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Microsoft, Chevron Partner on Power Deal for Massive Texas AI Datacenter
Microsoft on Monday unveiled plans for one of the largest datacenter expansions in its history, pairing a new 2-gigawatt AI-focused campus in Pecos, Texas, with a 20-year power agreement from Chevron designed to ensure the facility has dedicated energy capacity as demand for AI services continues to surge.
The announcements, made separately by Microsoft and Chevron, highlight the growing lengths hyperscale cloud providers are going to secure reliable power as AI workloads drive unprecedented infrastructure growth.
According to Microsoft, the Pecos campus will expand the company's global datacenter footprint by approximately 2 gigawatts and represents a multibillion-dollar investment over the next five to seven years.
"Today, Microsoft is announcing one of the largest single capacity additions in our history," wrote Noelle Walsh, Microsoft's president of Cloud Operations and Innovation. "In Pecos, Texas, we will build a new datacenter campus, expanding our global datacenter capacity by approximately 2 gigawatts (GW) to meet strong and sustained customer demand for AI and cloud services across industries and regions."
Microsoft said the project is expected to support more than 6,000 construction jobs at peak build-out and create hundreds of permanent operations positions in West Texas. The company also emphasized that the project is being designed around a dedicated onsite energy supply rather than relying solely on the regional power grid.
"By pairing new datacenter infrastructure with dedicated energy supply located onsite, we can bring capacity online at the pace our customers require while maintaining operational reliability," Walsh wrote. "Critically, the energy infrastructure required to power this datacenter is being funded by Microsoft."
Chevron will supply power for the new campus through Project Kilby, a West Texas energy project being developed by Energy Forge One, Chevron's wholly owned subsidiary. Under a 20-year agreement, the facility will provide dedicated electricity directly to Microsoft's datacenter.
Announcing the deal, Jeff Gustavson, president of Chevron New Energies, said it reflects growing collaboration between energy providers and technology companies as AI drives demand for new power infrastructure.
"Our agreement with Microsoft through Project Kilby represents Chevron's unique ability to deliver power to AI customers with certainty, speed and at a competitive cost, leveraging Permian natural gas supply, infrastructure and our proven execution capabilities," Gustavson said.
Walsh echoed that theme, noting that traditional approaches to infrastructure planning are no longer sufficient for the AI era.
"Customer demand for AI and cloud services continues to grow rapidly," she wrote. "Meeting this demand requires not only more datacenter capacity, but capacity that is predictable, resilient and able to scale quickly."
The Pecos campus will initially use a co-located natural gas facility that can power the datacenter without relying on the public grid. Microsoft said the datacenter and power infrastructure may eventually connect to the regional energy system.
The deal shows how critical power access has become for AI infrastructure, with hyperscalers now treating energy supply as a core part of datacenter planning.