Microsoft and Chevron have signed a 20-year agreement to support one of the largest AI-driven infrastructure projects in the United States. The partnership will provide natural gas-fired power for a proposed $7 billion data center campus in West Texas, highlighting the growing connection between the energy and technology sectors.
The project, known as Project Kilby, is being developed by Chevron in partnership with investment firm Engine No. 1. Located near Pecos, Texas, in the heart of the Permian Basin, the facility is expected to begin generating electricity by 2028 and eventually reach a capacity of 2.67 gigawatts (GW).
As artificial intelligence continues to drive unprecedented demand for computing power, technology companies are increasingly seeking reliable, large-scale energy sources. Microsoft, which plans to double its data center footprint over the next two years, views the partnership as a strategic move to secure the dependable power needed to support next-generation AI workloads.
For the oil and gas industry, the announcement represents another example of how energy producers are positioning themselves to benefit from the rapid expansion of AI and data center infrastructure. The Permian Basin’s abundant natural gas resources, existing infrastructure, and proximity to major power markets make it an attractive location for energy-intensive projects.
The development also reinforces a growing trend: oil and gas companies are finding new growth opportunities by supplying power directly to data centers, creating a bridge between traditional energy production and the digital economy.
Chevron expects to make a final investment decision on the project later this year. If approved, Project Kilby could become one of the largest examples of natural gas-powered AI infrastructure in North America.
Author: phinds