Jinjoo Lee of The Wall Street Journal reports that Exxon and Chevron are expanding into natural-gas power with carbon capture to meet growing data center demand. They leverage their expertise and financial strength, though the returns from power generation remain uncertain. Lee writes:
Artificial intelligence has suddenly made electricity a hot commodity. No wonder major oil companies want a piece of it.
Both Exxon Mobil and Chevron said last month that they are talking to potential data-center customers on deals to supply natural-gas-fired power paired with carbon-capture technology. Exxon is working on a power-plant design with at least 1.5 gigawatts of capacity—enough to power more than a million homes. TotalEnergies, which has a power business, last year bought 1.5 GW of natural-gas-fired power plants near Dallas and Houston in Texas.
Exxon and Chevron have shied away from the wind and solar business for good reason: They have no experience in it and the expected returns are too low. But gas-fired power seems like a natural fit. […]
Major oil companies also are able to move fast—something tech giants value. They can site power plants near the source of fuel—near their own oil and gas fields—and sell electricity directly to data centers without needing to connect to the grid. And oil companies have lots of experience building off-grid power to support operations in far-flung places. That means they can bypass the lengthy process of connecting to the grid or building out a pipeline. In fact, it would be a natural fit for places with a lack of pipeline capacity—such as the Waha hub in Texas—where natural-gas prices often turn negative. […]
The world’s energy demand is inevitably moving from hydrocarbons to electrons. Power-hungry data centers could very well help major oil companies stay relevant.
Read more here.