Chevron, Microsoft sign 20-year deal to power massive AI data center with natural gas
Chevron and Microsoft have struck a 20-year supply deal to power a massive new AI data center in Texas with natural gas. The agreement underlines how the AI boom is reviving fossil-fuel demand even as the sector pledges decarbonisation.
Chevron and Microsoft have signed a 20-year offtake agreement to power a vast new AI-focused data center being built in the Texas Permian basin with natural gas, the companies said. Under the deal Chevron will construct a dedicated gas-fired power plant on its acreage and pipe the output entirely to a new Microsoft Azure facility.
The project will start at 2.5 gigawatts of nameplate capacity and can scale to 4 GW. Microsoft framed the deal as a response to « AI compute demand sprinting ahead of grid build-out », while Chevron CEO Mike Wirth called it « one of the largest 20-year gas-supply contracts on the continent ». The plant is targeted for first power in late 2027.
Chevron shares climbed 3.1% in pre-market trading on the news, while Microsoft added 0.6%. US natural gas futures hit $4.82 per MMBtu, their highest since February. Environmental groups attacked the deal as « a retreat from Microsoft's 2030 carbon-negative pledge », but the company insisted carbon-capture infrastructure would be integrated from day one.
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