Microsoft Project Kilby data center, Reeves County, Texas

Microsoft plans a data center campus of about 2 gigawatts outside Pecos, in Reeves County, Texas, powered by a dedicated natural gas plant, Project Kilby, that Chevron will build next to it. Chevron's subsidiary Energy Forge One signed a 20-year agreement on June 22, 2026 to supply power from Kilby, which is expected to deliver about 2.67 gigawatts. The site spans more than 2,000 acres near Pecos, Quartz reported, citing The Wall Street Journal.

Microsoft calls it a multibillion-dollar investment over five to seven years, with more than 6,000 construction jobs at peak and hundreds of permanent ones. The power plant will not connect to the electric grid; it will run on gas from Chevron's own Permian Basin wells, using large turbines from GE Vernova and Solar Turbines. Chevron says the plant will use non-potable, salty groundwater instead of fresh water, with controls to cut emissions and noise. Microsoft says its data centers will use closed-loop cooling that needs water only once, not continuously.

Chevron's subsidiary applied to the Texas Commission on Environmental Quality for air permits, filed October 17, 2025, covering carbon monoxide, greenhouse gases, nitrogen oxides and other pollutants. The agency's staff made a preliminary finding that the emissions will not break state or federal air rules and drafted a permit. The commission held a public meeting on the permits in Pecos on June 10, 2026, and people affected by the plant's emissions can ask for a contested hearing, similar to a civil trial, before final approval.

Energy Forge One applied for a state school tax break for large projects, and the Pecos-Barstow-Toyah school board approved it in February 2026; the state covers the cost, not the district. State documents show the break could save the company more than $227 million over 10 years, Wired reported. Wired's analysis found the plant could emit more than 11.5 million tons of carbon dioxide equivalent a year. Greg LeRoy of Good Jobs First noted that Microsoft's pledge to pay its "full and fair share of local property taxes" does not mention tax abatements.

Reeves County Judge Leo Hung, the county's top elected official, welcomed it: "We are excited to welcome Microsoft to Pecos." Chevron puts the project's benefit at more than $10 billion in state and local tax revenue and almost 2,000 jobs.

The next decisions are the state air permits and Chevron's final investment decision, expected by the end of 2026.