Microsoft Announces 2GW Data Center Campus in Pecos, Texas, Backed by Chevron Energy Deal
June 22, 2026
Microsoft Announces 2GW Data Center Campus in Pecos, Texas, Backed by Chevron Energy Deal
Microsoft has unveiled plans for a massive 2-gigawatt data center campus in Pecos, Texas, marking one of the largest single-site infrastructure investments by the tech giant. The project, described as a multibillion-dollar endeavor, will unfold over the next five to seven years and is expected to generate approximately 6,000 construction jobs at peak buildout.
Central to the project is a behind-the-meter energy supply agreement with U.S. oil and gas major Chevron, which will provide up to 2.67 gigawatts of power capacity under a 20-year Power Purchase Agreement (PPA). The capacity will increase incrementally to align with the phased construction of a dedicated natural gas-fired power plant. The plant, known as Project Kirby, is being developed jointly by Chevron and U.S. hedge fund Engine No. 1. First power delivery is anticipated in 2028.
The partnership between Microsoft and Chevron dates back to January 2025, when the two companies initially agreed to develop up to 4 gigawatts of gas-powered capacity to support data centers nationwide. In November 2025, Chevron selected West Texas as the location for its first natural gas plant serving the data center sector. By April 2026, the partners signed an exclusivity agreement with Microsoft, setting the framework for the current energy supply deal.
Project Kirby will rely primarily on large GE Vernova-manufactured turbines and associated electrical infrastructure, with additional capacity from Caterpillar subsidiary Solar Turbines. Chevron and Engine No. 1 secured seven GE Vernova 7HA natural gas turbines as part of their original partnership. While the exact turbine model was not disclosed, GE Vernova offers three variants with capacities of 290MW, 384MW, and 430MW.
“AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fueling that transformation,” said Jeff Gustavson, Chevron’s president of New Energies. “Chevron is uniquely positioned to deliver power to customers with certainty, speed, and at a competitive cost, leveraging Permian natural gas and our proven execution capabilities.”
Noelle Walsh, Microsoft’s president of Cloud Operations + Innovation, added: “The rapid growth we’re experiencing in AI and cloud, driven by customer demand, requires energy infrastructure that can scale quickly and reliably. Our agreement with Chevron helps ensure we’ll have dedicated, large-scale power to support the evolution and reliability of advanced compute.”
Beyond energy supply, Chevron said the project will deliver substantial economic benefits to the local region, including more than $10 billion in state and local tax revenue. For water use, the company plans to rely on non-potable, brackish groundwater sources and is exploring solutions to reuse produced water from oil and gas operations.
Pecos, located in West Texas near the New Mexico border, is not a traditional data center hub. However, the area has drawn increasing interest from hyperscale developers. In August 2025, Pacific Energy announced plans for a 5-gigawatt off-grid power project in nearby Pecos County, purpose-built to serve large-scale data centers. Microsoft already maintains a significant data center footprint across Texas, including operational and under-development facilities in Medina, Castroville, and a recent lease of about 700MW of capacity from Crusoe’s campus in Abilene in March 2026.
The deal underscores a broader trend of hyperscalers securing dedicated, large-scale power supplies to meet the surging energy demands of AI and cloud computing. By partnering with fossil fuel companies, Microsoft aims to ensure reliable baseload power while continuing to advance its broader sustainability commitments.
Source: datacenterdynamics
