chevron It will be a huge fuel microsoft The oil major announced Monday that it will use natural gas to build a data center in West Texas under a 20-year contract.
The data center, dubbed Project Killby, is expected to consume nearly 2.7 gigawatts of electricity, the equivalent of powering about 2 million homes.
The majority of the electricity will come from large gas turbines supplied by Chevron’s partners. GE Vernova. caterpillar We also provide turbines. Power infrastructure is installed on the data center premises.
Project Kilby has not begun construction in Reeves County. Chevron expects to make a final investment decision on the project later this year. The data center is scheduled to begin powering in 2028.
Microsoft and Chevron’s partnership comes amid a major data center expansion to power artificial intelligence applications. It plans to spend $190 billion in capital spending this year, a 61% increase over 2025.
Microsoft’s embrace of natural gas through partnerships with the oil industry demonstrates its willingness to invest in fossil fuels to meet its electricity needs.
Rapid growth in AI “requires an energy infrastructure that can scale quickly and reliably,” Noel Walsh, Microsoft’s president of cloud operations and innovation, said in a statement Monday.
Jeff Gustafson, Chevron’s president of new energy, said Chevron is well-positioned to quickly and reliably supply data centers with natural gas from the Permian Basin, located in west Texas and southeastern New Mexico, at a competitive cost.
Microsoft has invested primarily in renewable energy to offset carbon emissions from its data centers. However, the company is now exploring alternative power sources that can more reliably meet the 24/7 demands of its data centers. For example, the company converted to nuclear power in 2024 by investing in restarting the Three Mile Island nuclear power plant in Pennsylvania.
