Chevron plans to launch its first AI data center power project in West Texas in 2027. Photo via Chevron.com

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.

A forecast from Energy Innovation Policy & Technology shows that Texas is expected to see a decline in solar, wind and battery-powered storage by 2035 due to clean energy tax credit repeals in the 'One Big Beautiful Bill Act.' Photo via Getty Images.

New forecast shows impact of 'Big Beautiful Bill' on Texas clean energy generation

energy forecast

Texas is expected to see a 77-gigawatt decrease in power generation capacity within the next 10 years under the federal "One Big Beautiful Bill Act," which President Trump recently signed into law, a new forecast shows.

Primarily due to the act’s repeal of some clean energy tax credits, a forecast, published by energy policy research organization Energy Innovation Policy & Technology, predicts that Texas is expected to experience a:

  • 54-gigawatt decline in capacity from solar power by 2035
  • 23-gigawatt decline in capacity from wind power by 2035
  • 3.1-gigawatt decline in capacity from battery-stored power by 2035
  • 2.5-gigawatt increase in capacity from natural gas by 2035

The legislation “will reduce additions of new, cost-effective electricity capacity in Texas, raising power prices for consumers and decreasing the state’s GDP and job growth in the coming years,” the forecast says.

The forecast also reports that the loss of sources of low-cost renewable energy and the resulting hike in natural gas prices could bump up electric bills in Texas. The forecast envisions a 23 percent to 54 percent hike in electric rates for residential, commercial and industrial customers in Texas.

Household energy bills are expected to increase by $220 per year by 2030 and by $480 per year by 2035, according to the forecast.

Energy Innovation Policy & Technology expects job growth and economic growth to also take a hit under the "Big Beautiful Bill."

The nonprofit organization foresees annual losses of $5.9 billion in Texas economic output (as measured by GDP) by 2030 and $10 billion by 2035. In tandem with the impact on GDP, Texas is projected to lose 42,000 jobs by 2030 and 94,000 jobs by 2035 due to the law’s provisions, according to the organization.

The White House believes the "Big Beautiful Bill" will promote, not harm, U.S. energy production. The law encourages the growth of traditional sources of power such as oil, natural gas, coal and hydropower.

“The One Big Beautiful Bill Act is a historic piece of legislation that will restore energy independence and make life more affordable for American families by reversing disastrous Biden-era policies that constricted domestic energy production,” Interior Secretary Doug Burgum said in a news release.

Promoters of renewable energy offer an opposing viewpoint.

“The bill makes steep cuts to solar energy and places new restrictions on energy tax credits that will slow the deployment of residential and utility-scale solar while undermining the growth of U.S. manufacturing,” says the Solar Energy Industries Association.

Jason Grumet, CEO of the American Clean Power Association, complained that the legislation limits energy production, boosts prices for U.S. businesses and families, and jeopardizes the reliability of the country’s power grid.

“Our economic and national security requires that we support all forms of American energy,” Grumet said in a statement. “It is time for the brawlers to get out of the way and let the builders get back to work.”

Texas outpaced all other states in various categories of power generation in 2024, according to a new report from Ember, an energy think tank. File photo

New report shows Texas led nation in solar and battery growth in 2024

by the numbers

The winds of change in power generation are sweeping through Texas.

Texas outpaced all other states in various categories of power generation in 2024, according to a new report from Ember, an energy think tank. The report shows:

  • Texas contributed more (12 terawatt-hours) to the country’s 64 terawatt-hour rise in solar generation last year than any other state.
  • Texas installed more solar (7.4 gigawatts) and battery (3.9 gigawatt) capacity than any other state.
  • Texas installed more utility-scale battery capacity (3.9 gigawatts) than any other state.
  • Texas saw the second biggest increase (eight terawatt-hours) in natural gas generation in 2024. Only Virginia, at 10 terawatt-hours, ranked higher.
  • Texas ranked second among the states for the biggest drop in production of coal-fueled power (6.07 terawatt-hours), preceded only by Wyoming (6.3 terawatt-hours).

Overall, coal represented 14 percent of power generation in Texas last year, with the combination of wind and solar at 30 percent, according to the report. Across the U.S., says the report, wind and solar generated more electricity than coal for the first time. Coal generation made up just 15% of U.S. electricity generation in 2024.

“The shift away from coal has been primarily driven by market dynamics and availability of more cost-effective resources,” the report says. “The unit costs of wind and solar have reduced significantly and their quick installation makes them commercially attractive.”

