Microsoft quietly signs Chevron for 2.67 GW of West Texas gas power for 20 years

Microsoft has locked in 2.67 gigawatts of natural gas power for two decades to support a new West Texas data center project. The power purchase agreement runs through Chevron subsidiary Energy Forge One and is tied to a new facility dubbed Project Kilby in Pecos, with natural gas turbines built on the site to serve Microsoft in a behind-the-meter setup.

This is not just “more power for servers.” Chevron describes the turbines as “among the largest co-located natural gas power and data center developments in the U.S.” Microsoft’s own materials also confirm the substance, even if they do not name Chevron or Energy Forge One. Microsoft says the new facility “will operate with a co-located natural gas power facility” in Pecos, and Microsoft confirmed to The Register that the power purchase agreement does concern the Pecos facility. In other words, the data center and the gas plant are being planned as one integrated build.

So why does this matter beyond the usual datacenter story? Because the U.S. has been tightening its scrutiny on environmental impacts from these facilities, and this deal lands right in the middle of that pressure. Microsoft is trying to frame the project as neighborhood-minded, and it does that with a different kind of promise than most companies make. The company published an open letter to people in Pecos alongside its announcement, arguing that being a “good neighbor” is “something you prove over time.” It stresses steps it claims to have taken before and implies the Pecos build will follow that pattern.

Part of Microsoft’s case for Pecos is economic and operational. It says building its own energy infrastructure helps prevent locals from paying more for power. It also says the turbines may eventually connect to the grid and become a broader energy source. That “eventually” is important, because it highlights a classic setup: a behind-the-meter arrangement can look insulated from grid issues, but it still depends on fuel sourcing, permits, and local impact management. And the local impacts are where the scrutiny comes roaring back.

Chevron says the turbine plan includes noise and light impact mitigations and “selective catalytic reduction” systems designed to reduce nitrogen oxide emissions. The source is careful here: reduction, not elimination. That matters for how air quality risk is communicated to regulators and communities, because NOx is a key ingredient in smog formation and related public health concerns. Even with mitigation systems, a plant of this scale changes the emissions math in a town that may not be used to that level of industrial throughput.

To get a sense of the magnitude, the source compares Microsoft’s planned Pecos gas plant to the gas turbine installation at xAI’s Colossus AI data center in Memphis, Tennessee. Colossus installed 150 megawatts of gas turbines, which the source characterizes as roughly one eighteenth the size of Microsoft’s planned Pecos gas plant. Even at that smaller scale, the Memphis facility is already the subject of a lawsuit [PDF] alleging the facility is producing too much smog for local air to be healthy and calling for it to be shut down. The point is not that Pecos is Memphis. The point is that turbine-driven data center power can quickly turn into a legal and community fight once emissions performance becomes a contested fact.

Water is the other pressure point in West Texas, and the source underlines that Pecos sits in a drought-prone region with limited access to fresh, potable water. Microsoft and Chevron both emphasize minimizing water usage. Microsoft says it is designing operations to minimize reliance on freshwater by utilizing nonpotable water where possible, and it points to closed-loop cooling systems that will “significantly reduce water requirements.” Chevron, for its part, says the facility will use “non-potable, brackish groundwater sources for power plant operations” rather than freshwater.

But brackish groundwater is not a free resource. It is drawn from massive, salty underground aquifers, and it has already been a major source of water for dry West Texas. The source notes that desalination of brackish groundwater has been suggested [PDF] as a source of drinking water for the town and surrounding region. That raises a direct sustainability question: if the same brackish sources that might be used for drinking water are also consumed for cooling and operations, how do you balance competing priorities? In dry regions, water access often becomes the hidden balance sheet item, and this project puts it on the table.

The deal also has a supply-chain angle that adds to the risk picture. Some of the turbines being deployed to Pecos will be manufactured by Solar Turbines, a company that the source describes as building gas power systems despite its name. The source also says Solar Turbines supplied gas turbines for Colossus at xAI’s Memphis facility, based on reports and photographs from that site. That kind of shared hardware across projects can matter because performance, emissions behavior, and mitigation system integration are not always perfectly transferable from one site and regulatory regime to another.

Microsoft did not answer further questions posed to it by The Register aside from confirming Chevron’s press release related to the Pecos datacenter. Chevron did not respond. That silence is familiar in these stories, but it becomes more consequential when the stakes involve a 2.67 GW, two-decade buildout of co-located turbines, with explicit attention to NOx reduction and water minimization, in a region where community trust and regulatory scrutiny can move quickly. For executives and boards watching the datacenter arms race, the strategic takeaway is straightforward: energy decisions are now part of the operational risk stack, and they come with long timelines and long memories.