Chevron Leverages Natural Gas to Power AI Data Centers Amid Surging Energy Demand

As artificial intelligence (AI) drives explosive growth in data usage and computing power, Chevron is positioning itself as a key energy supplier to meet the rising electricity demands of U.S. data centers. With AI's rapid expansion, data centers are projected to consume up to 9% of the country’s total electricity by 2030, up from the current 2%.

Chevron, in partnership with Engine No. 1 and GE Verona, announced plans to build natural gas-fired power plants directly connected to data centers, ensuring around-the-clock energy availability. The initiative will focus heavily on U.S. natural gas supplies, particularly from the Permian Basin, which Chevron CEO Mike Wirth highlighted as essential for supporting AI's energy needs.

“AI’s advance will depend not only on Silicon Valley’s innovation, but also on the gas fields of the Permian Basin,” Wirth stated during the Gastech conference in 2024.

According to Goldman Sachs, powering future data center expansion could require an additional 3.3 billion cubic feet of natural gas per day by 2030. Data centers already use 10 to 50 times more energy per square foot than typical commercial buildings and can stress local grids, especially during peak demand.

To mitigate these challenges, Chevron is advancing “behind-the-meter” energy solutions—localized power sources that reduce dependency on the public grid and help control costs for operators.

Major tech firms like Microsoft, Amazon, Google, and Meta are accelerating AI infrastructure development. Microsoft alone announced an $80 billion investment in AI-enabled data centers, with over half earmarked for U.S. projects. Blackstone estimates over $1 trillion will be invested in U.S. data centers through 2030.

Chevron’s growing role in this energy shift reinforces its strategic push into power generation for high-growth digital sectors through its Chevron New Energies division.

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Chevron Corporation has announced the purchase of 15,380,000 shares of Hess Corporation common stock in open market transactions between January and March 2025. This represents approximately 4.99% of Hess's outstanding shares as of January 31, 2025. These purchases were made at a discount to the exchange ratio set in the merger agreement between Chevron and Hess, which was signed on October 22, 2023. The acquisitions reflect Chevron’s confidence in the completion of its pending acquisition of Hess. These purchases are in addition to Chevron’s ongoing stock repurchase program for the first quarter of 2025.

Chevron also issued a cautionary statement regarding forward-looking information, outlining risks such as market conditions, regulatory approvals, geopolitical conflicts, and operational uncertainties that could impact the Hess transaction and other business operations.

Chevron has announced plans to use natural gas to power AI data centers, partnering with GE Vernova and Engine No. 1 to deliver up to four gigawatts of energy—enough to power 3.5 million U.S. homes for a year. AI data centers require significantly more energy than traditional office buildings, and this initiative aims to ensure reliable power while reducing dependency on the electrical grid. The companies will build behind-the-meter power plants near data centers, utilizing U.S.-made GE Vernova 7HA natural gas turbines, which are expected to begin supplying power in 2027.

These power plants are designed to be adaptable for lower-carbon solutions, such as carbon capture and renewable energy integration. Chevron has experience using behind-the-meter solutions to provide energy for high-producing remote facilities, and this project continues that approach. By leveraging the abundance of U.S. natural gas, the initiative seeks to support AI-driven industries with reliable, cost-effective energy while maintaining flexibility for future sustainability enhancements.

Chevron Corporation filed a Form 8-K with the U.S. Securities and Exchange Commission on February 26, 2025, announcing a debt issuance by its wholly owned subsidiary, Chevron U.S.A. Inc. (CUSA).

CUSA has issued seven series of notes totaling $5.5 billion under an existing indenture:
- 4.405% Notes Due 2027 – $750 million
- Floating Rate Notes Due 2027 – $750 million
- 4.475% Notes Due 2028 – $1 billion
- Floating Rate Notes Due 2028 – $500 million
- 4.687% Notes Due 2030 – $1.1 billion
- 4.819% Notes Due 2032 – $650 million
- 4.980% Notes Due 2035 – $750 million

These notes are issued under an indenture dated August 12, 2020, and a third supplemental indenture dated February 26, 2025, with Deutsche Bank Trust Company Americas as the trustee. Chevron Corporation fully and unconditionally guarantees the obligations under these notes on an unsecured and unsubordinated basis.

The fixed-rate notes will pay interest semi-annually, while the floating-rate notes will pay interest quarterly based on compounded SOFR plus a margin (0.36% for the 2027 floating rate notes and 0.47% for the 2028 floating rate notes).

Chevron U.S.A. Inc. retains the right to redeem the fixed-rate notes before maturity, subject to specific terms outlined in the final prospectus supplement. However, the floating-rate notes cannot be redeemed before maturity.

The offering was conducted under a $5 billion underwriting agreement with Barclays Capital Inc., BofA Securities, Inc., and J.P. Morgan Securities LLC as representatives of the underwriters.

This filing includes legal opinions from Morgan, Lewis & Bockius LLP and Pillsbury Winthrop Shaw Pittman LLP regarding the validity of the issuance.

Chevron Corporation’s board conducted its annual executive compensation review on January 29, 2025. CEO Michael Wirth’s salary remains at $1.9 million, while other executives received base salary increases. The board maintained target bonus percentages under the Chevron Incentive Plan and approved 2025 equity awards under the 2022 Long-Term Incentive Plan, including performance shares, restricted stock units, and stock options. Equity awards will vest over time, with performance shares tied to total shareholder return and return on capital employed. Executives meeting specific tenure thresholds will retain some vesting benefits upon termination.

Chevron reported earnings of $3.2 billion for the fourth quarter of 2024, an increase from $2.3 billion in the same period last year. Adjusted earnings, excluding special items, were $3.6 billion, down from $6.5 billion in Q4 2023. The company returned a record $27 billion to shareholders in 2024 through dividends and share buybacks. Production reached record levels, with a 7 percent increase worldwide and a 19 percent increase in the U.S., driven by growth in the Permian Basin and the acquisition of PDC Energy.

Key project milestones included the start-up of the high-pressure Anchor project in the Gulf of Mexico, the completion of the Wellhead Pressure Management Project in Kazakhstan, and the start of production at the Future Growth Project. Chevron also announced a 5 percent increase in its quarterly dividend to $1.71 per share.

Earnings for the full year were $17.7 billion, compared to $21.4 billion in 2023, with the decline attributed to lower refining margins, reduced oil and gas realizations, and severance costs. The company closed asset sales in Canada, the Republic of Congo, and Alaska, and made progress on the Hess Corporation acquisition. Free cash flow declined to $15 billion from $19.8 billion in the prior year, while cash flow from operations dropped to $31.5 billion from $35.6 billion.

U.S. upstream earnings increased due to the absence of prior-year decommissioning obligations and impairment charges, though this was partially offset by lower oil prices and severance costs. International upstream earnings declined due to lower oil prices, higher operating expenses, and impairments, despite favorable foreign currency effects. The downstream segment reported losses in the U.S. due to lower refining margins and severance charges, while international downstream earnings also declined due to lower margins and impairments.

Chevron continues to focus on cost reductions and capital discipline, targeting $2-3 billion in structural cost savings by 2026. It also expanded its exploration footprint in the Gulf of Mexico, Angola, Brazil, and Namibia and launched a $500 million Future Energy Fund to invest in lower-carbon technologies. The company remains committed to shareholder returns while strengthening its portfolio for future growth.