Chevron Corporation has announced that Energy Forge One, a wholly owned subsidiary, has signed an agreement with Microsoft to develop a co-located gas power generation facility in West Texas that will provide dedicated electricity to a Microsoft-operated data center under a 20-year power purchase agreement.

Chevron and Engine No. 1 have been collaborating on the development, known as Project Kilby. Kilby is expected to deliver approximately 2.67 GW of capacity, built through a phased, modular approach that Chevron says "enables incremental expansion over time." A majority of the generation will come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity provided by Caterpillar subsidiary Solar Turbines. First power delivery is anticipated in 2028.

"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. "Chevron is uniquely positioned to deliver power to customers with certainty, speed and at a competitive cost, leveraging Permian natural gas and our proven execution capabilities. This project links Chevron's traditional strengths to emerging demand, creating differentiated value for our shareholders and the communities where we operate."

By co-locating new, large-scale power generation with the data center, Kilby is designed to deliver dispatchable electricity directly to Microsoft while aiming to mitigate impacts on the regional grid. The facility plans to use non-potable, brackish groundwater sources for power plant operations rather than freshwater. Chevron is also working to advance solutions for reuse of produced water from oil and gas operations. The plant design will incorporate air emissions control technologies, including selective catalytic reduction systems designed to reduce NOx emissions, as well as measures to minimize noise and light impacts on surrounding communities.

Last year, GE Vernova, Chevron and Engine No. 1 announced intentions to build a new company aimed at delivering up to four GW of reliable power for U.S. data centers. The partnership formed as energy demand for AI development and data processing continues to skyrocket. The companies cited early actions of the Trump Administration "setting the critical foundation to encourage investment leveraging America's energy abundance to enable America's AI leadership."

The projects are not designed to initially flow through the existing transmission grid. Over time, surplus electricity from the projects could be sold back to the grid through future interconnects, providing additional capacity to the broader energy market without driving up costs for consumers. The first projects, branded as "power foundries," are expected to leverage seven GE Vernova 7HA natural gas-fired turbines, secured under a slot reservation agreement, on an accelerated timeline. These turbines are expected to serve co-located data centers in the U.S. Southeast, Midwest and West regions.

"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. "Our agreement with Chevron helps ensure we'll have dedicated, large-scale power to support the evolution and reliability of advanced compute. Through this partnership, we're delighted to grow with and become a deeper part of the West Texas community."