CERAWEEK: Chevron to prioritize access to gas, ease of decarbonization in siting data center power facilities

The locations of Chevron's data center power generation facilities will be selected based on ease of access to natural gas and an ability to reduce the plants' carbon intensity over time, Chevron CEO Mike Wirth said March 10.

Hyperscalers engaged in discussions with Chevron for these planned co-located power facilities are engaged in an "arms race" with competitors and need off-grid power to reach the market quickly, Wirth told an audience at CERAWeek by S&P Global energy conference in Houston.

"One of the criteria in site selection will be access to gas," he said. "It will also be proximity to carbon capture and storage capacity, access to renewables, potentially off the grid, access to geothermal or potentially hydrogen, so we're looking for ways to reduce the carbon intensity over time."

Chevron's new venture

In January, Chevron announced a partnership with investment firm Engine No. 1 to develop gas-fired generation to power US data centers, particularly in the Southeast, Midwest and West. These "power foundries" will utilize seven US-made, GE Vernova 550-MW 7HA gas turbines, the company said.

Delivery of the turbines should begin in 2026, and Chevron expects to bring power to market in late 2027, Wirth said at CERAWeek.

Chevron is entering this market because accessing sufficient reliable electricity by way of the power grid is a major bottleneck for companies building data center facilities to operate artificial intelligence technologies, Wirth said.

"Our approach is to build a different kind of value proposition for a different kind of a customer," he said. "It will be behind the meter, not necessarily connected to the grid, at least in the first instance -- I think over time it probably will be tied into the grid – but gigawatt-scale generation for a very specific type of customer looking for speed to market, high degree of reliability, scale."

Gas supply

Chevron's US gas production averaged 2.74 Bcf/d during Q4 2024 and volume for the full year was 2.68 Bcf/d, up 27% from 2023.

Upstream and midstream gas companies of all sizes, meanwhile, say they are in talks with AI developers about supplying gas directly for power generation at data center sites.

S&P Global Ratings analysts have estimated that US data centers' energy demand could lead to additional gas demand of 3 Bcf/d-6 Bcf/d by 2030, they said in an oil and gas credit outlook published Jan. 14, although they qualified that estimating gas' share is difficult because renewables are expected to meet a large share of power demand growth.

Some of Chevron's peer producers in the Permian have observed that among counterparties looking for behind-the-meter power solutions for their data centers, there is special interest in supply from that basin, which is very cheap and abundant.

Permian gas production averaged 20.5 Bcf/d in 2024, according to data from S&P Global Commodity Insights analysts, up more than 80% versus five years ago. By 2028, associated gas production in the basin is projected to surpass 24 Bcf/d. And without sufficient pipeline takeaway capacity, prices at Waha Hub in West Texas plunged below zero throughout 2024, averaging just 2 cents/MMBtu during the year, according to data from Platts, part of Commodity Insights.