Chevron signs landmark power-purchase agreement with Microsoft for West Texas AI data center.
McGuireWoods served as legal adviser to Chevron U.S.A. Inc. in negotiating an agreement between its wholly owned indirect subsidiary Energy Forge One LLC and Microsoft Corp. to develop a natural gas power facility in West Texas that will supply dedicated electricity to a co-located Microsoft-operated data center under a 20-year power purchase agreement. The project, known as Project Kilby, was developed in collaboration with the investment firm Engine No. 1.
Project Kilby will rank among the largest co-located natural gas power and data center developments in the United States, delivering approximately 2.67 gigawatts of power generation capacity. The facility employs a phased, modular approach to enable incremental expansion while providing reliable, dispatchable electricity directly to Microsoft. This structure supports the next phase of AI growth without straining regional electricity systems.
The McGuireWoods team was led by partner Brian Kelly and associates Mark Staines, Jacob Lubinski, and Michelle Lim Harris, with additional support from Julia English, Katlyn Davis Farrell, and Jake Maguire (regulatory); and Makram Jaber and Eric Mothander (environmental).
"This agreement represents a game-changing development in electricity offtake structuring, particularly in the data center space," Kelly said, noting his role as co-leader of the firm's Energy Industry Team. "The novel concepts embedded in this transaction required creative solutions to satisfy Chevron's commercial objectives and the stringent performance standards demanded by Microsoft. Our team was proud to assist in this historic transaction."
McGuireWoods has demonstrated deep expertise in the data center sector. In 2025, the firm advised NiSource Inc.'s subsidiaries Northern Indiana Public Service Company LLC and NIPSCO Generation LLC in structuring an electric service agreement with Amazon to supply up to 3 gigawatts of capacity for Amazon data centers in Northern Indiana, securing equity financing and leading negotiations for construction and power purchase agreements. The firm's cross-practice data centers team has facilitated the development of millions of square feet of data center space nationwide, providing strategic guidance on transactions, site selection, permitting, and energy procurement, with public affairs and advocacy support from McGuireWoods Consulting.
The firm's Energy M&A and Finance Practice Group, ranked nationally by Chambers USA, the Legal 500 United States, and Best Law Firms, combines focused industry knowledge, regulatory fluency, and practical, business-driven solutions to help clients complete strategic transactions, secure financing, and advance critical projects across the country.