Chevron says it will supply natural gas power for Microsoft’s Project Kilby data center in West Texas, which could begin receiving electricity in 2028.
Chevron will supply natural gas power for a major Microsoft data center planned in West Texas under a 20-year agreement, the oil company announced Monday.
The project, known as Project Kilby, is expected to require nearly 2.7 gigawatts of electricity — roughly comparable to the power used by about 2 million homes. The deal highlights the scale of the energy challenge facing technology companies as they build data centers to support artificial intelligence applications.
Most of the electricity for the site is expected to come from large gas turbines provided by GE Vernova, Chevron’s partner on the project. Caterpillar will also provide turbines, and the power infrastructure will be located at the data center site.
Project Kilby has not yet begun construction in Reeves County. Chevron said it expects to make a final investment decision later this year, with the data center starting to receive power in 2028.
Microsoft has been expanding its data center footprint rapidly as AI workloads drive demand for computing capacity. The company plans $190 billion in capital expenditures this year, a 61% increase from 2025, according to the source report.
The agreement also shows a broader shift in how Microsoft is trying to secure energy for its technology infrastructure. The company has invested primarily in renewable energy to offset carbon dioxide emissions from its data centers, and in 2024 it moved into nuclear power through an investment tied to restarting the Three Mile Island nuclear plant in Pennsylvania.
By turning to a natural gas partnership with Chevron, Microsoft is adding a fossil-fuel-backed power source to that mix. The next key step is Chevron’s final investment decision, which will determine whether the project moves toward the 2028 power target.
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