Texas politics may delay Chevron data centre decision, Semafor reports

A final investment decision on Project Kilby, a huge gas-powered data centre in West Texas, could slip from the end of this year to 2027 because of state politics. Tim McDonnell reported the news for Semafor on Thursday.

The project, near Pecos in the Permian Basin, will use about 2.67GW of on-site gas turbines to power a Microsoft data centre. Chevron signed a 20-year power deal with Microsoft for the site in June, and first power is planned for 2028.

TNW is owned by Tekpon. Microsoft is listed on Tekpon’s marketplace.

The likely delay follows Governor Greg Abbott’s order last month to stop all new environmental permits for data centres. The pause lasts until state grid and water agencies finish audits, the Texas Tribune reported.

The order also covers projects that make their own power, like Kilby, which a grid connection pause in August did not reach.

“Permitting and regulatory side has caused some slowdown or potential delay,” Daniel Droog, Chevron’s vice president for power solutions, told Semafor, referring to AI projects across Texas.

Droog said Kilby is still on track to produce power by 2028. Early earthworks are under way while the developers finish building contracts and wait for permits.

Chevron’s partner, Joulent, grew out of the investment firm Engine No. 1, according to Semafor. Its new chief financial officer, Michael Wortley, told Semafor the contracts were days or a couple of weeks from being signed. He also said he expects the project to get its permits.

Data centres have become a major issue in Texas ahead of November’s elections, with candidates in both parties calling for tighter water rules.