Chevron to build gas-fired West Texas power plant, supply Microsoft
Chevron Corp. wholly owned subsidiary Energy Forge One LLC has agreed to develop a collocated 2.67-Gw power plant for Microsoft Corp. in West Texas that will provide dedicated electricity to a Microsoft-operated data center under a 20-year power purchase agreement. Chevron and US-based investment firm Engine No. 1 have been collaborating on the development, known as Project Kilby, which Chevron describes as among the largest collocated natural gas power and data-center developments in the US.
The companies will build Kilby through a phased, modular approach that will allow for incremental expansion over time. A majority of the power generation will come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar.
Chevron executives aren’t intending for this project to be a one-off: Speaking at the JPMorgan Energy, Power & Renewables Conference 2026, Jeff Gustavson, president of Chevron’s New Energies group, said the Kilby model “represents a platform for growth for us” and added that his team is already looking into more partnerships with Microsoft as well as other companies.
“If we can get to a returns equation that works for our company and our shareholders, you can expect to hear more from us,” Gustavson said, adding that the Microsoft project had already been factored into Chevron’s 2026 financial guidance. “You could see this being a business over time that could be in the billions of dollars in terms of free cash flow.”
In lieu of freshwater, Kilby plans to use non-potable, brackish groundwater sources for power plant operations. Chevron is also working to advance solutions for reuse of produced water from oil and gas operations. Plant design will incorporate advanced air emissions control technologies, including selective catalytic reduction systems designed to reduce NOx emissions, Chevron said, as well as measures to minimize noise and light impacts on surrounding communities.
Chevron plans to take final investment decision on Project Kilby by end-2026, with first power delivery in 2028.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
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