Microsoft plans new data center campus in Pecos, Texas with massive power deal
The tech giant is teaming up with Chevron and Engine No. 1 on a $7 billion natural gas plant to fuel a 2,500 MW campus in West Texas
Microsoft is going big in West Texas. The company is planning a sprawling data center campus in Pecos, Reeves County, spanning roughly 7,000 acres with an expected capacity of approximately 2,500 to 2,595 MW.
The power behind the plan
Microsoft has entered an exclusivity agreement with Chevron and Engine No. 1 to develop a $7 billion natural gas-fired power plant dedicated to the campus. The deal was initiated between March and April 2026, and the plant is expected to initially generate 2,500 MW with room to scale further.
This makes it one of the largest behind-the-meter energy projects ever connected to a single tech tenant. Instead of pulling from the public grid, Microsoft is essentially building its own private power supply, wired directly to its servers.
The campus is expected to become operational around 2027, with the power plant reaching full capacity in phases over the following years.
Why West Texas
West Texas offers abundant land, plentiful energy resources, and a regulatory environment that doesn’t slow things down the way traditional data center markets can. Land in Northern Virginia or the Dallas-Fort Worth metro, the country’s two largest data center corridors, is getting expensive and scarce.
Core Scientific already operates a 300 MW facility in the area, illustrating that high-density data infrastructure is viable in the region. The Chevron partnership also makes geographic sense, as Chevron has deep operational roots in the Permian Basin.
What this means for investors
A $7 billion natural gas plant built specifically for a tech tenant represents a new category of demand that didn’t exist at this scale five years ago.
The natural gas angle will inevitably draw scrutiny from environmental advocates, as powering data centers with fossil fuels runs counter to the net-zero pledges that Microsoft and its peers have made.
For the local economy in Reeves County, Pecos has a population of roughly 12,000 people, so a project of this magnitude could fundamentally reshape the community’s economic profile.