Microsoft secures Chevron power for AI buildout

Microsoft and Chevron have signed a 20-year agreement for dedicated power at Project Kilby, a planned AI data centre campus near Pecos, Texas. The project links phased natural gas generation with Microsoft data centre expansion, sharpening the market signal that deliverable power is becoming a gating factor for AI infrastructure growth.

• Project Kilby links 2.67 GW generation with Microsoft's 2 GW buildout

• The deal turns deliverable power into an AI infrastructure control point

The fact

Microsoft and Chevron have signed a 20-year agreement for dedicated power at Project Kilby, a planned AI data centre campus near Pecos, Texas. Chevron subsidiary Energy Forge One and investor Engine No. 1 will develop about 2.67 GW of phased natural gas generation, using GE Vernova and Caterpillar equipment. First power is planned for 2028, while Microsoft expects to add about 2 GW of data centre capacity over five to seven years.

The Assessment

Project Kilby is not just a power supply deal. It shows AI infrastructure developers treating generation, fuel access and compute capacity as one delivery system rather than separate procurement tracks. The Permian Basin location gives Chevron control over both gas supply and power generation, reducing Microsoft's exposure to long grid interconnection timelines. The project sharpens the "deliverable megawatt" signal: capacity matters only if it can reliably reach compute. Whether the model scales depends on gas prices, permitting speed and carbon policy.

What to Watch

Chevron's final investment decision by end-2026, the 2028 first-power target, and whether other hyperscalers adopt similar behind-the-meter energy-compute projects.