Chevron Microsoft PPA Spurs Turbine Demand
Chevron Microsoft PPA ties off-grid gas generation to multi-GW data-center power and locks long-term turbine demand, boosting supplier backlog.
KEY TAKEAWAYS
- A 20-year PPA for Project Kilby underpins roughly 2.67 GW of off-grid gas generation.
- Chevron and Engine No. 1 reserved seven GE Vernova 7HA turbine slots, tightening multi-year delivery timing.
- Environmental analysis estimated over 13 million tons CO2, prompting air-permit reviews and local pushback.
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Chevron Corporation (CVX) announced on June 22, 2026, a 20-year power purchase agreement with Microsoft Corporation (MSFT) to supply a co-located, off-grid natural-gas-fired plant and AI data-center campus in West Texas. The multi-gigawatt buildout is designed to support turbine demand and power hyperscale AI workloads.
Project Kilby and Power Supply Details
Project Kilby, located near Pecos in Reeves County within the Permian Basin, spans more than 2,000 acres. Chevron, Microsoft, and investors including Engine No. 1 via Joulent/Energy Forge One are developing the site as a co-located natural-gas power plant and Microsoft data-center campus.
Chevron plans to ramp the facility to roughly 2.67 gigawatts of dedicated capacity by 2028, with a final investment decision expected by the end of 2026. Microsoft describes the campus as a multi-billion-dollar investment over five to seven years, adding about 2 gigawatts to its data-center capacity.
The gas plant will generate power exclusively for the Microsoft campus and operate off-grid, not relying on local utilities. Chevron intends to source natural gas primarily from its Permian Basin production, supplemented by Joulent’s regional fields. Surplus electricity could be sold into regional grids over time.
Turbine Orders and Supply Chain
Most electricity generation will come from large GE Vernova gas turbines, with additional capacity from Caterpillar’s Solar Turbines. Chevron and Engine No. 1 have committed to orders and reserved slots for seven GE Vernova 7HA turbines under a slot-reservation agreement linked to a "power foundries" program. This program aims to deliver up to 4 gigawatts of reliable power to hyperscale data centers across multiple U.S. regions.
The reserved turbine slots secure delivery timing amid a years-long manufacturing backlog, supporting a medium-term pipeline for large-frame turbines.
Local Economic Impact and Emissions
Microsoft projects the buildout will create more than 6,000 construction jobs and hundreds of permanent operational roles. Other estimates place local employment effects closer to 2,000 jobs. Chevron-aligned reporting anticipates over $10 billion in tax revenue for local and regional governments during the project’s lifespan.
An Environmental Integrity Project analysis estimates the plant could emit more than 13 million tons of CO₂, 3,200 tons of criteria air pollutants, and 278,000 pounds of hazardous air pollutants over its operating life. These projections have prompted local environmental concerns and indicate the need for state and federal air-permit reviews. Chevron has acknowledged environmental pushback and is addressing regulatory requirements accordingly.
