Chevron and Williams Build Gas Plants to Power AI Data Centers

Two major fossil fuel companies are positioning themselves as primary energy suppliers for the artificial intelligence boom, building gas-fired power plants dedicated exclusively to data centers.

Chevron and Williams have announced multi-billion dollar investments in natural gas infrastructure designed to power AI operations for tech giants Meta and Microsoft, according to details first reported by WIRED. The projects represent a significant bet that data center demand will sustain fossil fuel growth for decades, even as climate concerns intensify.

Behind-the-meter power surge

Williams, one of the largest oil and gas infrastructure companies in the United States, is building six gas plants specifically for data centers, including four facilities serving Meta operations in Ohio. The company announced more than $5 billion in investments for these ventures in mid-July, including backing from private equity firm KKR.

These "behind-the-meter" power arrangements allow tech companies to bypass grid connection delays and avoid impacting consumer electricity prices. Williams has constructed a 9-mile natural gas pipeline across an Ohio suburb to supply its facilities, with executives indicating they intentionally overbuilt capacity to serve additional data centers in the region.

Permit applications for Williams' four documented power plants show potential emissions of up to 9.6 million tons of greenhouse gases annually, equivalent to more than 22 average natural gas plants. Williams spokesperson Alex Schott stated the facilities are designed to operate well below permitted limits, with company modeling suggesting actual emissions could be two-thirds lower.

Chevron's gigawatt-scale Microsoft project

Chevron's partnership with Microsoft dwarfs Williams' projects in scale. The oil company is building a 2.67-gigawatt gas power plant in Texas under a 20-year power purchase agreement with Microsoft. Chevron highlighted the project in investor materials accompanying its best quarterly profits in six years.

According to its permit, the facility could produce more than 11.5 million tons of carbon-dioxide-equivalent emissions per year. The plant recently secured a school district tax break worth millions from the state of Texas.

Jeff Gustavson, president of Chevron's New Energies division, told investors the project "provides a repeatable model" and that the company is already in discussions with potential future data center customers. He noted that grid constraints are expected to persist for years, creating sustained demand for islanded power solutions.

Climate and grid implications

Combined, just five of the seven data-center-connected gas plants highlighted in the companies' second quarter results could emit as much as 21 million tons of greenhouse gases annually—roughly equivalent to Guatemala's total annual emissions, though actual emissions may be lower than permitted maximums.

Ashish Sethia, global head of commodities and energy at BloombergNEF, noted that data centers are becoming "a big driver for both power and gas demand in the US." A BloombergNEF report found that increased natural gas demand driven partly by data centers would require US production to increase 36 percent by the mid-2030s.

Whether these massive plants will eventually connect to the public grid remains uncertain. Chevron's investor materials indicate it expects to connect the Microsoft plant to the Texas grid after 2030, though the state faces significant interconnection delays. Williams indicated it may evaluate future interconnection opportunities once long-term needs are better understood.

Why it matters

The fossil fuel industry is securing decades-long contracts with tech companies at precisely the moment when climate scientists say emissions must decline rapidly. These power purchase agreements—ranging from 10 to 20 years—could lock in substantial greenhouse gas emissions regardless of future political shifts toward renewable energy. The projects also establish a precedent for private, fossil-fuel-powered infrastructure operating parallel to an increasingly renewable public grid, potentially creating a two-tier energy system where tech companies' AI ambitions are subsidized by extended fossil fuel dependence.

Lukas Shankar-Ross, deputy director at environmental nonprofit Friends of the Earth, characterized the development as "a lifeline to an industry that we need to be phasing out."

These details were first reported by WIRED.