Chevron has signed a 20-year power purchase agreement with Microsoft to supply electricity for what could become one of the nation's largest AI data centers in West Texas. The arrangement marks an unusual partnership between an oil major and a tech giant amid surging demand for energy-hungry artificial intelligence computing.

The proposed 2.7-gigawatt facility would sit on more than 2,000 acres in Reeves County within the Permian Basin, featuring its own natural-gas-fired power plant. Chevron will provide fuel from its nearby fields while partnering with Joulent, an energy company created by investment firm Engine No. 1, to develop the generation complex.

Neither company disclosed the project's estimated cost, though Chevron expects to make a final investment decision after securing permits later this year. This collaboration represents the growing intersection between traditional energy producers and technology companies racing to secure reliable power for AI infrastructure.

Energy firms are increasingly positioning themselves to capitalize on tech sector demand as companies like Microsoft pursue self-reliance in power generation rather than depending on strained electrical grids.