Chevron’s Microsoft Deal Turns Natural Gas Into an AI Trade

Chevron and Microsoft announced a 20-year, 2.67 gigawatt natural gas power purchase agreement (Project Kilby) to power a dedicated AI data center campus in Texas. The deal allows Chevron to monetize stranded natural gas from its Permian Basin operations while providing Microsoft with reliable baseload power independent of the public grid. The $7 billion project targets mid-teen IRR and represents a strategic shift for traditional energy producers to capitalize on AI infrastructure demand.