Chevron advances plans to develop US data centers with power generation

By Laila Kearney

HOUSTON (Reuters) - Chevron is advancing plans to tap into data center power demand, with the oil major recently entering the permitting and engineering phases for multiple U.S. sites to develop the centers and the electricity to supply them, a company executive told Reuters this week.

Energy use for U.S. data centers, which are essentially giant server warehouses, is expected to triple in the next three years as the race to expand artificial intelligence intensifies.

Big Tech has struck unprecedented power purchase deals to quickly access vast quantities of electricity, including buying directly from nuclear power plants and inking agreements with utilities to bring power generation to the grid.

That growth - and the need to access vast amounts of electricity fast - is upending the country’s power industry, which is seeing record peak demand after dismal growth over nearly two decades, and giving new rise to natural gas consumption.

And Big Oil is tapping into that growth. Chevron and Exxon Mobil last year announced plans to begin power generation, largely using the natural gas that they produce, for data centers for the first time. Most significant power generation by the oil majors has historically been used for their own operations.

"The customer interest is high," Daniel Droog, vice president of power solutions at Chevron, said in an interview at the CERAWeek conference in Houston this week.

"It's really trying to intersect where they have that level of need because they're building new or expanding facilities, at a rate that's ahead of the power supply."

Many new data centers, which were typically around 20 gigawatts (GW), are being built 50 times their traditional size and requiring as much around-the-clock electricity at a single location as an entire mid-sized city.

Chevron is targeting the development of data center sites and power plants that are around 1 GW in capacity and targeted to come online in 2027 or 2028, Droog said.

"We're really focused on scale, speed and reliability," the executive said.

He did not disclose Chevron's customers or where exactly it was in development on data centers, but said the company is targeting regions for data centers that include the south, western interior and the Midwest.

Chevron’s data centers are not expected to be connected to the grid and would be primarily powered by natural gas. Some sites are being looked at for carbon capture additions and others may include buildout of renewable power.

Natural gas, which had been avoided by Big Tech in various climate pledges over the last several years that called for a full shift to renewable energies to power their operations, has become an increasingly popular option for data center fuel.

The fuel is relatively cheap and abundant in the U.S., the world's top gas producer, and gas-fired power plants are quicker to construct than some other generation sources like nuclear.

Chevron has seven GE Vernova gas turbines scheduled for delivery in 2026 that would be used to help generate the power. Turbines have been on an increasingly lengthy backorder, with some companies reporting orders of large turbines taking five years to be delivered.

(Reporting by Laila Kearney; Editing by Liz Hampton and Marguerita Choy)