Chevron to continue securing deals for US data centers

Chevron has been negotiating additional data-center deals in the U.S. including the Midwest, Rockies and Gulf Coast following its two-decade contract to power a Microsoft Data Center in West Texas.

Chevron, Exxon Mobil and other oil and gas companies are looking to capitalize on the unprecedented electricity demand created by Big Tech’s AI-driven expansion of data centers. They offer their natural gas as well as experience in developing large-scale and complex energy projects.

Chevron announced on Monday that it had signed an agreement for the development of a natural-gas-fired facility called Project Kilby. The facility would have a capacity of 2.67 gigawatts and supply dedicated electricity to Microsoft’s data center campus at Pecos in Texas. This is the first project of its kind for Chevron, and it will be large enough to power an entire city the size San Francisco.

CHEVRON TEXAS MIDWEST GULF COAST

Jeff Gustavson said that the 'oil major' sees the potential for more projects in West Texas. This is part of the Permian Basin, the largest U.S. oilfield, and it possesses abundant natural gas reserves, said Jeff Gustavson.

He said that the Midwest, Gulf Coast and Rocky Mountains in Colorado are also areas of interest. The company also considers data center deals with Utah, where Chevron operates a hydrogen facility.

We'll also look at other areas of the country. Microsoft will be a part of the discussion. Gustavson stated that they would discuss it with potential customers. If we can get the right pieces to meet our return thresholds, there will be more announcements in time.

Kilby offers Chevron a separate "revenue stream" that is not subject to the commodity price risks of its core business. Gustavson stated that Chevron, its partners and themselves are finalizing the project design details. He declined to reveal an 'estimated cost.

This week, analysts said it was too early to say whether Chevron will be able to generate a significant revenue stream by providing power to data centers.

Chevron will make its final investment decision before the end of this year. First power from 'Kilby' is expected by 2028. The project will take several years to reach full capacity.

The project can expand its capacity beyond the initial 2,67 gigawatts. Reporting by Laila K. Kearney, New York; Sheila Dang, Houston; editing by Rod Nickel

(source: Reuters)