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The Chevron–Microsoft talks reported in April 2026 have since advanced to a signed 20-year power purchase agreement. Under the planned Project Kilby, Chevron and Engine No. 1 would develop a natural-gas-fired power facility beside Microsoft’s data center campus in Pecos, Texas. The agreement points to one way technology companies may seek dependable power for growing AI workloads: developing generation near the data centers it serves, rather than relying only on conventional grid supply.
What Chevron and Microsoft agreed to
On June 22, 2026, Chevron announced that its wholly owned Energy Forge One LLC had signed an agreement with Microsoft to develop the facility under a 20-year power purchase agreement. Chevron and Engine No. 1 have been collaborating on the development, known as Project Kilby. Reuters reported that the facility is intended to supply dedicated natural-gas-fired power to Microsoft’s Pecos campus. Chevron’s announcement and Reuters’ report describe the deal.
This is a significant change from the status reported on March 31. At that point, Microsoft, Chevron and Engine No. 1 had an exclusivity agreement, but said commercial terms were not finalized and no definitive agreement existed. The June signing superseded that earlier negotiating stage. Reuters reported the March exclusivity agreement.
How much power is planned—and what the figures mean
The capacity numbers refer to different things. Chevron says the planned power facility is expected to deliver approximately 2.67 gigawatts of generating capacity. Reuters reported that Microsoft’s data center capacity at the campus is expected to expand by 2 gigawatts. One figure describes the power facility; the other describes the reported addition to data center capacity. They are not interchangeable measures of the same output.
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Chevron says most generation would come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity from Solar Turbines, a wholly owned Caterpillar subsidiary. The company describes a phased, modular development designed to provide dispatchable electricity directly to the co-located campus. These are planned features, not evidence of an operating plant.
Schedule: targets, not completed milestones
In its June 22 announcement, Chevron said it expected a final investment decision by the end of 2026, subject to other necessary conditions, and anticipated first power delivery in 2028. Reuters’ June 26 follow-up also reported the 2028 initial-power expectation and said reaching full capacity would take several years. Both dates are expectations, not guarantees that investment has been approved or electricity will arrive on schedule. Reuters’ follow-up covers the timetable and Chevron’s consideration of other data center projects.
Why companies are considering power built beside data centers
AI data centers require large amounts of electricity, and access to power can constrain how quickly infrastructure is built. Data Center Knowledge framed the April Chevron discussions as an example of companies pursuing dedicated, co-located generation amid that constraint. Project Kilby offers Microsoft a planned supply arrangement tied to a particular campus, while Chevron and its partners would develop and operate the generation project. That is a concrete example of this approach, not proof that the entire data center industry is abandoning utilities or grid power. Data Center Knowledge’s April 8 report provides context on the talks and power availability.
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Dedicated, dispatchable generation could give a large customer more direct control over a supply plan, but it does not remove the financial and infrastructure risks. The reviewed announcements do not provide a like-for-like comparison of Project Kilby’s cost or lifecycle emissions against grid power, renewables, storage or nuclear. They therefore do not establish that this project is cheaper or cleaner than those alternatives. A meaningful comparison would also need to consider delivery timing, reliability, financing, water requirements and effects on the regional grid.
Environmental and community claims need attribution
Water, air pollution controls and local impacts
Chevron says the project plans to use non-potable brackish groundwater rather than freshwater for power plant operations, and that it is working on ways to reuse produced water from oil and gas operations. The company also says the design will include selective catalytic reduction systems intended to reduce nitrogen oxides, as well as measures to limit noise and light impacts. These are company plans; they do not establish that impacts will be eliminated or independently quantify the project’s effects.
External emissions estimate
TechCrunch reported an Environmental Integrity Project estimate of potential emissions exceeding 13 million tons of carbon dioxide, 3,200 tons of criteria air pollutants and 278,000 pounds of hazardous air pollutants. These are an external estimate, not measured emissions or a verified result from an operating facility. The reviewed material does not independently validate the estimate or state all the assumptions needed to assess it. TechCrunch’s report relays the estimate.
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Projected jobs and tax revenue
Chevron projects more than $10 billion in state and local tax revenue and support for almost 2,000 jobs. Separately, Reuters reported Microsoft’s statement that its multi-billion-dollar data center investment over five to seven years was expected to support more than 6,000 construction jobs and hundreds of permanent operational roles. Those claims describe different scopes and are projected benefits, not realized totals; they should not be added together as if they measured the same project or period.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the agreement signals—and what it does not
Project Kilby shows how a major data center customer and energy developers can use a long-term agreement to plan dedicated generation alongside a campus. It also brings the costs and consequences of that supply into sharper focus: construction and investment exposure, emissions, water use and the relationship between the facility and the regional grid. The announced capacity and schedule make the project consequential, but the available figures do not settle whether this model is more affordable or environmentally preferable to other power options.
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