Microsoft Signs 20-Year Power Deal With Chevron

Chevron announced that Energy Forge One LLC, a wholly owned subsidiary, signed a 20-year power purchase agreement with Microsoft to develop a co-located natural-gas-fired power facility, known as Project Kilby, to serve a Microsoft-operated data center campus in Pecos, West Texas, Chevron stated in a June 22 press release. Chevron said Kilby is expected to deliver approximately 2.67 gigawatts of capacity, built through a phased, modular approach, and to begin supplying first power by 2028 with a gradual ramp to full capacity (Chevron newsroom release; Reuters).

Chevron and public reporting name GE Vernova as supplying a majority of the large gas turbines, with additional capacity from Solar Turbines, a subsidiary of Caterpillar Inc. (Chevron; Reuters). Reuters and Bloomberg described Project Kilby as likely to rank among the largest co-located natural-gas power and data center developments in the United States (Reuters; Bloomberg).

Chevron said the project will be co-located with Microsoft's data center campus and described the work as supporting "the next phase of American AI growth by leveraging America's natural gas advantage," and Jeff Gustavson, Chevron president of New Energies, was quoted saying, "AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fueling that transformation." Microsoft's Noelle Walsh was quoted saying, "The rapid growth we're experiencing in AI and cloud, driven by customer demand, requires energy infrastructure that can scale quickly and reliably" (Chevron newsroom release). Reuters reported that Microsoft said the campus expansion would add about 2 gigawatts of data center capacity, that the investment would span the next five to seven years, and that it is expected to support over 6,000 construction jobs and hundreds of permanent operational roles (Reuters).

Companies building large-scale AI infrastructure require predictable, dispatchable power for continuous compute loads. Industry reporting places Project Kilby in a pattern where major cloud providers secure dedicated generation, sometimes co-located, to ensure capacity, latency, and reliability for AI workloads rather than relying solely on grid deliveries. Co-location reduces transmission exposure but raises questions about fuel sourcing, on-site resilience, and integration with regional grids.

Observed patterns in similar transitions: major cloud and hyperscale operators have pursued long-term power arrangements, including PPAs, behind-the-meter generation, and direct investment in renewables and storage. Reporting on Kilby emphasizes natural gas and modular gas-turbine capacity as a response to the near-term need for large, dispatchable power to support rapid AI-driven server growth. Bloomberg and CNBC offered different consumer-equivalent framings for the same capacity figure, Bloomberg calculated Kilby's 2.67 gigawatts as more than 530,000 Texas homes, while CNBC used a roughly 2 million homes comparison, illustrating how headline metrics vary by methodology (Bloomberg; CNBC).

Indicators an observer should follow include whether Chevron announces a final investment decision by year-end as Reuters reported Chevron expects; permitting and local approvals in Reeves County; timeline adherence toward first power in 2028; grid-interconnection details and any hydrogen or carbon-management elements disclosed later; and how other cloud providers respond in procurement strategy. For practitioners, changes in on-site generation patterns will affect data center design choices for power distribution, resilience, and emissions accounting.

Project Kilby brings fossil-fuel-based, dispatchable generation into a visible role for large-scale AI infrastructure procurement. Reporting so far mixes company statements, job and capacity estimates, and independent calculations; readers should treat quoted capacity and schedule figures as company- and reporter-attributed until further regulatory filings or permitting documents provide additional detail (Chevron newsroom release; Reuters; Bloomberg; CNBC).