Chevron just made its biggest bet yet that the AI boom needs fossil fuels to survive. The oil major signed a 20-year power purchase agreement with Microsoft to supply natural gas-fired electricity to a massive new data center complex in West Texas, a project dubbed “Kilby.”
The deal, announced on June 22, positions Chevron as a direct power provider to one of the world’s largest AI infrastructure buildouts. Through its subsidiary Energy Forge One LLC, Chevron plans to deliver up to 2.67 gigawatts of electricity, enough to power roughly 2 million homes, using natural gas pulled from its existing Permian Basin operations.
What Project Kilby actually looks like
The facility will follow a phased modular development approach, with first power generation expected by 2028. A final investment decision is projected by the end of 2026.
The project builds on a proposed $7 billion natural gas power plant initiative and an exclusivity agreement reached in late March or early April 2026 between Chevron, Microsoft, and investment firm Engine No. 1. That three-way pact laid the groundwork for what became the formal 20-year commitment.
