Chevron Enters Natural Gas Power Market for AI Demand

In a significant move to capitalize on the escalating electricity demand fueled by the artificial intelligence sector, Chevron, one of the largest oil and gas companies in the United States, has announced its plans to construct natural gas power plants specifically aimed at powering technology companies' data centers. This initiative comes as major players in the energy industry reposition themselves to address the burgeoning energy requirements driven by AI.

Chevron is collaborating with Engine No. 1, a San Francisco-based investment firm known for its previous victories in corporate governance battles, to drive this initiative forward. Plans are already underway, as the two have secured critical equipment, identified potential locations for the plants, and anticipate the first one to be operational within a three-year timeframe. "It’s a chance for us to help meet the moment and address this growing need for reliable and affordable power," stated Mike Wirth, Chevron’s CEO.

This development underscores the transformative impact of AI on the economy, compelling traditional oil firms to diversify their portfolios by embracing power generation — a sector often viewed as less lucrative than oil drilling. Fellow energy titan Exxon has also indicated interest in entering the electric supply market, aiming to provide power for data centers.

However, the future of AI-related energy demand is fraught with uncertainty. Recent market movements reflected investor apprehension, particularly following revelations from Chinese start-up DeepSeek, which claimed significant AI advancements achieved with minimal energy consumption. This news led to a sharp decline in the stock prices of tech and energy companies, including a notable 17% drop for chipmaker Nvidia and a more than 20% decline for Constellation Energy. As the landscape of AI continues to evolve, both opportunities and challenges remain for energy suppliers in this new digital age.