Chevron, Microsoft, Engine No. 1 to Build 2.5 GW Gas Plant for AI

Chevron, Microsoft, and investment firm Engine No. 1 have entered an exclusivity agreement to develop a natural gas-fired power plant in West Texas, aimed at supplying electricity to a large artificial intelligence data center campus. The proposed facility, located in the Permian Basin near Pecos, would generate 2.5 gigawatts of power initially, enough to serve nearly two million homes, and could expand to five gigawatts.

The companies announced the agreement on Tuesday, emphasizing that no commercial terms have been finalized and no definitive deal exists at this time. According to their joint statement, the project focuses on colocated power generation to meet the surging electricity needs of AI infrastructure while minimizing strain on regional grids. The plant, estimated to cost about seven billion dollars, is expected to come online as early as late 2027 and would utilize natural gas produced alongside oil operations in the Permian Basin.

This initiative builds on a partnership formed last year between Chevron and Engine No. 1 to create gas-fired power solutions for data centers. The two entities have ordered seven large-scale turbines from GE Vernova to support scalable...