Microsoft, Chevron, and Engine No. 1 have signed an energy deal that could see the hyperscaler receive up to 2.5GW of natural gas power to use for a new data center.

The companies have entered into what they call an “exclusivity agreement” relating to power generation and offtake, but said no commercial terms have been finalized.

News of the agreement was first reported by Bloomberg, which said the deal will be tied to a $7 billion natural gas-fired power plant that Chevron and Engine No 1 are proposing to build in West Texas.

According to Bloomberg, this would initially supply up to 2.5GW of power, which could be used for a data center.

Oil and gas giant Chevron and San Francisco hedge fund Engine No. 1 announced in January 2025 that they were teaming up to build natural gas power stations to serve co-located AI data centers. At the time, the pair said they would be deploying 7HA natural gas turbines from GE Vernova.

In November, it was reported that a site in West Texas had been identified for the first facility. It is expected to be operational by 2027.

For its part, Microsoft is continuing a rapid data center buildout to meet the needs of its AI systems. Last week, it was confirmed that the company was taking the remaining space at Crusoe’s campus in Abilene, Texas, agreeing on a deal for 900MW of data center capacity.