data center demand
Chevron and ExxonMobil feed the need for gas-powered data centers
Two of the Houston area’s oil and gas goliaths, Chevron and ExxonMobil, are duking it out in the emerging market for natural gas-powered data centers—centers that would ease the burden on electric grids.
Chevron said it’s negotiating with an unnamed company to supply natural gas-generated power for the data center industry, whose energy consumption is soaring mostly due to AI. The power would come from a 2.5-gigawatt plant that Chevron plans to build in West Texas. The company says the plant could eventually accommodate 5 gigawatts of power generation.
The Chevron plant is expected to come online in 2027. A final decision on investing in the plant will be made next year, Jeff Gustavson, vice president of Chevron’s low-carbon energy business, said at a recent gathering for investors.
“Demand for gas is expected to grow even faster than for oil, including the critical role gas will play [in] providing the energy backbone for data centers and advanced computing,” Gustavson said.
In January, the company’s Chevron USA subsidiary unveiled a partnership with investment firm Engine No. 1 and energy equipment manufacturer GE Vernova to develop large-scale natural gas power plants co-located with data centers.
The plants will feature behind-the-meter energy generation and storage systems on the customer side of the electricity meter, meaning they supply power directly to a customer without being connected to an electric grid. The venture is expected to start delivering power by the end of 2027.
Chevron rival ExxonMobil is focusing on data centers in a slightly different way.
ExxonMobil Chairman and CEO Darren Woods said the company aims to enable the capture of more than 90 percent of emissions from data centers. The company would achieve this by building natural gas plants that incorporate carbon capture and storage technology. These plants would “bring a unique advantage” to the power market for data centers, Woods said.
“In the near to medium term, we are probably the only realistic game in town to accomplish that,” he said during ExxonMobil’s third-quarter earnings call. “I think we can do it pretty effectively.”
Woods said ExxonMobil is in advanced talks with hyperscalers, or large-scale providers of cloud computing services, to equip their data centers with low-carbon energy.
“We will see what gets translated into actual contracts and then into construction,” he said.
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