/Tech2h ago

Microsoft and Chevron partner on a $7 billion, 2.67-GW behind-the-meter gas project for Texas AI data centers

Story Overview

Microsoft and Chevron have inked a 20-year power purchase agreement to develop Project Kilby, a dedicated 2.67-GW natural gas plant in West Texas that will feed electricity straight to Microsoft AI data centers via behind-the-meter infrastructure, bypassing the regional grid entirely.

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Original post

Shanu Mathew@ShanuMathew93

MSFT & Chevron sign deal - Project Kilby is one of the largest disclosed behind-the-meter AI power deal in the US now = 2.67 GW underpinned by 20-year Microsoft PPA, ~$7B capex, FID later 2026, first power 2028.

-Chevron + Engine No. 1 (50% option, matching capex) develop a dedicated gas plant near Pecos, TX; 7 GE Vernova turbines committed despite multi-year backlog; zero grid draw, no utility involvement, no ERCOT exposure -Feedstock edge: Permian associated gas is frequently flared due to takeaway constraints, creating structurally cheap input costs -Scale context: US data center capacity expected to double to 77 GW by 2030 (BNEF); Texas leads pipeline at 33 GW planned but Virginia leads on actual construction. -Hyperscalers now contracting directly with E&P majors, bypassing the utility stack entirely. Watch for competing moves from XOM, Coterra, or Permian-heavy operators.

5:51 AM · Jun 22, 2026 · 15K Views

Cost Pressure

Why a 20-year lock-in changes the build timeline

The deal sets a first-power target of 2028 with a final investment decision due by the end of 2026, giving both companies a fixed revenue path that supports mid-teen returns for Chevron while letting Microsoft secure baseload capacity independent of grid constraints.

Open Question

What still sits outside the public filing

Exact PPA pricing, Microsoft capex details, and the full financing stack remain undisclosed, so the $7 billion figure and any use of flared gas stay unconfirmed in the official announcement.

Sentiment

Positive users view the Microsoft-Chevron natural gas deal as proof of sustained AI power demand and infrastructure scaling, while negative users criticize it for contradicting net-zero pledges through long-term fossil fuel reliance.

Pos

59.4%

Neg

40.6%

21 comments with sentiment.

Cluster Engagement

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Posts from X

Most Activity

VIEWS1.2KRETWEETS23

Polymarket@Polymarket

JUST IN: Chevron signs 20-year deal with Microsoft to supply natural gas power to its Texas data center campus.

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BOOKMARKS2

Grok@grok

**Chevron will supply it.**

The Project Kilby gas plant near Pecos, TX sits in the heart of the Permian Basin (Delaware sub-basin). Chevron—one of the biggest gas producers there—is developing the dedicated behind-the-meter facility with Engine No. 1.

They’ll source associated gas directly from local Permian production. This gas is often flared due to takeaway limits, giving structurally cheap feedstock for the turbines. No utility or grid involvement.

Classic hyperscaler move: lock in dedicated power + fuel at the source.

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LIKES2

Crypto Unicorn 🦄@NastiaVox

@Polymarket That’s so cool, it shows how much power demand is driving the AI buildout

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REPLIES1

Imaginary Kaiju2020 🔺@sikander69

@Polymarket Is there any corruption behind this deal or tax evasion? @grok

2h11

zoeyrose@dmexgB2DfHrIytw

@Polymarket So they’re betting on “cloud” power, but the cloud’s still puffing smoke. Nice.

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Big Hoss@FromWhiteCastle

@ShanuMathew93 @zephyr_z9 Don’t get involved with Engine No. 1. They care more about ESG than actual returns or profit.

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BuyBTCRetireEarly@btc4casuals

@ShanuMathew93 @grok who will supply the natural gas

2h128

Dan 🌲@Dan_Canoeth

@FromWhiteCastle @ShanuMathew93 @zephyr_z9 they’re sponsoring a gas plant

2h31

Zaid@Zayd__08

@Polymarket A 20-year deal tells you everything you need to know about where Microsoft thinks long-term energy demands are going.

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Zephry@name89515855910

@ShanuMathew93 My investment strategy.

⬇️ ⬇️

2h5

dmytro affixpin@affixpin

@Polymarket imagine having 20 years contact with microsoft

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WorldDecoded@BharatUncovered

@Polymarket Nothing says 'commitment to net-zero' quite like a casual 20-year fossil fuel contract. Congratulations to Microsoft on their historic shift to 'light green' energy!

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Eazyscalp@eazyscalp

@Polymarket that’s a massive amount of power for a data center.

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HawkChain@HawkChainETH

The greatest irony of all would be if AI demand ultimately resulted in more power available and not less.

This is the first real catalyst in a long time to drive real capital investments into power creation. And perhaps future state AI efficiencies will lead to over building now that other sectors can enjoy the benefit of in the future.

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Nathan Invest@Reed_Mining

@ShanuMathew93 Hyperscalers becoming their own utilities. Direct E&P contracts bypass the grid entirely. Permian flared gas now powers baseload AI. Markets find efficiency where regulation fails.

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B.G snipe$$@Snipe_burga

@Polymarket When the tech narrative meets the reality of actual supply and demand. They can market whatever they want, but the big money is locking in real institutional order flow. 📈

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