Chevron and Microsoft to Build $7 Billion Power Plant
Chevron (NYSE: CVX) and investment fund Engine No. 1 are nearing a deal with Microsoft (NASDAQ: MSFT) to construct a 2.5-gigawatt natural gas-fired power plant in West Texas. The facility, estimated to cost around $7 billion, is designed to meet the electricity demands of a large AI data center campus.
This power plant represents a critical piece of Chevron’s growth strategy, driven by increasing energy needs from tech companies. The project will utilize associated natural gas from Chevron’s operations in the Permian Basin, where excess gas frequently sells at a discount due to limited pipeline capacity. The proposed facility is anticipated to significantly enhance Chevron’s cash flow generation capabilities, aiming for over $12.5 billion in incremental free cash flow by 2026 if oil prices remain stable.
Since their partnership began last year, Chevron and Engine No. 1 have aimed to provide up to 4 gigawatts of power capacity to data centers. Securing Microsoft as a customer would allow them to advance this initial project, which could further solidify Chevron’s market position and support an evolving lower-carbon economy.
