March 31 - Microsoft, Chevron and Engine No. 1 announced on Tuesday that they have signed an exclusivity agreement to negotiate the generation and provision of power.
The three companies said the arrangement relates to power generation and supply as technology firms race to lock in electricity for expanding data center footprints that will underpin generative artificial intelligence services such as ChatGPT and Copilot. In a joint statement they noted: "No commercial terms have been finalized, and there is no definitive agreement at this time."
Chevron and Engine No. 1 had previously disclosed a collaboration last year to develop natural gas-fired power plants adjacent to data centers in the United States. That project planning included the intention to equip the facilities with turbines supplied by GE Vernova.
Reporting from Bloomberg has linked the prospective long-term agreement to a proposed natural gas-fired plant in West Texas. The project has been described as having an estimated cost of about $7 billion and an initial output of 2,500 megawatts of electricity, with the power intended to serve a sizable data center campus.
Chevron in November said its inaugural project to provide natural gas-driven power for an AI data center will be located in West Texas, targeting a start-up date by 2027. Separately, Bloomberg reported last week that Microsoft has agreed to lease a data center development in Texas that was originally being pursued for Oracle and OpenAI.
Within the disclosure about the deal discussions, the companies emphasized that no final commercial arrangements have been reached and no binding agreement exists at this stage. The announcement follows earlier cooperation between Chevron and Engine No. 1 to site gas-fired generation capacity close to data center campuses and to deploy GE Vernova turbines in those plants.
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Context and next steps
The exclusivity agreement establishes a period during which the three parties will negotiate terms for power generation and supply, while preserving the possibility that no final deal will be concluded. The projects discussed include natural gas-fired plants designed to serve large-scale data center campuses, with specific planning details referenced for a West Texas development and targeted timelines expressed by Chevron for initial start-up.