Chevron, Microsoft sign 20-yr gas deal for Texas data center

Chevron and Microsoft have entered a 20-year agreement to power a massive new data center in West Texas with natural gas, marking a significant shift for both companies. The deal, announced on Monday, June 22, 2026, involves a dedicated power plant called Project Kilby, to be built near Pecos in Reeves County within the Permian Basin. Chevron expects the plant to begin delivering power in 2028 and eventually scale up to 2.67 gigawatts, making it one of the largest single sources of dedicated data center power in the United States.

The project is designed as an off-grid facility, generating its own electricity on-site without drawing from the Texas public power grid. Jeff Gustavson, president of Chevron New Energies, stated the design aims to avoid adding strain to the regional grid, which is already facing surging demand. He emphasized the location’s strategic value, noting the Permian Basin produces vast amounts of natural gas as a byproduct of oil extraction, often leading to flaring due to pipeline constraints. The plant, he said, brings demand directly to the source to utilize that gas.

Project Kilby will be powered primarily by large turbines from GE Vernova, with...