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Chevron signs 20-year power agreement with Microsoft for West Texas data center

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Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#21

Post by auspiv »

The current natural gas price in West Texas (the WaHa hub, north of Coyanosa, TX) is negative. And has been for a while. The price peaked (dipped?) to -$9/MCF a couple months ago. That means gas producers had to pay $9 per MCF for it to be taken away. Oil in the Permian comes with gas, a lot of it, so to produce oil, you need to get rid of gas. Wells I'm familiar with have 4000-5000 cubic feet of gas per barrel of oil. Recall in oilfield M = thousand, so that's 4-5 MCF per bbl of oil.

There is no free gas pipeline capacity to get gas out of West Texas. Any time new pipelines are built, they are filled within months.

This makes a ton of sense for oil producers (which are also gas producers) who can sell their gas for less of a loss (potentially a profit!) and also for MSFT who can lock in long term contracts for minimal cost. I'd guess these contracts are for $1-2/MCF which is win/win for the oil companies in the area and MSFT.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#23

Post by bob1029 »

ElevenLathe wrote: post #20
epistasis wrote: post #18

Earlier quoted context omitted.

And despite that, when there's any sort of price pressure, like there is for new electricity grid additions from investors, solar and batteries completely dominate the choice over natural gas in Texas. Look at the map for 2026 of the grid buildout in Texas at the bottom of this page: https://www.eia.gov/todayinenergy/detail.php?id=67205 All solar and batteries (yellow and black), with a few tiny blue dots for gas. It…

This is just a guess, but is the reason the same one that the gas is cheap all the way out in BFE west Texas? In other words, even if you could generate electricity from wellhead gas more cheaply than a bunch of wind turbines, solar panels, and batteries just west of Fort Worth, can you actually export it to east Texas where all the demand is? The solution here being: let's build our giant demand machine directly on…

> data is much cheaper to move than energy

It's something like 5-10 orders of magnitude cheaper to move information over fiber than it is to move the energy required to produce that same information through a [pipe/power]line.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#24

Post by declan_roberts »

auspiv wrote: post #21

The current natural gas price in West Texas (the WaHa hub, north of Coyanosa, TX) is negative. And has been for a while. The price peaked (dipped?) to -$9/MCF a couple months ago. That means gas producers had to pay $9 per MCF for it to be taken away. Oil in the Permian comes with gas, a lot of it, so to produce oil, you need to get rid of gas. Wells I'm familiar with have 4000-5000 cubic feet of gas per barrel of oi…

Even corporate ESG policies bend the knee to cheap Texas energy!

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#25

Post by jeffbee »

I had to go read the article to check because other operators have been entering into PPAs with oil companies, but for photovoltaic power. E.g. Google and TotalEnergies.

https://pv-magazine-usa.com/2026/02/09/totalenergies-signs-1...

Also Google and itself. I guess there's a difference between Google and Microsoft after all.

https://storage.googleapis.com/gweb-uniblog-publish-prod/doc...

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#28

Post by 21asdffdsa12 »

Sorry, but who in his right mind, signs contracts for 20 years - could you have imagined the world today 20 years ago? No and no. All one should do is sign snippet contracts of 5 years with the offer of an option to predefined condition. Split it into 4 sequences with a renewal.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#29

Post by gnerd00 »

bob1029 wrote: post #15
epistasis wrote: post #6

Fascinating they're going this direction when solar and batteries are so cheap in Texas... Nearly all new additions to the grid are solar, wind, and storage right now on Texas' grid. Not because of Texas regulations, but because Texas' grid is one of the few grids where generation decisions are all made by independent investors trying to make money. Especially with the shortage in gas turbine manufacturing, very surp…

West Texas is like Costco for natural gas. There are cases where the fields can produce more than the pipelines can carry away. If you put your gigantic gas turbines right next to the fields you can obtain access to some extremely cheap fuel. They might even pay you to burn it sometimes. Negative gas prices are a thing.

West Texas is also a basket of methane leakage -- see CarbonMapper et al

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#30

Post by ecshafer »

advisedwang wrote: post #27

Microsoft says [1] they're going to be carbon negative by 2030. Hard to see them doing that while deploying gigawatts of new fossil fuels. [1] https://www.microsoft.com/en-us/corporate-responsibility/sus...

Its easy, they are going to use fancy accounting to make it come true. Produce a ton of carbon, then buy a cheap, under-priced carbon credit to make it be a zero.
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