Oil Giants Enter Race to Power AI Data Centers #

Exxon and Chevron Bet on Natural Gas for Tech’s Energy Needs #

Exxon Mobil and Chevron are making strategic moves to power artificial intelligence data centers, betting that tech companies will turn to natural gas to meet their growing energy demands.

Exxon has announced plans to construct a natural gas plant dedicated to powering a data center. The company intends to implement carbon capture and storage technology to reduce the plant’s emissions by 90%. This gas plant would operate independently from the electric grid and utilities, allowing for faster installation compared to traditional power generation projects.

The oil major estimates that decarbonizing AI data centers could represent up to 20% of its total addressable market for carbon capture and storage by 2050. Exxon has already invested heavily in building a carbon capture network along the Gulf Coast, with over 900 miles of pipeline to transport CO2 from industrial customers to permanent storage sites.

Chevron is also exploring ways to power data centers. The company sees itself as well-positioned to participate in this market, given its status as a major natural gas producer with power generation equipment and large tracts of land suitable for data centers.

While tech giants like Alphabet, Amazon, Microsoft, and Meta have primarily relied on wind and solar power for their data centers, the increasing energy demands of AI are pushing them to seek more reliable electricity sources. This has led to growing interest in nuclear power, with some tech companies investing in next-generation small nuclear reactors or exploring the revival of existing nuclear plants.

However, the fossil fuel industry and energy analysts argue that the tech sector will ultimately need to embrace natural gas due to the lengthy timelines associated with building nuclear plants. Exxon’s CEO claims that his company is better positioned than any other in the U.S. to meet AI’s power needs in the immediate and near term.

Exxon does not intend to start a power generation business. Instead, the company plans to use its expertise in leading large projects to help install power generation for data centers in the early stages of AI development. Once this initial phase is complete, Exxon will focus on trapping and storing emissions associated with data centers and supplying decarbonized natural gas to AI power plants.