Citing data like the figures published by Ember, Texas Gov. Greg Abbott champions Texas as the “Energy Capital of the World,” a title that Houston also claims.

“As Texas continues to experience unprecedented growth, we will remain a leader in energy while also bolstering the Texas grid to meet the growing demands of our great state,” Abbott said in 2024.

The offshore site is adjacent to a CO2 pipeline network that ExxonMobil acquired in 2023 with its $4.9 billion purchase of Plano-based Denbury Resources. Photo via ExxonMobil.com

ExxonMobil signs biggest offshore CCS lease in the U.S.

big deal

Spring-based ExxonMobil continues to ramp up its carbon capture and storage business with a new offshore lease and a new CCS customer.

On October 10, ExxonMobil announced it had signed the biggest offshore carbon dioxide storage lease in the U.S. ExxonMobil says the more than 271,000-acre site, being leased from the Texas General Land Office, complements the onshore CO2 storage portfolio that it’s assembling.

“This is yet another sign of our commitment to CCS and the strides we’ve been able to make,” Dan Ammann, president of ExxonMobil Low Carbon Solutions, says in a news release.

The offshore site is adjacent to a CO2 pipeline network that ExxonMobil acquired in 2023 with its $4.9 billion purchase of Plano-based Denbury Resources.

Ammann told Forbes that when it comes to available acreage in the Gulf Coast, this site is “the largest and most attractive from a geological point of view.”

The initial customer for the newly purchased site will be Northbrook, Illinois-based CF Industries, Forbes reported.

This summer, ExxonMobil sealed a deal to remove up to 500,000 metric tons of CO2 each year from CF’s nitrogen plant in Yazoo City, Mississippi. CF has earmarked about $100 million to build a CO2 dehydration and compression unit at the plant.

A couple of days before the lease announcement, Ammann said in a LinkedIn post that ExxonMobil had agreed to transport and annually store up to 1.2 metric tons of CO2 from the $1.6 billion New Generation Gas Gathering (NG3) pipeline project in Louisiana. Houston-based Momentum Midstream is developing NG3, which will collect and treat natural gas produced in Texas and Louisiana and deliver it to Gulf Coast markets.

This is ExxonMobil’s first CCS deal with a natural gas processor and fifth CCS deal agreement overall. To date, ExxonMobil has contracts in place for storage of up to 6.7 metric tons of CO2 per year.

“I’m proud that even more industries are choosing our #CCS solutions to meet their emissions reduction goals,” Ammann wrote on LinkedIn.

ExxonMobil says it operates the largest CO2 pipeline network in the U.S.

“The most fundamental thing we’re focused on is making sure the CO2 is stored safely and securely,” Ammann told Forbes in addressing fears that captured CO2 could seep back into the atmosphere.

The blaze forced evacuations and shelter orders in the area, including at schools. Photo via Getty Images

Large pipeline explodes in Houston after a vehicle struck a valve, officials say

breaking news

A massive pipeline explosion that sent a towering flame over neighborhoods near Houston for hours on Monday began after a vehicle drove through a fence and struck an above-ground valve, officials said.

Deer Park officials said police and local FBI agents found no evidence of “terroristic activity" and said it appears to be an isolated incident. The ongoing investigation includes an effort to identify the driver. The blaze forced evacuations and shelter orders in the area, including at schools.

Operators shut off the flow of natural gas liquids in the pipeline, but so much remained in the miles of pipe that firefighters could do nothing but watch and hose down adjacent homes until it burned itself out. That could take hours, perhaps into Tuesday, Deer Park Mayor Jerry Mouton Jr. said.

“The fire, it’s very hot, so a lot of the house structures that are adjacent to that are still catching on fire even though we’re putting a lot of water on them,” Mouton said at an afternoon news conference.

Firefighters were dispatched at 9:55 a.m., after an explosion at a valve station in Deer Park and right next to La Porte rattled adjacent homes and businesses, including a Walmart. Deer Park officials said an SUV drove into the valve after going through a fence on the side of the Walmart parking lot.

Nearly 1,000 homes were in the evacuation area, said Lee Woodward, a spokesperson for La Porte.

At the news conference, officials said only one person, a firefighter, sustained a minor injury. Later, Deer Park spokesperson Kaitlyn Bluejacket said four people were injured. She didn’t provide details about the severity of the injuries.

Harris County Judge Lina Hidalgo said in a statement that 20 miles (32 kilometers) of pipeline between the two closed vales must burn off before the fire stops.

