Chevron and Exxon are both planning to venture into the electricity supply business to take advantage of the surge in demand expected to come from the proliferation of data centers.
The majors would focus on natural gas plus carbon capture to ensure the supply is low-emission, Reuters reported this week, citing company executives from both Exxon and Chevron.
“It fits many of our capabilities – natural gas, construction, operations, and being able to provide customers with a low-carbon pathway on power through CCUS (carbon capture, utilization and storage), geothermal, and maybe some other technologies,” Jeff Gustavson, president of Chevron New Energies, told Reuters at an event organized by the publication.
Exxon separately said in an update this week that it has plans to enter the electricity supply market in light of the expected demand boom from Big Tech majors as the race in artificial intelligence intensifies.
AI and the data centers necessary to power the technology is seen driving electricity demand in the United States to a record high this year and next, according to the Energy Information Administration. In the same report—the Short-Term Energy Outlook—the EIA also said it expected the share of natural gas in the U.S. energy mix to inch up from 42% last year to 43% this year. It then expects gas to dip to 40% of the total, as wind and solar expand to 25% next year.
The agency might be forgetting a minor detail about the latter two, however, and that is the fact they cannot secure uninterrupted supply of electricity for data centers unless combined with massive batteries—and even with batteries the security of supply will not be 100% guaranteed. This means that the share of gas in power generation could actually rise further next year, which is something Big Oil has certainly factored into its decision to enter the power generation sector.
By Irina Slav for Oilprice.com