Chevron Corporation is stepping into data center power generation. The company is focusing on locations with easy access to natural gas and lower carbon intensity. Chevron CEO Mike Wirth revealed and discussed these plans at the CERAWeek energy conference by S&P Global in Houston.
Hyperscale companies want off-grid power sources to speed up their market entry. This makes Chevron’s proposed facilities very crucial. Wirth highlighted,
“One of the criteria in site selection will be access to gas. It will also be proximity to carbon capture and storage capacity, access to renewables, potentially off the grid, access to geothermal or potentially hydrogen, so we’re looking for ways to reduce the carbon intensity over time.”
Chevron aims to develop these facilities in key U.S. regions like the Southeast, Midwest, and West. The company plans to place power plants near data centers. This will help ensure reliable energy and lessen reliance on the grid.
Chevron, Engine No. 1, and GE Vernova To Power U.S. Data Centers
In January, Chevron announced a partnership with Engine No. 1 LP. Together, they will develop gas-fired power plants designed for U.S. data centers.
These “power foundries” will use GE Vernova’s 550-MW 7HA gas turbines and will deliver up to four gigawatts of power, equivalent to powering 3-3.5 million U.S. homes. Deliveries will start in 2026, and Chevron expects power generation to begin by late 2027.
Chris James, founder of Engine No. 1, stressed the importance of energy in AI growth.
“Energy is the key to America’s AI dominance. By using abundant domestic natural gas to generate electricity directly connected to data centers, we can secure AI leadership, drive productivity gains across our economy and restore America’s standing as an industrial superpower. This partnership with Chevron and GE Vernova addresses the biggest energy challenge we face.”
These gigawatt-scale power solutions will help data centers that need quick setup and dependability. The initial design keeps these plants off the grid but can be integrated in the future. Consequently, this will reduce strain on the grid and lower consumer electricity price risks. Future expansions could increase capacity, providing reliable power for U.S. AI data centers.
The press release further revealed that a key part of Chevron’s initiative is integrating lower-carbon solutions over time. The power plants will use carbon capture and storage (CCS) technology that can potentially remove 90% of CO2 emissions from gas turbines. Notably, these facilities might use renewable energy sources such as solar, wind, and hydrogen. This will help reduce carbon intensity even more.
Natural Gas and CCUS: Future Outlook
The Net Zero Emissions (NZE) Scenario predicts gas demand will peak soon and drop 30% by 2030 to 3,300 bcm.
By 2050, demand could fall 70% from 2021 levels to 1,200 bcm, with 40% used for hydrogen production with CCUS. Despite falling demand, continued investment is needed to sustain supply. The NZE Scenario estimates $200 billion per year until 2030, then $85 billion annually.
The NZE Scenario promotes policies for CCUS investment.
- By 2050, CCUS could capture 6.2 Gt of CO₂, helping cut emissions in industries like cement and data centers.
AI Boom Fuels Natural Gas Surge
AI and cloud computing are increasing energy use. So, securing stable power sources is now essential. Traditional grid systems can’t keep up, so companies look for direct energy solutions.
S&P Global further noted that analysts predict U.S. data centers could demand an extra 3-6 Bcf/d of gas by 2030. However, the exact role of gas in this growth is unclear and could be due to an increase in renewable energy investments.
Chevron’s natural gas production is already increasing. In Q4 2024, the company averaged 2.74 Bcf/d, with full-year production reaching 2.68 Bcf/d—up 27% from 2023.
The Permian Basin remains a major source, producing 20.5 Bcf/d in 2024, an 80% increase over five years. By 2028, production could exceed 24 Bcf/d, solidifying the region’s role in the energy landscape.
Fluctuating Permian gas prices have also shaped Chevron’s strategy. According to data from Platts (a part of Commodity Insights), in 2024, Waha Hub prices in West Texas often fell below zero due to pipeline issues, averaging just 2 cents/MMBtu.
Chevron plans to redirect excess gas to power foundries. This approach captures value and supports AI growth.
Chevron’s Power Shift: Merging Energy, AI, and Sustainability
Chevron is transforming energy infrastructure with its move to behind-the-meter power generation. This shift goes beyond AI and data centers, driving a broader push toward localized power production.
The joint venture will create thousands of jobs and boost U.S. reindustrialization. Chevron’s power plants will also sell excess electricity back to the grid that will further boost stability. This model balances immediate AI-driven power needs with long-term grid support.
The oil giant’s endeavors don’t end here. As per its sustainability report, the company is investing $8 billion in lower-carbon energy projects from 2021 to 2028, focusing on renewable fuels, carbon capture, hydrogen, and offsets. It is also committing an additional $2 billion to cut 4 million metric tons of emissions annually within its operations.
Chevron’s entry into the data center brings energy and technology together. The company wants to keep up with the rising demand for AI while also strengthening U.S. energy security. The big investments and partnerships are helping it lead in the rapidly evolving energy landscape.