Anna Lewis, who was walking into the nearby Walmart when the explosion happened, said it sounded “like a bomb went off.” She said everyone inside was rushed to the back of the store and then taken across the street to a grocery store before being bussed to a community center.

“It scared me,” she said. “You really don’t know what to do when it’s happening.”

Geselle Melina Guerra said she and her boyfriend heard the explosion as they were having breakfast in their mobile home.

“All of a sudden we hear this loud bang and then I see something bright, like orange, coming from our back door that’s outside,” said Guerra, who lives within the evacuation area.

Guerra’s boyfriend, Jairo Sanchez, said they’re used to evacuations because they live close to other plants near the highway, but he hadn’t seen an explosion before in his 10 years living there.

“We just drove as far as we could because we didn’t know what was happening,” Sanchez said.

Houston, Texas’ largest city, is the nation’s petrochemical heartland and is home to a cluster of refineries and plants and thousands of miles of pipelines. Explosions and fires are a familiar sight in the area, including some that have been deadly, raising recurring questions about the adequacy of industry efforts to protect the public and the environment.

Letting the fire burn out is better, from an environmental perspective, than trying to attack the flames with some kind of suppressing foam or liquid, said Ramanan Krishnamoorti, a petroleum engineering professor at the University of Houston.

“Otherwise it’s going to release a lot of volatile organics into the environment,” he said.

Still, there will undoubtedly be negative environmental consequences, including a release of soot, carbons and organic material, he said.

The pipeline’s owner, Dallas-based Energy Transfer, said air monitoring equipment was being set up near the plume of fire and smoke, which could be seen from at least 10 miles (16 kilometers) away at one point.

A statement from Harris County Pollution Control on Monday afternoon said no volatile organic compounds had been detected. The statement said particulate matter from the smoke was moderate and not an immediate risk to healthy people, although “sensitive populations may want to take precautions.” The Texas Commission on Environmental Quality said it was also monitoring the air.

Natural gas liquids are used primarily in the manufacturing of plastics and basic and intermediate chemicals, Krishnamoorti said.

The fire burned through nearby power lines, and the website PowerOutage.us said several thousand customers were without power at one point in Harris County.

In addition to damage closest to the flame, the area’s extensive pipeline infrastructure will also have to be closely inspected and monitored for damage, Krishnamoorti said.

He said that “in the grand scheme of things,” the fire “won’t be a major disrupter of supply chains.”

The Railroad Commission of Texas, which regulates oil and gas in the state, said its safety inspectors were investigating. The agency said they were receiving information from other pipeline operators about what they were doing to ensure the safety of their systems.

Margaret Newman, who lives on the edge of the evacuation zone, said that when she heard the explosion she went out into her yard and could see the flame shooting above the trees. She lost electricity but has a generator that will keep one of the rooms in her home cool, so she planned to stay.

Newman said that in general, she’s not bothered by living so close to such industry. She said she thought the flame was getting smaller by Monday afternoon.

“I keep waiting for it to go out, poof!” she said. “I’m tired of this.”

Caliche says Sixth Street’s backing will enable it to expand its Golden Storage Triangle complex. Photo via calichestorage.com

Investor acquires majority stake in Houston energy storage, CCS co.

here's the deal

Investment firm Sixth Street has purchased a majority stake in Houston-based Caliche Development Partners, which focuses on buying, developing, and operating natural gas and gas storage facilities along with carbon sequestration projects.

Financial terms weren’t disclosed.

The deal includes Caliche’s Golden Triangle Storage facilities and carbon sequestration project in Beaumont, and its Central Valley Gas Storage facilities in Princeton, California.

Caliche says Sixth Street’s backing will enable it to expand its Golden Storage Triangle complex, including the addition of two natural gas caverns.

Caliche’s leadership will continue to oversee day-to-day operations and remain investors in the company. All employees in Caliche’s Texas and California offices and at its facilities are staying aboard.

“We continue to meet the growing demand for the storage of natural gas and industrial gasses, including helium and hydrogen, and provide the infrastructure for lower environmental impact forms of energy through our commitment to safety, deliverability, [and] asset integrity,” Dave Marchese, CEO of Caliche, says in a news release.

Richard Sberlati, a partner at Sixth Street, which has an office in Houston, says Caliche’s success “comes from a combined 65 years of collective storage experience, and we look forward to partnering with the company’s management as they further grow the business.”

Sixth Street’s acquisition of Caliche’s Texas business operations is expected to close in late 2024, and its acquisition of the California business operations is set to close in mid-2025.

