Source: Fortune.com
Summary
Chevron and Microsoft have entered an exclusivity agreement to discuss colocating gas-fired power plants with an AI campus in West Texas. The deal could represent the largest collaboration between a US oil and gas giant and Big Tech. Chevron is developing a 2.5-gigawatt power plant hub, scalable to 5 gigawatts, which could start coming online in late 2027. The project reflects a shift in how power for AI is being developed, bringing energy supply closer to demand.
Our Reading
The strategy enters a familiar phase.
Chevron is pivoting to the power sector, triggered by the AI boom. The company is developing a multibillion-dollar project in West Texas, with 2.5 gigawatts of gas-fired power. Microsoft is considering colocating its AI campus with the power plant. Chevron’s natural gas production in the Permian Basin makes it an attractive partner for hyperscalers. The company is also looking at colocated power projects in the Midwest and West.
Chevron CEO Mike Wirth says the US is in an AI race against China and wants to help hyperscalers with gas in power and permitting issues. Wirth notes that power is becoming the great limiting element for growth, and creative deals are being done to address this issue.
Abundant American natural gas is seen as the foundation for powering the AI sector’s growth. Wirth mentions that pipeline gas in the US has remained relatively flat in price, despite global price spikes.
Companies are realizing they can’t just plug in a data center and expect it to work; they need to commit to power purchase agreements to meet their needs.
What’s really concerning people is access to power.
