Chevron and Microsoft Sign 20-Year, 2.67-GW Power Deal for West Texas Data Center
According to a Business Wire report via BOE Report, Chevron Corporation has announced that its wholly owned subsidiary, Energy Forge One LLC, signed a 20-year power purchase agreement with Microsoft to develop a co-located natural gas power facility in West Texas dedicated to a Microsoft-operated data center.
Project Scale and Timeline
The development, known as Project Kilby, is being built in collaboration with Engine No. 1 and is expected to deliver approximately 2.67 gigawatts of capacity through a phased, modular approach. The majority of generation will come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar. Chevron positions Kilby among the largest co-located natural gas power and data center developments in the United States.
Chevron’s Final Investment Decision is expected by the end of 2026, subject to completion of other necessary conditions. First power delivery is targeted for 2028, with the project targeting mid-teen returns.
Beyond power generation, Kilby is projected to generate more than $10 billion in state and local tax revenue, support nearly 2,000 jobs, and drive broader regional economic growth. The project also plans to use non-potable, brackish groundwater instead of freshwater for plant operations.
“Chevron is uniquely positioned to deliver power to customers with certainty, speed and at a competitive cost, leveraging Permian natural gas and our proven execution capabilities,” said Jeff Gustavson, Chevron president of New Energies.
What It Means for Subcontractors
- A 2.67-GW phased build in West Texas means sustained, multi-year construction demand for electrical, mechanical, civil, and pipeline subcontractors in the Permian Basin. The modular approach signals recurring contract opportunities, not a single mobilization.
- The FID is expected by end of 2026, making now the time to pursue vendor qualification and relationship-building with Chevron’s procurement and EPC partners. Companies not pre-qualified before FID risk missing early-phase awards.
- Power plant construction at this scale requires specialized turbine installation, high-voltage electrical work, and cooling system contractors. Firms with GE Vernova or Caterpillar Solar Turbines experience have a direct advantage.
- The project’s independence from oil and gas price cycles, by design, means construction timelines are less likely to be derailed by commodity swings, offering subcontractors more schedule certainty than a typical upstream Permian job.
- With first power targeted for 2028, procurement and early civil work will likely begin in 2027 or earlier. Subcontractors should be tracking public bid announcements and EPC selections closely over the next 12 months.