Founded in 2016, Caliche announced in 2020 that it had arranged a $150 million debt facility with Houston-based investment firm Orion Infrastructure Capital. Two years later, Caliche gained $268 million in funding from Orion and Chicago-based asset management firm GCM Grosvenor.

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ERCOT approves $9.4B project to improve grid, meet data center demand

power project

The Electric Reliability Council of Texas, which manages the electric grid for 90 percent of Texans, is undertaking a $9.4 billion project to improve the reliability and efficiency of statewide power distribution. The initiative comes as ERCOT copes with escalating demand for electricity from data centers and cryptocurrency-mining facilities.

The project, approved Dec. 9 by ERCOT’s board, will involve building a 1,109-mile “super highway” of new 765-kilovolt transmission lines. One kilovolt equals 1,000 volts of electricity.

According to the Hoodline Dallas news site, the $9.4 billion project represents the five- to six-year first phase of ERCOT’s Strategic Transmission Expansion Plan (STEP). Hoodline says the plan, whose price tag is nearly $33 billion, calls for 2,468 miles of new 765-kilovolt power lines.

STEP will enable ERCOT to “move power longer distances with fewer losses,” Hoodline reports.

Upgrading the ERCOT grid is a key priority amid continued population growth in Texas, along with the state’s explosion of new data centers and cryptocurrency-mining facilities.

ERCOT says about 11,000 megawatts of new power generation capacity have been added to the ERCOT grid since last winter.

But in a report released ahead of the December board meeting, ERCOT says it received 225 requests this year from large power users to connect to its grid — a 270 percent uptick in the number of megawatts being sought by mega-users since last December. Nearly three-fourths (73 percent) of the requests came from data centers.

Allan Schurr, chief commercial officer of Houston-based Enchanted Rock, a provider of products and services for microgrids and onsite power generation, tells Energy Capital that the quickly expanding data center industry is putting “unprecedented pressure” on ERCOT’s grid.

“While the state has added new generation and transmission capacity, lengthy interconnection timelines and grid-planning limitations mean that supply and transmission are not keeping pace with this rapid expansion,” Schurr says. “This impacts both reliability and affordability.”

For families in Texas, this could result in higher energy bills, he says. Meanwhile, critical facilities like hospitals and grocery stores face a heightened challenge of preventing power outages during extreme weather or at other times when the ERCOT grid is taxed.

“I expect this trend to continue as AI and high-density computing grow, driving higher peak demand and greater grid variability — made even more complex by more renewables, extreme weather and other large energy users, like manufacturers,” Schurr says.

According to the Pew Research Center, data centers accounted for 4 percent of U.S. electricity use in 2024, and power demand from data centers is expected to more than double by 2030. Data centers that support the AI boom make up much of the rising demand.

In September, RBN Energy reported more than 10 massive data-center campuses had been announced in Texas, with dozens more planned. The Lone Star State is already home to roughly 400 data centers.

“Texas easily ranks among the nation’s top states for existing data centers, with only Virginia edging it out in both data-center count and associated power demand,” says RBN Energy.

Federal judge strikes Trump order blocking wind energy development

wind win

In a win for clean energy and wind projects in Texas and throughout the U.S., a federal judge struck down President Donald Trump’s “Day One” executive order that blocked wind energy development on federal lands and waters, the Associated Press reports.

Judge Patti Saris of the U.S. District Court for the District of Massachusetts vacated Trump’s executive order from Jan. 20, declaring it unlawful and calling it “arbitrary and capricious.”

The challenge was led by a group of state attorneys general from 17 states and Washington, D.C., which was led by New York Attorney General Letitia James. The coalition pushed back against Trump's order , arguing that the administration didn’t have the authority to halt project permitting, and that efforts would critically impact state economies, the energy industry, public health and climate relief efforts.

White House spokesperson Taylor Rogers told the Associated Press that wind projects were given unfair treatment during the Biden Administration and cited that the rest of the energy industry suffered from regulations.

According to the American Clean Power Association, wind is the largest source of renewable energy in the U.S. It provides 10 percent of the electricity generated—and growing. Texas leads the nation in wind electricity generation, accounting for 28 percent of the U.S. total in 2024, according to the U.S. Energy Information Administration.

Several clean-energy initiatives have been disrupted by recent policy changes, impacting Houston projects.

The Biden era Inflation Reduction Act’s 10-year hydrogen incentive was shortened under Trump’s One Big Beautiful Bill Act, prompting ExxonMobil to pause its Baytown low-carbon hydrogen project. That project — and two others in the Houston region — also lost federal support as part of a broader $700 million cancellation tied to DOE cuts.

