearly 2,000 jobs in Texas.
Yahoo FinanceMicrosoft Signs 20-Year Power Deal With Chevron Showing How Far AI’s Energy Needs Have Grown
Microsoft has signed a landmark 20-year power purchase agreement with Chevron to supply 2.7 gigawatts of natural-gas-fired electricity to a data center in West Texas, enough to power roughly two million homes. The project, named Project Kilby, involves GE Vernova and Caterpillar supplying turbines, with Chevron providing natural gas from the Permian Basin. First power is expected in 2028. The deal underscores the enormous energy demands of AI infrastructure, as Microsoft reported $37 billion in annual AI revenue and $30.88 billion in capital expenditures in Q3 2026, up 84% year-over-year. Chevron expects over $10 billion in tax revenue and 2,000 local jobs from the project. The agreement highlights how tech giants are locking in long-term energy supplies to fuel AI expansion.
Yahoo FinanceMicrosoft Signs 20-Year Natural Gas Power Agreement with Chevron for AI Data Centers
Microsoft has signed a landmark 20-year power purchase agreement with Chevron to supply 2.7 gigawatts of natural gas-fired electricity to a data center in West Texas. The deal, one of the largest of its kind, underscores the massive energy demands of AI infrastructure. Chevron's Project Kilby, operated through its Energy Forge One LLC with Joulent, is expected to generate over $10 billion in tax revenue and create nearly 2,000 jobs. GE Vernova and Caterpillar supply the turbines. Microsoft’s AI business has reached $37 billion annual revenue run rate, while capital expenditures surged 84% year-over-year. The agreement reflects a broader trend of energy firms partnering with tech giants to power AI expansion.
Yahoo FinanceChevron Signs 20-Year Natural Gas Power Deal with Microsoft for West Texas AI Data Center
Chevron and Microsoft have signed a 20-year power purchase agreement for a natural gas plant to supply electricity to a Microsoft AI data center in West Texas. The project, named Project Kilby, is designed to generate up to 2.67 gigawatts, equivalent to the power needs of 2 million homes, with power delivery starting in late 2028. The on-site plant will use GE Vernova and Solar Turbines (Caterpillar) turbines and operate independently of the regional grid to avoid cost impacts on local ratepayers. Total project costs are estimated at roughly $7 billion, targeting mid-teen returns. The plant will use natural gas from Chevron's Permian Basin production, benefiting from low local gas prices due to pipeline constraints. The deal signals Microsoft's willingness to add fossil fuel generation to its energy mix, alongside its historical reliance on renewables and nuclear. Microsoft's 2026 capital expenditure budget is $190 billion, up 61% from 2025.
Yahoo FinanceChevron signs 20-year natural gas deal with Microsoft for AI data center
Chevron signed a 20-year power purchase agreement with Microsoft to supply electricity from a natural gas plant to a data center in West Texas. The project, called Kilby, is designed to generate approximately 2.67 GW at full build-out, equivalent to the electricity needs of 2 million homes. Power is expected to begin flowing in late 2028. The on-site plant will use GE Vernova and Solar Turbines turbines and operate independently to avoid cost impacts on local ratepayers. Estimated costs are roughly $7 billion, targeting mid-teen returns. The plant will use natural gas from Chevron's Permian Basin production, taking advantage of excess gas that is often flared. The deal signals Microsoft's readiness to add fossil fuels to its energy mix alongside renewables and nuclear. Chevron expects more than $10 billion in state and local tax revenue and nearly 2,000 jobs.
Yahoo FinanceChevron to fuel massive Microsoft data center in Texas with natural gas
Chevron announced a 20-year agreement on June 22, 2026, to supply natural gas for Microsoft's massive data center called Project Kilby in West Texas. The data center is expected to consume nearly 2.7 gigawatts of electricity, equivalent to about 2 million homes. Most of the power will come from large gas turbines supplied by Chevron's partner GE Vernova, with additional turbines from Caterpillar. Construction has not started in Reeves County, and Chevron plans to make a final investment decision this year, with power delivery expected in 2028. The deal reflects Microsoft's willingness to invest in fossil fuels to meet surging data center power demand, despite its primary investments in renewable energy and nuclear power to address climate change.
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