Microsoft, Chevron Sign Power Deal for Texas Data Center

[00:00:00]It could be. Chevron is calling this a platform for the future, may release a new business for them.

[00:00:05]I mean, as you know, there is a big oil and gas company there, not in the power industry, um, until until now. Um, and it's, it's it's really to take advantage of the, uh, the very, very cheap and abundant natural gas that, uh, that exists, exists in West Texas. Um, this, uh, this data center is being built, um, right in the heart of the Permian Basin, which we should probably know is the biggest oil fields, um, in the country.

[00:00:30]But with that oil comes a lot of, uh, natural gas as a, as a byproduct.

[00:00:35]And there's actually so much natural gas out there at the moment that, um, it's, uh, it can't be taken away, overwhelms the pipeline capacity.

[00:00:43]Um, and and so it's, it's it's either burned off as waste or it's, um, or companies have to actually pay people to, uh, to take it away.

[00:00:51]So, so Chevron and Microsoft, uh, I think, well, this is, uh, this is a good competitive advantage here. We can use this gas to, uh, to build a big power plant that will then, um, that will then, uh, power a, uh, a data center. Um, the, uh, I mean, the the disadvantage is the the location here is, is is very, very remote is about 400 miles west of the, uh, the Dallas-Fort worth, um, um, area.

[00:01:19]Um, but, um, the, um, the cheap power is, is is definitely a competitive advantage of this project. Okay.

[00:01:26]So it sounds like, you know, it's getting some value out of something that would be disposed of anyway. Um, that sounds great.

[00:01:33]Does it? Does that mean that there's no risk, no concern about, um, locals to the extent that there are any locals living near the Permian Basin or any nearby communities facing higher, uh, utility bills? No.

[00:01:48]So, Chevron say this is 100%, uh, behind the meter.

[00:01:52]So so this is just there is no utility, uh, even connected with this project.

[00:01:57]So this is this is just purely, um, um, uh, Chevron building the, um, taking the gas. Building the power station and then using that power to, uh, to, uh, for the data center.

[00:02:10]I mean, it's a very it's a very remote, sparsely populated area anyway.

[00:02:13]But, uh, they insist that there's absolutely no, uh, impact on the, uh, on the, on the local and the local ratepayers, uh, at all which which I think makes this which they, they claim anyway, makes this makes this project, uh, unique. Um, it's rare for, uh, data center of this scale to be, uh, to not utilize, uh, grid power, right?

[00:02:34]Or have the involvement of a utility. If that's the case, how come we didn't get something like this sooner? Why did it take so long?

[00:02:42]These are big projects. They cost.

[00:02:43]They cost a lot of money. Um, and and it's and it's new.

[00:02:46]I mean, Chevron is not is not a utility is not, uh, is not a power producer.

[00:02:51]Um, the other thing I think is, is, is is, uh, so far, uh, big tech companies have preferred to build data centers near to, uh, to larger population centers. Um, and the other thing is, is, is, well, is is early on, you know, These companies did did prefer to, to use these renewables, um, uh, and uh, to uh, to lower the emissions of those data centers. Uh, but now they say there does seem to be a movement towards, uh, natural gas. Uh, given that given the scale, uh, that we now see ahead of us. Kevin, you got 30s left.

[00:03:23]Tell us why this is a new business for Chevron.

[00:03:27]Chevron's in the oil and gas business. They know they're not in the power business. Really?

[00:03:30]Until now. But, uh, they think this can this can diversify their revenue streams, uh, provides, uh, bit more, bit more of a reliable. It's it's not as it won't be as cyclical as the, uh, as the oil and gas business. Um, but it also takes advantage of some of, some of the, of some of that key competitive advantages.

[00:03:46]Chevron's already in the Permian. They, uh, they know how to how to build and build big projects, and they, uh, they have the gas.

[00:03:53]So, uh, so I think it's it's it's within their, within their skill sets.

[00:03:57]Um, you know, unlike some other companies like BP and shell, which, which got into power, um, uh, about 5 or 6 years ago, um, uh, unsuccessfully.