Chevron and Microsoft sign 20-year deal to power a 2.67 GW West Texas data center

Chevron Corporation and Microsoft Corporation signed a 20-year power purchase agreement on June 22, 2026 to develop Project Kilby, a co-located natural gas plant and data center in West Texas that will supply roughly 2.67 gigawatts of dedicated electricity to a Microsoft-operated facility.

The Chevron–Microsoft Project Kilby deal ranks among the largest co-located gas-and-data-center developments in the United States, and it ties AI compute growth directly to fossil fuel production: Permian Basin natural gas will fuel the plant. Chevron said in its announcement the project will be built in phases through a modular approach that allows capacity to expand incrementally.

Generation will come primarily from large GE Vernova turbines, with additional capacity from Solar Turbines, a Caterpillar subsidiary. Chevron expects a Final Investment Decision by the end of 2026 and first power delivery in 2028 — dates that make this a commitment, not yet a running plant. Microsoft, which is building the datacenter campus in Pecos, said it is funding the new generation and supporting infrastructure to serve its own operations, an arrangement it calls "behind the meter."

Chevron also said the development is expected to generate more than $10 billion in state and local tax revenue and support almost 2,000 jobs. Those figures are Chevron's own projections and have not been independently verified.

On environmental impact, Chevron says the plant will run Selective Catalytic Reduction systems to cut nitrogen-oxide emissions and will use non-potable brackish groundwater rather than freshwater — a notable choice in water-stressed West Texas, though the plant still burns gas and its lifetime emissions are not detailed in the announcement.

The deal is the latest sign that hyperscalers are securing dedicated generation rather than relying on strained grids to power AI. For Chevron, it converts upstream gas into a long-term, contracted power buyer at data-center scale.