Why it matters
The strategic read
Turns the AI power bottleneck into a named, multi-gigawatt offtake between a hyperscaler and an oil major. Microsoft is locking dispatchable power next to compute instead of waiting on grid queues, Chevron is turning Permian gas into utility-style AI infrastructure cash flow, and GE Vernova / Caterpillar equipment becomes part of the data-center supply chain. Project Kilby is also a clean example of the new template: co-located generation, eventual grid optionality, brackish / produced-water plans, emissions controls, and ratepayer-impact mitigation wrapped around AI capacity.
Source-supported terms
What was disclosed
- 01
Chevron announced on June 22, 2026 that Energy Forge One LLC, a wholly owned subsidiary, signed an agreement with Microsoft to develop a co-located power facility in West Texas.
- 02
The facility will provide dedicated electricity to a Microsoft-operated data center under a 20-year power purchase agreement.
- 03
Chevron and Engine No. 1 have been collaborating on the development, known as Project Kilby.
- 04
Project Kilby is expected to deliver approximately 2.67 GW of capacity through a phased, modular approach that enables incremental expansion over time.
- 05
Most generation capacity is expected to come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity from Solar Turbines, a Caterpillar subsidiary.
- 06
Joulent, backed by Engine No. 1, said Kilby is its first power project and is designed to deliver reliable electricity for hyperscale AI workloads while aiming to reduce pressure on the regional grid.
- 07
Microsoft president of Cloud Operations + Innovation Noelle Walsh said the company needs energy infrastructure that can scale quickly and reliably as AI and cloud customer demand grows.
- 08
Chevron said the agreement is an important milestone toward final investment decision, expected by the end of 2026 subject to remaining conditions.
- 09
First power delivery is anticipated in 2028.
- 10
Chevron said Kilby is expected to generate more than $10B in state and local tax revenue, support almost 2,000 jobs and use non-potable brackish groundwater rather than freshwater for power-plant operations.
- 11
Data Center Dynamics reported the same day that Microsoft revealed plans for a 2 GW data-center campus in Pecos, Texas, described as a multibillion-dollar campus with investment over five to seven years and roughly 6,000 construction jobs at full buildout.
- 12
DCD reported that Chevron will provide power capacity to the site under the 20-year PPA, with capacity increasing incrementally as the power plant is built in phases.
Disclosure boundary
What is known—and what is not
Primary Business Wire releases from Chevron and Joulent plus same-day DCD reporting. Public materials disclose the 20-year PPA, Microsoft-operated data-center customer, Chevron subsidiary Energy Forge One, Engine No. 1 / Joulent collaboration, approximately 2.67 GW capacity target, West Texas / Pecos-area location, phased modular approach, GE Vernova and Caterpillar Solar Turbines equipment roles, FID target, first-power target, tax / jobs framing and water / emissions-control posture. DCD reports Microsoft has revealed a 2 GW Pecos data-center campus tied to the PPA. Public materials do not disclose PPA pricing, take-or-pay terms, minimum offtake obligations, exact site coordinates, final permits, gas-supply contracts, interconnection or export arrangements, construction/EPC awards, financing structure, final turbine counts, server/GPU allocation, backup power architecture or Microsoft workload allocation.