Episode summary
Microsoft and Chevron Sign 20-Year Power Deal For Texas Data Center | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Scarlet Fu · Guests: Kevin Crowley, Sam Fazeli, Spencer Liberman, Dennis Lockhart
Summary
Chevron’s 20-year agreement with Microsoft to power a proposed West Texas data center highlighted how AI infrastructure is increasingly colliding with energy supply. A guest said the project could become a blueprint because it uses abundant, stranded natural gas in the Permian Basin, where pipeline constraints can leave gas flared or sold at steep discounts. Chevron said the power plant will be built behind the meter, so the project should not affect local utility rates, and it is expected to begin producing power by 2028 as it ramps toward 2.67 gigawatts.
The discussion then turned to AbbVie’s $10.9 billion cash purchase of Apogee Therapeutics. A guest said AbbVie is using its strong cash generation and high operating margins to deepen its immunology and inflammation franchise, especially by adding exposure to the eczema market. The segment also framed biotech M&A as a way to fill pipeline gaps as companies keep hunting for new growth areas.
Later, CRH’s agreement to buy Arcosa for $8.5 billion was presented as a bet on U.S. aggregates, infrastructure spending, and data center construction. The final segment on Alan Greenspan argued that his long tenure, deep market knowledge, and light-touch approach helped define the Fed’s great moderation, but may also have contributed to blind spots before the housing crisis.
Key takeaways
- The host said Chevron’s 20-year Microsoft deal could be a blueprint for powering AI data centers with stranded West Texas natural gas.
- Kevin Crowley said Chevron views the project as a new power business that diversifies revenue beyond oil and gas.
- The guest said AbbVie’s $10.9 billion cash deal for Apogee fits a cash-rich pharma sector with operating margins around 30% plus.
- Spencer Liberman said CRH is leaning into aggregates and U.S. infrastructure demand, with more than 100 data center projects already in its pipeline.
- Dennis Lockhart said Alan Greenspan’s success during the great moderation may have bred confidence that contributed to the pre-2007 housing blind spot.
Notable quotes
“Chevron signed a 20-year deal with Microsoft to provide natural gas fired power for proposed West Texas data center”
“This could be. Yeah, Chevron Chevron are calling this a platform for the future”
“so Chevron and Microsoft think well this is a good competitive advantage here”
“We have a good outlook for the aggregates as well. A lot of this be infrastructure driven”
How the episode opens
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Pretty interesting deal out there in the world of energies as we think about AI. That's been one of the gating issues we've all come to learn that okay, you can build all these data centers, but you got to figure out how to power them. You can't, you know, you're going to have to need new and flexible energy sources.
So, here's a piece of news today. Chevron signed a 20-year deal with Microsoft to provide natural gas fired power for proposed West Texas data center. Uh, so that's pretty cool there.
Let's get talk to the reporter from Bloomberg News on that story. Kevin Crowley, a Bloomberg News, a big oil reporter. talk to us about this deal here.
Uh Kevin, it seems like we've seen we're starting to see more and more of these and is this kind of the blueprint for the future?
This could be. Yeah, Chevron Chevron are calling this a platform for the future. I mean, really, it's a new business for for them.
I mean, as you know, they're a big oil and gas company. They're 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 is being built um right in the heart of the Peran Basin, which which you probably know is the the biggest oil field um in the country.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- data center power deal
- oil and gas energy demand
- biopharma acquisition
- industrial construction materials m&a
- renewable vs fossil power debate
Companies and tickers mentioned
- MSFT
- CVX
- ABBV
- CRH
- Microsoft
- Chevron
- AbbVie
- Apogee Therapeutics
- CRH
- Arcosa
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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