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Chevron will buy the biofuel company for $ 3.15 billion

Chevron Corp.

CVX 1.49%

makes one of its largest investments in renewable fuels, paying $ 3.15 billion to buy a company that produces diesel and other fuels from sources such as corn or cooking oil, as the fossil fuel giant faces pressure from investors to invest in green energy.

The purchase of the Iowa-based Renewable Energy Group Inc.,

REGI 40.36%

with 11 refineries, mainly from waste products such as grease or used cooking oil, will help Chevron in its quest to offer a wider range of fuels with a lower carbon footprint than oil and gas. Chevron plans to continue to make acquisitions in the area and will spend money on converting existing refineries so that they can process low-carbon fuels, said CEO Mike Wirth.

“We’re building a system here, not just buying a business for a connection,” Wirth said. “It’s building opportunities to do things that are very similar to what we have done historically, with a wide variety of raw materials.”

Demonstrating the importance of the Renewable Energy Group deal, Chevron said that REG president and CEO Cynthia J. Warner is expected to join the Chevron board of directors and the Chevron renewable fuel company will relocate to Iowa.

The acquisition of REG comes as Chevron, along with other major oil and gas companies, comes under intense pressure to revise their operations to reduce carbon emissions from fossil fuels that contribute to global warming. Chevron said last year it would triple spending on its low-carbon plant, committing to spending $ 10 billion by 2028 on biofuels, hydrogen production, carbon capture and other technologies, up from a previous commitment of about $ 3 billion.

Part of Chevron’s strategy is to boost the production of renewable fuels: natural gas, diesel and oil, usually produced from organic or waste materials that produce less carbon dioxide during construction and consumption from fossil fuels.

The company said last year it hopes to produce 100,000 barrels of renewable diesel by 2030. That is a large enough volume to supply current California-based diesel customers in the US West Coast, which implements some of the most aggressive clean of the country fuel programs.

The acquisition of the Renewable Energy Group will help achieve this goal, as REG has a renewable diesel unit with a capacity of 20,000 barrels per day, said Mark Nelson, Executive Vice President of Chevron Chevron Chemicals. renewable fuel boost oversight.

Chevron is also investing in renewable natural gas, initially engaging with companies that produce fuel from dairy-cow manure.

Chevron announced last year a joint venture with US farming giant Bunge Ltd.

BG -1.29%

to develop more sources of renewable fuels, such as oils from soybean processing plants.

I write to you Phred Dvorak at phred.dvorak@wsj.com

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Chevron will buy the biofuel company for $ 3.15 billion

Source link Chevron will buy the biofuel company for $ 3.15 billion

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