In a bold move to capitalize on the surging energy demands of artificial intelligence, Chevron has announced its first dedicated power project for a data center in West Texas. This initiative marks the oil giant’s strategic pivot into the power generation sector, leveraging its abundant natural gas resources from the Permian Basin to fuel the AI boom. As data centers worldwide grapple with unprecedented electricity needs—projected to double by 2030—Chevron’s entry positions it as a key player in bridging the gap between traditional energy and tech-driven innovation.
Project Specifications: Powering AI in the Permian
The West Texas project, located in the heart of the shale-rich Permian Basin, will supply natural gas-fired power directly to an unnamed premier data center operator, with whom Chevron is in exclusive negotiations.
Utilizing GE Vernova’s advanced 7HA natural gas turbines, the setup is designed for co-location, meaning the power plant will sit adjacent to the data center to minimize transmission losses and enhance reliability.
This behind-the-meter approach bypasses traditional grid dependencies initially, allowing for faster deployment amid growing concerns over grid stability.Key specs include a targeted operational start by 2027, with a final investment decision expected early in 2026.
While exact capacity for this initial site remains undisclosed, it forms part of a broader partnership with Engine No. 1 and GE Vernova aiming to deliver up to 4 gigawatts (GW) of power across multiple U.S. regions, including the West.
Future expansions could scale to 5,000 megawatts (MW), incorporating carbon capture and storage (CCS) technology to capture over 90% of CO2 emissions, aligning with lower-carbon goals.
The project leverages Chevron’s existing natural gas production in the area, ensuring a steady fuel supply while creating synergies with its core upstream operations.
A New Frontier: Chevron’s Dive into Power Generation
This venture represents a significant evolution for Chevron, expanding beyond traditional oil and gas extraction into the “New Energies” division.
Historically focused on hydrocarbons, the company is now positioning itself as a provider of scalable, reliable power solutions tailored to high-demand sectors like AI and cloud computing.
By integrating power generation with potential renewables and CCS, Chevron aims to address the “energy trilemma” of affordability, reliability, and sustainability. This shift is part of a $10 billion investment in lower-carbon projects through 2028, including renewable fuels, hydrogen, and carbon offsets.
The strategy echoes broader industry trends, where energy firms are repurposing expertise to meet AI’s voracious power appetite. For context, data centers could consume up to 8% of U.S. electricity by 2030, creating opportunities for innovative power models.
Lessons from Liberty Energy: A Parallel Path in AI Power
Chevron’s approach bears striking similarities to strategies adopted by other energy players, such as Liberty Energy. In an exclusive interview with Energy News Beat, Liberty’s CEO Ron Gusek detailed their pivot from oilfield services to powering AI data centers through Liberty Power Innovations.
Liberty employs modular, behind-the-meter microgrids fueled by natural gas, with plans to incorporate small modular nuclear reactors (SMRs) from partners like Oklo for baseload power.
Gusek emphasized the advantages: rapid deployment in 12-18 months versus years for grid-tied plants, locked-in fuel costs for 5-20 years to stabilize expenses, and resilience against grid blackouts.
This hybrid gas-nuclear model addresses a projected 200 GW power shortfall for AI, with only 22 GW currently planned.
Like Chevron, Liberty views natural gas as a transitional fuel for reliability, while eyeing nuclear for long-term decarbonization. Challenges include SMR commercialization delays, but the strategy promises stable revenues, shifting from cyclical oilfield income to predictable power contracts.
Chevron could draw from this playbook, potentially layering in nuclear or other tech as its power business matures.
Check out the interview with Ron Gusek, CEO, Liberty Energy here: How Liberty Energy Plans to Power AI Data Centers and Dominate U.S. Energy with Gas + Nuclear
Scaling Up: Chevron’s Broader Business Model and Investor Wins
Chevron’s announcements, particularly at its recent Investor Day, underscore the ambitious scale of this new model.
The West Texas project is the flagship of a portfolio targeting multiple GW by 2030, with initial focus on co-located facilities in the Southeast, Midwest, and West.
This “power foundry” concept—combining generation and data centers—could expand to sell surplus power to the grid, supporting national energy security and reindustrialization.
For investors, the benefits are clear and quantified. The initiative bolsters Chevron’s cash flow growth, projecting over 10% annual increases in adjusted free cash flow and earnings per share at $70 Brent oil prices.
It supports aggressive shareholder returns, including 7% average annual dividend growth and $10-20 billion in yearly share buybacks through 2030.
Return on capital employed is expected to rise by more than 3% by 2030, with a breakeven oil price below $50 per barrel, enhancing resilience.
By diversifying into high-growth areas like AI power, Chevron mitigates commodity volatility, drives U.S. energy dominance, and creates thousands of jobs—all while delivering superior value to shareholders.
As AI reshapes the global economy, Chevron’s West Texas rollout signals a new era where Big Oil meets Big Tech. With parallels to innovators like Liberty Energy, this project not only powers data centers but also fuels Chevron’s transformation into a multifaceted energy leader. Stay tuned to Energy News Beat for updates on this electrifying development.
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