Chevron plans data center power solutions utilizing US natural gas

Chevron USA Inc. and investment firm Engine No. 1 will form a joint venture to develop scalable power solutions for US-based data centers running on natural gas.

“The partnership will work directly with customers to develop power generation that is dedicated to and co-located with data centers. The power generators will leverage Chevron’s natural gas capabilities and utilize turbines manufactured by GE Vernova,” Chevron chief executive officer and chairman Mike Wirth said in a post to his LinkedIn account Jan. 28. 

Data center power demand 

Wirth cited artificial intelligence as “one of the most important technological breakthroughs in recent history, igniting productivity gains across our global economy,” but pointed to the “massive amounts of 24/7 power” needed to scale.

A December 2024 report produced by Lawrence Berkeley National Laboratory and presented by the US Department of Energy estimates that data center load growth has tripled over the past decade and is projected to double or triple by 2028. 

The report finds that data centers consumed about 4.4% of total US electricity in 2023 and are expected to consume about 6.7-12% of total US electricity by 2028.

"Meeting this demand is forecasted to require significant investment in power generation capacity, while managing carbon emissions and mitigating the risk of grid destabilization,” he said. 

The first of the projects, to be managed by Chevron New Energies, are expected to serve co-located data centers in the US Southeast, Midwest, and West regions, leveraging seven GE Vernova 7HA natural gas turbines. The companies said the projects are to be designed with flexibility to integrate carbon capture and storage (CCS) and renewable energy sources, Chevron and Engine No. 1 said in a joint release Jan. 28. 

The plan is to deliver up to 4 Gw with initial in-service targeted by end-2027 and the potential for project expansion. 

As power generation is not designed to flow initially through the existing transmission grid, the risk of increasing electricity prices for consumers is reduced, the companies said, but noted that the model, “over time…is designed to sell surplus power to the US power grid, through future interconnects, supporting broader energy demands while keeping costs low.”

In a note to investors Jan. 28, TD Cowen analysts said execution may be contingent on securing power purchase agreements, and that “recent DeepSeek developments could result in more tempered market reception than this would otherwise receive.”

Read more about the DeepSeek development at Oil & Gas Journal sister brand SecurityInfoWatch.com.

That said, Chevron “should have capacity to support capex” for the venture within its $14-16 billion consolidated capex budget announced in December “given declining spend in major project regions such as Permian, Kazakhstan, and Gulf of Mexico,” the analysts continued, citing Chevron’s then-plan to allocate $1.5 billion to “lowering the carbon intensity of its operations and growing New Energies.” 

For more on data centers, visit Endeavor Business Media's Data Center Frontier, an Oil & Gas Journal sister brand.