The New AI Landlords: Oil and Gas Giants Pivot to Data Center Power
AI-generated image · US National Wire
As AI scales, the bottleneck shifts from GPUs to energy infrastructure, with legacy energy firms like Chevron and Williams building the 'energy arteries' required to sustain the boom.
For enterprise leaders, the AI roadmap is often viewed through the lens of compute and software. However, a critical operational bottleneck is emerging in the physical layer: energy infrastructure. Legacy oil and gas firms are repositioning themselves as indispensable partners to Big Tech, leveraging their expertise in pipelines and power plants to solve the electricity crisis facing the data center industry.
As Wired first reported, two American energy companies—Williams and Chevron—are aggressively expanding their footprints to meet this demand. The shift is driven by the need for reliable, high-capacity power that can bypass the traditional electric grid, a strategy often referred to as "behind-the-meter" power.
**The Infrastructure Play: Williams and Meta** Williams is utilizing its position as a major infrastructure firm to build a dedicated data-center services business. Wired reports that Williams is currently constructing six behind-the-meter gas plants across the U.S., including four specifically serving Meta data centers in Ohio.
To support this expansion, Williams announced over $5 billion in investments for its data center ventures in mid-July, which included funding from private equity firm KKR. Beyond the plants, the company is building a 9-mile natural gas pipeline in an Ohio suburb. Williams president Chad Zamarin stated during a May earnings call that the company intentionally "overbuilt the capacity" of a pipeline serving a Meta-affiliated plant to create an "energy artery" for future regional projects.
**The Scale Play: Chevron and Microsoft** While Williams focuses on a cluster of projects, Chevron is pursuing massive, single-site scale. Wired reports that Chevron has signed a 20-year power purchase agreement with Microsoft to build a 2.67-gigawatt project in Texas.
Chevron is positioning this as a "repeatable model" for future data center partnerships, according to Jeff Gustavson, president of Chevron’s New Energies division. The project's scale is significant; Chevron asserts that no other project of this "multi-[gigawatt]" size has a contract of similar length. Additionally, Wired notes that the project recently secured a school district tax break worth millions.
**The Macro Impact and ROI Trade-offs** From a demand perspective, the impact is systemic. Ashish Sethia, global head of commodities and energy at BloombergNEF, told Wired that data centers are becoming a primary driver for U.S. power and gas demand. A BloombergNEF report suggests that if this trend continues, the U.S. may need to increase natural gas production by 36 percent by the mid-2030s.
However, this infrastructure pivot carries significant environmental costs. Permit applications for five of the seven gas-fired plants mentioned in the companies' Q2 results indicate potential emissions of up to 21 million tons of greenhouse gases annually. Specifically, the Chevron-Microsoft plant's permit suggests it could produce over 11.5 million tons of carbon-dioxide-equivalent emissions per year, while Williams’ four permit-pending plants could emit up to 9.6 million tons.
Company representatives have defended these figures. Williams spokesperson Alex Schott told Wired that actual emissions are modeled to be potentially two-thirds lower than permitted limits, while Chevron spokesperson Paula Beasley stated the Texas plant focuses on natural gas for reliability with the possibility of adding renewables later.