Chevron Just Jumped Ahead of ExxonMobil in Capturing This Massive Opportunity

As technology companies build larger and more powerful data centers, utilities and energy producers are scrambling to find ways to supply the enormous amounts of power these facilities require.

That's where oil and gas giants Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM) see a new opportunity. Both companies are pursuing natural gas-fired power plants designed specifically to support artificial intelligence (AI) data centers.

But for now, Chevron appears to have taken the lead. Here's why.

4 Gigawatts

Earlier this month, Chevron announced a partnership with Microsoft and power developer Engine No. 1 to develop natural gas-powered generation projects that could eventually supply up to 4 gigawatts of electricity to U.S. data centers. To put that in perspective, 4 gigawatts is enough to supply electricity to roughly 3 million average U.S. homes, depending on consumption and plant utilization.

The agreement marked Chevron's first major move into supplying dedicated power for AI infrastructure and establishes a long-term relationship with one of the world's largest cloud computing companies.

Rather than relying entirely on the existing electric grid, the projects are designed to colocate power generation with data centers, thereby providing the reliable, around-the-clock electricity needed to support AI workloads while reducing pressure on regional transmission systems.

Chevron expects to bring the first facilities online by 2028. For Chevron, this isn't just another natural gas customer. It actually establishes a direct relationship with one of the world's largest AI infrastructure builders at a time when demand for computing power continues to rise. This is not trivial. And ExxonMobil is chasing the same opportunity.

Exxon's angle

ExxonMobil recently partnered with NextEra Energy to market an initial 1.2 gigawatt natural gas power project equipped with carbon capture for AI data centers. The companies are combining their respective strengths. ExxonMobil brings expertise in natural gas production and carbon capture, while NextEra has decades of experience developing and operating utility-scale power projects.

Together, the companies are trying to offer data center operators a dedicated source of reliable electricity that can run around the clock. Exxon's approach is to pair natural gas generation with carbon capture to make that power more attractive to technology companies under pressure to control emissions.

Of course, Exxon is still looking for customers. While the NextEra partnership outlines an ambitious vision, the projects remain in the development and marketing stage. Chevron, meanwhile, has already secured a major technology customer and a specific deployment plan.

Bigger than a power plant

To be sure, this opportunity extends far beyond a handful of power plants. The Electric Power Research Institute (EPRI) estimates that data centers could consume between 9% and 17% of all U.S. electricity by 2030, up from about 4% to 5% today, as AI adoption accelerates.

Image source: Getty Images.

At the same time, rising electricity demand from manufacturing, electric vehicles, and building electrification is putting additional pressure on the nation's power grid.

Now, renewable energy will likely play a major role in powering the next generation of data centers. In fact, many of the world's largest technology companies continue to invest heavily in solar, wind, battery storage, and advanced nuclear projects.

But AI-driven electricity demand is growing so quickly that utilities and developers are looking for every available source of new generation capacity. As a result, the future power mix for AI infrastructure will include both renewable energy and natural gas rather than one replacing the other.

And that's creating a new market that didn't exist in a meaningful way just a few years ago. Indeed, Chevron and ExxonMobil are no longer simply producing oil and natural gas. They're increasingly positioning themselves as providers of energy infrastructure for the AI economy.

Both companies could benefit if demand for dedicated data center power continues to grow. But at least for now, Chevron has moved from talking about the opportunity to signing one of the industry's first major commercial agreements.

Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, Microsoft, and NextEra Energy. The Motley Fool has a disclosure policy.