Chevron (CVX) and Microsoft (MSFT) announced a 20-year power purchase agreement on June 22 to build a natural gas-fired power plant in West Texas dedicated to supplying electricity to a Microsoft data center campus.
The project, named Project Kilby, sits on more than 2,000 acres in Reeves County near the city of Pecos, deep in the Permian Basin
Bloomberg was first to report the deal. The arrangement is one of the largest between a U.S. oil major and a hyperscaler, and it builds on an exclusivity agreement the two companies reached with investment firm Engine No. 1 in late March. It also lands at a moment when access to reliable electricity has become the most pressing constraint in the AI infrastructure race, ahead of chips, permits, or construction timelines.
Project Kilby: what the 20-year Chevron-Microsoft power deal covers Project Kilby is designed as a behind-the-meter installation, meaning the power plant sits co-located with the data center rather than feeding into the public ERCOT grid. That setup gives Microsoft a direct, dedicated power supply that bypasses Texas’s main grid entirely. At full build-out, the facility is expected to generate approximately 2.67 gigawatts of capacity, enough to power roughly 2 million homes, Chevron said.