Meanwhile, Texas House Democrats have urged the administration to restore a $250 million Solar for All grant that would have helped low-income households install solar panels.

Texas launches cryptocurrency reserve with $5 million Bitcoin purchase

Digital Deals

Texas has launched its new cryptocurrency reserve with a $5 million purchase of Bitcoin as the state continues to embrace the volatile and controversial digital currency.

The Texas Comptroller’s Office confirmed the purchase was made last month as a “placeholder investment” while the office works to contract with a cryptocurrency bank to manage its portfolio.

The purchase is one of the first of its kind by a state government, made during a year where the price of Bitcoin has exploded amid the embrace of the digital currency by President Donald Trump’s administration and the rapid expansion of crypto mines in Texas.

“The Texas Legislature passed a bold mandate to create the nation’s first Strategic Bitcoin Reserve,” acting Comptroller Kelly Hancock wrote in a statement. “Our goal for implementation is simple: build a secure reserve that strengthens the state’s balance sheet. Texas is leading the way once again, and we’re proud to do it.”

The purchase represents half of the $10 million the Legislature appropriated for the strategic reserve during this year’s legislative session, but just a sliver of the state’s $338 billion budget.

However, the purchase is still significant, making Texas the first state to fund a strategic cryptocurrency reserve. Arizona and New Hampshire have also passed laws to create similar strategic funds but have not yet purchased cryptocurrency.

Wisconsin and Michigan made pension fund investments in cryptocurrency last year.

The Comptroller’s office purchased the Bitcoin the morning of Nov. 20 when the price of a single bitcoin was $91,336, according to the Comptroller’s office. As of Friday afternoon, Bitcoin was worth slightly less than the price Texas paid, trading for $89,406.

University of Houston energy economist Ed Hirs questioned the state’s investment, pointing to Bitcoin’s volatility. That makes it a bad investment of taxpayer dollars when compared to more common investments in the stock and bond markets, he said.

“The ordinary mix [in investing] is one that goes away from volatility,” Hirs said. “The goal is to not lose to the market. Once the public decides this really has no intrinsic value, then it will be over, and taxpayers will be left holding the bag.”

The price of Bitcoin is down significantly from an all-time high of $126,080 in early October.

Lee Bratcher, president of the Texas Blockchain Council, argued the state is making a good investment because the price of Bitcoin has trended upward ever since it first launched in early 2009.

“It’s only a 16-year-old asset, so the volatility, both in the up and down direction, will smooth out over time,” Bratcher said. “We still want it to retain some of those volatility characteristics because that’s how we could see those upward moves that will benefit the state’s finances in the future.”

Bratcher said the timing of the state’s investment was shrewd because he believes it is unlikely to be valued this low again.

The investment comes at a time that the crypto industry has found a home in Texas.

Rural counties have become magnets for crypto mines ever since China banned crypto mining in 2021 and Gov. Greg Abbott declared “Texas is open for crypto business” in a post on social media.

The state is home to at least 27 Bitcoin facilities, according to the Texas Blockchain Council, making it the world’s top crypto mining spot. The two largest crypto mining facilities in the world call Texas home.

The industry has also come under criticism as it expands.

Critics point to the industry’s significant energy usage, with crypto mines in the state consuming 2,717 megawatts of power in 2023, according to the comptroller’s office. That is enough electricity to power roughly 680,000 homes.

Crypto mines use large amounts of electricity to run computers that run constantly to produce cryptocurrencies, which are decentralized digital currencies used as alternatives to government-backed traditional currencies.

A 2023 study by energy research and consulting firm Wood Mackenzie commissioned by The New York Times found that Texans’ electric bills had risen nearly 5%, or $1.8 billion per year, due to the increase in demand on the state power grid created by crypto mines.

Residents living near crypto mines have also complained that the amount of job creation promised by the facilities has not materialized and the noise of their operation is a nuisance.

“Texas should be reinvesting Texan’s tax money in things that truly bolster the economy long term, living wage, access to quality healthcare, world class public schools,” said state Sen. Molly Cook, D-Houston, who voted against the creation of the strategic fund. “Instead it feels like they’re almost gambling our money on something that is known to be really volatile and has not shown to be a tide that raises all boats.”

State Sen. Charles Schwertner, R-Georgetown, who authored the bill that created the fund, said at the time it passed that it will allow Texas to “lead and compete in the digital economy.”

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This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.