Microsoft and Chevron plan to develop a 2.67-gigawatt natural gas power facility in West Texas to supply electricity directly to a Microsoft-operated AI and cloud data centre.
The companies have signed a 20-year power purchase agreement for the development, known as Project Kilby. Chevron said it would become one of the largest co-located natural gas power and data centre projects in the United States.
Dedicated Plant Will Reduce Reliance on the Grid
Chevron will build the power facility in Reeves County through its subsidiary Energy Forge One. The project will initially operate behind the meter, meaning electricity will flow directly to Microsoft’s data centre instead of passing through the wider Texas grid.
The companies may connect the facilities to the regional electricity network later. This could allow the project to participate in the broader energy market after its initial development.
Two large turbines from GE Vernova will provide most of the generating capacity. Solar Turbines, a Caterpillar subsidiary, will supply additional equipment.
The project will be developed in phases, allowing Microsoft to add computing and electricity capacity over time. Chevron expects to make a final investment decision by the end of 2026.
Microsoft said rapid growth in demand for AI and cloud services required power infrastructure that could expand quickly and operate reliably. Dedicated generation may also help the company avoid lengthy waits for new grid connections.
Project Creates New Sustainability Challenge
The natural gas agreement comes as Microsoft works toward its commitment to become carbon negative by 2030. Its emissions have already increased as the company builds more data centres and purchases additional computing hardware for AI.
The Environmental Integrity Project estimates that Project Kilby could release more than 13 million tonnes of carbon dioxide. It could also produce approximately 3,200 tonnes of regulated air pollutants and 278,000 pounds of hazardous air pollutants.
Those figures are estimates rather than measurements from an operating facility. The final emissions will depend on the plant’s design, operating hours, pollution controls, fuel efficiency, and eventual use.
Chevron said the facility would include advanced emissions controls and measures intended to reduce noise and light pollution. It will also be designed to minimise freshwater consumption by using brackish and other non-potable water where possible.
The company expects the development to create more than 6,000 construction jobs at peak activity and hundreds of permanent operating roles. Chevron also estimated that the project could generate more than $10 billion in state and local tax revenue over its lifetime.
Featured image credits: Wikimedia Commons
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