Chevron signs pact with Microsoft for powering its Texas data centre
Texas, June 22
Oil giant Chevron has entered into a pact with Microsoft for powering one of its data centres in the US state of Texas under a 20-year power purchase agreement.
The two companies will collaborate to build a co-located power facility, named Kilby, which will provide power to the data centre facility under a 20-year power purchase agreement.
The facility will deliver 2.67 gigawatts of power capacity to the Microsoft data centre using gas turbines from GE Vernova and additional capacity being provided by Solar Turbines, a wholly owned subsidiary of Caterpillar. The new facility will help mitigate the impact on the regional grid that consumers are dependent on.
Project Kilby is expected to generate tax revenue of more than USD10 billion for Texas and support almost 2,000 jobs, Chevron said.
"AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fueling that transformation," said Jeff Gustavson, Chevron president of New Energies.
Gustavson said that the energy giant can deliver power to consumers at a competitive cost, leveraging its Permian natural gas facility.
"This project links Chevron's traditional strengths to emerging demand, creating differentiated value for our shareholders and the communities where we operate," Gustavson added.
The agreement underscores the need for a massive amount of power that is required to run data centres. Hyperscalers like Google-parent Alphabet, Amazon and Microsoft are battling to build massive compute infrastructure that will train advanced AI frontier models like OpenAI's GPT and Anthropic's Claude.
"The rapid growth we're experiencing in AI and cloud, driven by customer demand, requires energy infrastructure that can scale quickly and reliably," said Noelle Walsh, Microsoft president of Cloud Operations + Innovation.
The recent market debut of SpaceX, raising record funds through IPO, shows that the race to stay ahead in AI buildout is only getting ferocious.
Musk has ambitions to take the battle to space with his orbital data centres that will use solar energy to power the computing infrastructure.
— ANI
Reader Comments
Makes sense that these hyperscalers need reliable baseload power for AI workloads. Gas turbines are a practical choice for now while battery storage scales up. I'm more curious about how India's energy policy will adapt - our data centre demand is exploding too but we have coal dependence. This model of co-located power generation could be a cleaner alternative if we use gas or renewables. Chevron is smart to repurpose their Permian expertise. The jobs and tax revenue angle is classic American infrastructure deal-making - very pragmatic
Read about this earlier. The 20-year PPA makes sense for both parties - Chevron gets guaranteed revenue, Microsoft gets price stability. But the environmental angle is concerning. In India, we are struggling with air quality, and gas turbines emit NOx and CO2. Why not invest more in nuclear or geothermal? Texas has access to both. Still, kudos to the scale - 2.67 GW is no joke. The SpaceX orbital data centre idea sounds like science fiction though. Musk's ambition is admirable but let's get terrestrial solutions right first 😅
From a business perspective, this is a smart hedge for Chevron. They're using their existing natural gas expertise to serve the AI boom while oil demand might peak in coming decades. For Microsoft, having dedicated power avoids grid congestion issues we see in places like California. The 2,000 jobs is significant for Texas too. I wonder though if India can attract similar partnerships for our data centres in Tamil Nadu or Maharashtra. Our states need that kind of investment and tax generation 🏭
The article mentions SpaceX's orbital data centres which sound cool but impractical for now. What's more relevant is how this Chevron-Microsoft deal shows the power requirements for AI are real and massive. In India, we are seeing similar trends with companies like Yotta and CtrlS building huge hyperscale data centres. The key question is whether our power grid can handle the load.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.