Energy giant Chevron (CVX.US) is launching a new business line to capitalize on the booming artificial intelligence (AI) sector. Its first initiative involves supplying natural gas-powered electricity to data centers, with West Texas selected as the project site.
According to Chevron’s pre-investor day statement and presentation materials, the company is in exclusive negotiations (with undisclosed end-users) and expects to finalize investment decisions early next year. The facility is slated to begin operations in 2027, with potential capacity reaching 5,000 megawatts.
As data centers increasingly shift from urban hubs to fuel-rich regions, major oil and gas firms are positioning themselves to meet surging energy demands. Chevron, a key producer in the Permian Basin, benefits from abundant natural gas resources—often flared due to pipeline constraints.
"We have ample natural gas supply," CFO Eimear Bonner said in an interview ahead of Wednesday’s investor presentation in New York. "We’re uniquely positioned to develop highly competitive projects."
The power project is projected to reach full capacity—around 2,500 megawatts, exceeding two nuclear reactors’ output—by its third year. It will likely operate off-grid to avoid competing with public utilities. Chevron aims to secure stable demand for its 3 billion cubic feet of daily gas production.
A pivotal step in Chevron’s AI strategy is its partnership with activist investor Engine No. 1, which successfully challenged ExxonMobil (XOM.US) in 2021. Through this collaboration, Chevron has ordered seven large gas turbines from GE Vernova (GEV.US).
**Five-Year Growth Plan** At its first investor day in nearly three years, the Houston-based company outlined its power business strategy. If Brent crude averages $70/barrel, Chevron forecasts 14% annual free cash flow growth, reaching $30 billion by 2030, with EPS rising over 10% yearly.
While maintaining share buybacks at the lower end of its $10 billion+ annual target, Bonner noted that $80/barrel Brent prices could support $20 billion in repurchases. Brent currently trades near $65.
Additionally, Chevron plans to trim annual capital spending to $18–$21 billion by 2030 (from $19–$22 billion). At $50 Brent, cash flow would cover dividends and capex. Oil and gas output is expected to grow 2%–3% annually through 2030 (versus JPMorgan’s 1.7% estimate). Cost savings will rise to $4 billion by 2026, with Hess merger synergies reaching $1.5 billion.