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Chevron's subsidiary Energy Forge One LLC has signed a 20-year power purchase agreement with Microsoft to develop Project Kilby, a co-located power facility and data center complex in West Texas. The project is expected to provide approximately 2.67 gigawatts of generating capacity through a phased buildout, with power generated using GE Vernova turbines and Solar Turbines equipment. Chevron expects to reach a final investment decision by the end of 2026, with first power delivery targeted for 2028.
Why it matters
Chevron is leveraging its natural gas production from the Permian Basin to meet surging electricity demand from AI and cloud computing workloads. By co-locating generation and computing infrastructure, the project aims to reduce pressure on the regional grid while providing dedicated power to Microsoft. The deal is expected to generate mid-teen returns and provide cash flows less exposed to oil and gas price volatility, reflecting a broader shift across the energy sector as technology companies seek reliable power sources for AI infrastructure.
What to watch
Chevron projects the facility will generate more than $10 billion（約1.6兆円） in state and local tax revenue, support nearly 2,000 jobs, and contribute to economic growth in West Texas. The project will use non-potable brackish groundwater rather than freshwater and incorporates emissions-control technologies including selective catalytic reduction systems to lower nitrogen oxide emissions.
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