Microsoft and Chevron enter exclusivity deal on powering West Texas AI data center complex

Big Oil is joining the data center game, with Chevron and Microsoft entering an exclusivity agreement on talks to colocate gas-fired power plants with an AI campus in West Texas’s oil and gas epicenter. If finalized, the deal would represent the largest collaboration to date between a U.S. oil and gas giant and Big Tech.

Chevron is developing a power plant hub with 2.5 gigawatts of gas-fired power in West Texas—enough to power nearly 2 million homes—and has negotiated for months with potential hyperscaler clients. The multibillion-dollar project is scalable to 5 gigawatts and could start coming online as early as late 2027. Chevron already has a financial partnership with the Engine No. 1 investment firm and seven gas turbines ordered from GE Vernova.

“No commercial terms have been finalized, and there is no definitive agreement at this time,” Chevron, Microsoft, and Engine No. 1 said in a statement.

“The approach reflects an emerging shift in how power for AI is being developed, bringing energy supply closer to demand through colocated, behind-the-meter generation to deliver reliability while helping avoid added strain on regional electricity systems,” the statement said.

The top American Big Oil players, Chevron and Exxon Mobil...