Big oil eyes powering big tech’s data center demand

Chevron Corp and Exxon Mobil are considering entering the electricity business, with the U.S. oil majors working on deals to use natural gas and carbon capture to power the technology industry's AI data centers, executives with the companies said separately on Wednesday.

Chevron has been in talks for more than a year about supplying natural gas-fired power, coupled with carbon capture technologies, to data centers, Jeff Gustavson, president of Chevron New Energies, said in an interview at the Reuters NEXT conference in New York.

Gustavson's comments follow a similar announcement by Exxon Mobil on Wednesday, which said it was working to provide data centers with low-carbon electricity by coupling carbon-capture with natural gas-fired power plants by the end of the decade.

"We are working on this as well," Gustavson said, adding that Chevron's experience supplying natural gas around the world, and operating natural gas fired power equipment, positions the company well to meet booming electricity demand from data centers.

"It fits many of our capabilities - natural gas, construction, operations, and being able to provide customers with a low-carbon pathway on power through CCUS (carbon capture, utilization and storage), geothermal, and maybe some other technologies," Gustavson said.

The oil companies, which typically only produce electricity for their own operations, would enter the broader power market at a time of surging demand.

Growth in technologies like generative artificial intelligence is expected to propel U.S. electricity demand to hit record highs in 2025 after remaining flat for roughly two decades.

The urgent need for power has prompted the U.S. power industry to invest in new natural gas infrastructure and push for the delayed retirement of fossil-fuel power plants.

That rush for electricity has also led some big technology companies to walk back climate-focused pledges, which previously required the use of only renewable sources like wind and solar for their energy-intensive AI data centers.