Rumor

Microsoft in talks with Chevron and Engine No. 1 for $7 billion natural gas plant to power AI infrastructure

Wednesday, April 1, 2026 at 12:41 PM

Microsoft is reportedly in exclusive negotiations with Chevron and Engine No. 1 to construct a $7 billion natural gas power plant in Pecos, Texas. The facility, located in the Permian Basin to leverage low-cost gas, is planned for an initial 2,500 MW capacity with potential expansion to 5,000 MW. The project aims to be operational by 2027, and the partners have already secured seven large gas turbines from GE Vernova.

Context

Microsoft is in exclusive negotiations with Chevron and Engine No. 1 to develop a $7 billion natural gas-fired power plant in the Permian Basin near Pecos, Texas. The facility is designed to provide dedicated energy for a massive new data center campus, addressing the critical power shortages facing AI infrastructure. The plant is expected to have an initial capacity of 2,500 MW, with the potential to scale to 5,000 MW, making it one of the largest private power projects in the United States. Construction is slated to begin shortly with an operational target of 2027. To secure the supply chain, Chevron and Engine No. 1 have already secured seven large gas turbines from GE Vernova. This deal highlights a significant shift in big tech's energy strategy, moving toward large-scale, behind-the-meter fossil fuel generation to bypass grid constraints while still exploring long-term decarbonization through GE Vernova's hydrogen-ready turbine technology.

Sources (5)

Microsoft in Talks With Chevron, Engine No. 1 Over $7 Billion Texas Power Plant - Bloomberg Microsoft in Talks With Chevron, Engine No. 1 Over $7 ...Microsoft, Chevron Forge $7 Billion Texas Power Pact to ...Hydrogen-Fueled Gas Turbines | GE Vernova Microsoft agrees to lease 700MW at Crusoe's data center in Abilene, Texas - report - DCD

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