Chevron Corporation has announced that its wholly owned subsidiary, Energy Forge One LLC, has signed a 20-year power purchase agreement with Microsoft Corp. to develop a co-located power facility in West Texas. Known as Project Kilby, the development will provide dedicated electricity to a Microsoft-operated data centre.
Project Kilby is expected to deliver approximately 2.67 GW of capacity using a phased, modular approach to enable incremental expansion. The majority of the power generation will be driven by large GE Vernova turbines, with additional capacity provided by Solar Turbines, a subsidiary of Caterpillar Inc. The initiative stands as one of the largest co-located natural gas power and data centre developments in the United States, utilizing Permian Basin natural gas to fuel expanding artificial intelligence infrastructure.
By co-locating the large-scale power generation directly with the data centre, the project is designed to deliver reliable, dispatchable electricity directly to Microsoft whilst mitigating potential strain on the regional consumer grid.
Jeff Gustavson, President of Chevron New Energies, stated that abundant, affordable, and reliable energy is essential to fuel the global AI transformation. He noted that the project successfully links Chevron’s traditional strengths with emerging technology demand. Noelle Walsh, Microsoft’s President of Cloud Operations and Innovation, added that the rapid growth of AI and cloud services requires energy infrastructure that can scale quickly and reliably, and that the agreement ensures dedicated power to support advanced compute systems.
A Final Investment Decision from Chevron is expected by the end of 2026, with first power delivery targeted for 2028. The project aims for mid-teen returns and plans to generate diversified cash flow independent of traditional oil and gas price cycles.
Architecturally, Project Kilby plans to use non-potable, brackish groundwater for its operations instead of freshwater, whilst Chevron explores the reuse of produced water from oil and gas operations. The plant design will also incorporate Selective Catalytic Reduction systems to reduce nitrogen oxide emissions, along with measures to minimise noise and light impacts on the surrounding West Texas community.
