Microsoft’s AI buildout is moving deeper into the energy business, with Chevron planning a huge natural gas power plant in West Texas to feed the company’s cloud and AI data centers.

The companies announced Monday that the 2.67-gigawatt project would supply dedicated electricity to a Microsoft-operated data center under a 20-year power purchase agreement. Chevron described the project as “among the largest co-located natural gas power and data center developments in the U.S.”

The plant, known as Project Kilby, is expected to rely mostly on two large GE Vernova turbines. A Caterpillar subsidiary, Solar Turbines, would provide the rest of the generating equipment.

The agreement puts Microsoft’s AI ambitions beside its climate promises. The company has pledged to eliminate its carbon emissions by 2030, but the new gas-powered project adds another fossil-fuel asset to the infrastructure behind its data center expansion.

The Environmental Integrity Project has said the plant could potentially release more than 13 million tons of carbon dioxide, along with 3,200 tons of criteria air pollutants and 278,000 pounds of hazardous air pollutants.

Big Tech companies have been racing to secure electricity as AI models and cloud services demand more computing capacity. For Microsoft, the Chevron deal shows how that demand is pushing tech firms toward direct power arrangements, even when those deals sit uneasily beside public climate targets.

The project now ties a flagship AI data center plan to a 20-year bet on natural gas.