Chevron is moving forward with plans to cater to the rising demand for power in data centers. The oil giant has initiated permitting and engineering processes for multiple locations in the U.S to establish data centers and provide electricity for them, as per a company executive who spoke to Reuters this week.
Energy consumption in U.S. data centers, described as massive server storage facilities, is on the rise in anticipation of the expanding artificial intelligence sector over the next three years.
Major technology companies have been making unprecedented efforts to secure substantial amounts of electricity quickly, such as procuring directly from nuclear power plants and forming agreements with utilities to augment grid power supply.
This surge in demand and the urgency for extensive electricity supplies are reshaping the U.S. power sector, resulting in record peak demands following nearly two decades of sluggish growth, thereby boosting natural gas consumption.
Capitalizing on this trend, Chevron and Exxon Mobil ventured into power generation last year, predominantly utilizing the natural gas they produce, specifically for data centers. Traditionally, energy produced by oil majors was primarily utilized for their internal operations.
"The interest from customers is significant," stated Daniel Droog, Chevron's Vice President of Power Solutions during an interview at the CERAWeek conference in Houston this week.
"Aligning with customers' escalating requirements due to new construction or expansions at a pace that surpasses power availability is the key focus."
With the increasing size of new data centers, now reaching up to 50 times their traditional capacity of around 20 gigawatts, the electricity demand per site rivals that of a medium-sized city, needing continuous power supply.
Chevron aims to establish data center sites and power plants with around 1 gigawatt capacity, expected to be operational by 2027 or 2028, according to Droog.
"Our primary focus is on scale, speed, and dependability," emphasized the executive.
Although Droog did not reveal Chevron's clients or the current status of data center development, he mentioned that the company is eyeing regions for data centers that span across the southern, western interior, and Midwestern U.S.
Chevron's data centers are anticipated to operate independently from the grid, drawing power mainly from natural gas. Some locations are being considered for carbon capture enhancements, while others may incorporate the expansion of renewable energy sources.
Despite Big Tech's earlier commitment to transitioning entirely to renewable energies for their facilities, natural gas has gained popularity as a data center fuel choice. It is cost-effective and abundant in the U.S., the world's leading natural gas producer, with gas-fired power plants quicker to build compared to nuclear plants.
Chevron has scheduled the delivery of seven GE Vernova gas turbines in 2026 for power generation support. Given the increasing demand for turbines, delays in delivery have become more common, with some businesses experiencing up to a five-year wait for their large turbine orders.