Chevron, Microsoft, and Engine No. 1 are negotiating a team-up for a multi-billion power plant in West Texas intended to power a huge data center campus, in the latest energy deal to power AI infrastructure.
“Chevron, Microsoft, and Engine No. 1 have entered into an exclusivity agreement related to a proposed power generation and electricity offtake arrangement,” the companies said in a statement to Bloomberg, which reported that a proposed natural gas-fired power plant in West Texas could cost $7 billion and generate 2,500 MW of electricity.
This could be one of the biggest U.S. gas power plants, noted Bloomberg, which cited anonymous sources familiar with the ongoing talks.
In response to the report, the companies told Bloomberg that “No commercial terms have been finalized, and there is no definitive agreement at this time.”
At the beginning of 2025, Chevron and Engine No. 1 formed a partnership with GE Vernova to build a new company to develop scalable, reliable power solutions for U.S.-based data centers running on U.S. natural gas.
The projects, set to use GE Vernova gas turbines, are expected to serve co-located data centers in the U.S. Southeast, Midwest, and West regions, Chevron and Engine No. 1 said at the time.
Power generation is not designed to flow initially through the existing transmission grid, reducing the risk of increasing electricity prices for consumers, they added.
The U.S. sees unprecedented power demand growth — AI infrastructure, data centers, and advanced manufacturing are driving the first meaningful growth in U.S. power consumption since the 1990s.
Helped by the favorable pro-fossil fuel policies of the Trump Administration, gas will be the winner in the U.S. power demand surge, analysts say.
“Natural gas will benefit significantly from the rising electricity demand and the requirement for 24/7 uninterrupted supply. It is most flexible among all energy sources and an abundant domestic resource,” Goldman Sachs said in a report last year.
By Tsvetana Paraskova for Oilprice.com
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