Big Oil Pivots Towards AI-Focused Power Plants Amid Energy Crunch

AI's energy appetite has become a pressing concern for tech giants and Big Oil alike. Chevron and Williams are teaming up to address this issue by building natural gas power plants designed specifically for data centers, bypassing traditional electrical grids.

Chevron is investing heavily in a project with Microsoft in West Texas, which will deliver 2.5 to 2.67 GW of electricity over the next two decades. The company's partnership with Engine No. 1 and GE Vernova aims to reach up to 4 GW across multiple US sites.

Williams is taking a modular approach, building project-specific facilities for individual tech clients like Meta. Project Socrates will deliver 400 MW by late 2026, while the larger NEO project is expected to produce 682 MW by 2028.

The shift towards long-term power purchase agreements has significant implications for crypto miners and AI data centers. With these contracts locking up energy supply for decades, it's become increasingly difficult for mining operations to compete on price.