The Evolution of Oil Majors: Chevron to Build Dedicated Power Plant for Data Centers

Global oil major Chevron has signed a 20-year long-term contract to supply power to artificial intelligence (AI) data centers being built by Microsoft (MS).

The deal is drawing particular attention as Chevron plans to construct a dedicated power plant exclusively for these data centers.

This move is interpreted as a major fossil fuel company seeking new business opportunities amid the boom in AI infrastructure development.

To avoid criticism that data centers, which consume massive amounts of electricity, are driving up electricity bills for households, the company has opted for "on-site" power generation, which is separated from the local power grid.

According to reports from the Financial Times and other foreign media, Chevron announced on June 22 (local time) that it would supply power to the Microsoft data center complex through natural gas generation under this agreement.

The facility is among the largest of its kind among data center projects currently underway in the United States.

Once completed, the data center, to be built in West Texas, is projected to consume 2.7 gigawatts (GW) of electricity, an amount equivalent to the power usage of 2 million households.

Chevron will source natural gas from the Permian Basin, the largest oil-producing region in the U.S. located in West Texas, to generate the power required for the complex.

Chevron plans to finalize its plan to build the dedicated natural gas power plant for the data center within this year.

Power supply is expected to begin in 2028.

The natural gas power plant built by Chevron will operate as a structure completely separated from the power grid used by local residents, a design feature intended to ensure it does not impact local electricity rates.

There is growing criticism among U.S. residents that they are effectively subsidizing big tech companies that operate power-hungry data centers.

Oil majors such as Chevron and ExxonMobil are accelerating efforts to supply power for infrastructure through natural gas generation as the AI industry invests billions of dollars to significantly expand AI data centers.

In particular, while AI infrastructure operators like Microsoft initially sought renewable energy solutions to reduce carbon emissions, the business environment is considered to have improved significantly as they increasingly and actively consider thermal power generation as well.

At the same time, the Financial Times noted that this project is highly significant as a means to dispose of excess natural gas produced in the Permian Basin.

The newspaper reported that as oil production in the Permian Basin has surged due to high oil prices in the wake of the war in Iran, the volume of natural gas produced as a byproduct has become so large that pipelines are struggling to handle the capacity.

In fact, the newspaper reported that oil and gas producers in the region are currently in a situation where they are paying to dispose of the natural gas on-site.

(Photo: AP, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.