The Daily Dig
Chevron subsidiary Energy Forge One LLC has signed a 20 year power purchase agreement with Microsoft. The deal covers a co located natural gas power facility planned for West Texas that will provide dedicated electricity to a Microsoft operated data center.
The project, called Kilby, is being developed alongside Engine No. 1, and Chevron says it draws on Permian natural gas supply. Microsoft says the deal gives it dedicated, large scale power to support continued growth in AI and cloud operations, and that the partnership deepens its involvement in the West Texas community.
Kilby is expected to deliver roughly 2.67 gigawatts of capacity, built in phases that allow the project to expand incrementally rather than coming online all at once. Most of the generation equipment will come from GE Vernova turbines, with Caterpillar subsidiary Solar Turbines supplying additional capacity.
Chevron says the scale puts Kilby among the largest co located gas power and data center projects in the country, though that ranking comes from the company itself rather than an independent source. Chevron also describes the project as linking its traditional natural gas business to emerging demand from AI and cloud computing.
No Final Investment Decision has been made yet. Chevron expects to reach that milestone by the end of 2026, pending other conditions, with first power delivery targeted for 2028.
The company is pointing to mid teen returns and cash flow it says does not move with oil and gas pricing cycles.
On the local side, Chevron projects more than 10 billion dollars in state and local tax revenue and support for almost 2,000 jobs, though the release does not specify a timeframe for those figures.
Kilby plans to use non potable brackish groundwater instead of freshwater, and Chevron says it is also working to advance solutions for reuse of produced water from oil and gas operations. Planned emissions controls include Selective Catalytic Reduction systems designed to reduce NOx, along with measures to limit noise and light impacts on nearby communities.
Snapshot:
Project Name: Project Kilby
Developer: Energy Forge One LLC (Chevron subsidiary)
Partner: Engine No. 1
Power Off-Taker: Microsoft Corp.
Location: West Texas; tied to Permian natural gas supply
Sector: Co-located natural gas power generation / data center
Capacity: Approximately 2.67 gigawatts
Build Approach: Phased, modular expansion
Primary Equipment: GE Vernova turbines
Additional Equipment: Solar Turbines (Caterpillar subsidiary)
Agreement Term: 20-year power purchase agreement
Financial Decision: Final Investment Decision expected by end of 2026
Target Returns: Mid-teen returns
First Power Delivery: 2028
Economic Impact: More than $10 billion in state and local tax revenue (timeframe not specified in source)
Workforce Impact: Almost 2,000 jobs supported
Planned Water Source: Non-potable brackish groundwater
Emissions Controls: Selective Catalytic Reduction (SCR) systems for NOx
TheJobWalk Thoughts
A phased 2.67 GW buildout suggests procurement could roll out in stages rather than one large package, though Chevron has not detailed a sequencing plan. Contractors who land early phase work may be positioned for follow on scopes as the project expands toward 2028.
Chevron's plan to use brackish groundwater instead of freshwater points to a need for specialized water sourcing and treatment expertise as the project moves toward FID.
With FID still about six months out, this is a window for building relationships ahead of the schedule firming up, not yet a window for bidding live work.
