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Chevron Forms a Biofuels Business Unit

31 May 2006

Chevron Corporation has formed a biofuels business unit to advance technology and pursue commercial opportunities related to the production and distribution of ethanol and biodiesel in the United States.

Chevron made the announcement today at the groundbreaking ceremony for Galveston Bay Biodiesel (GBB)—a new 100-million gallon per year biodiesel plant. Chevron has a 22% stake in the GBB company. (Earlier post.)

Biofuels are a growing component of the world’s energy base and will be an active part of Chevron’s efforts to help diversify the world’s energy supplies. Chevron’s capabilities and experience in producing and distributing high-quality fuels make us ideally positioned to pursue opportunities in this sector as it expands.

—Donald Paul, vice president and chief technology officer, Chevron

The biofuels business unit will operate within Chevron Technology Ventures (CTV), a corporate subsidiary dedicated to identifying, developing and commercializing emerging energy technologies. Chevron will leverage its broad portfolio of existing technological capabilities and assets to the company’s efforts in this area.

In the United States, Chevron currently blends about 300 million gallons of ethanol per year for use in gasoline blends. In January, the company announced it is participating in an E85 demonstration project with the state of California, General Motors and Pacific Ethanol. The project will study performance, efficiency and environmental issues over a one-year period using California-formulated E85 (85% ethanol, 15% gasoline).

May 31, 2006 in Biodiesel, Ethanol | Permalink | Comments (14) | TrackBack (0)

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____If oil producing palms (600 gallons/acre) can grow in Puerto Rico and Hawaii along with coconut (280 gallon acre in the southern Florida and shores of southern Texas (no frost/high humidity/30"+ regular rainfall rainfall) then we could have a large source of biodiesel/SVO.
____Further breeding/manipulation of oil palms to withstand frosts and colder climates while retaining ability to produce large quatities of oil should also be looked into.
____Oil palm plantations in the Tropics/Sub-tropics of the Americas (from 25 deg. N to 25 deg S of the Equator) could provide another significant source of fuel. Brazil could switch from Soy to Palm oil in the tropics.
____However, they would all pale in comparison to oil algae crops at >5,000 gallons/acre. Set in barren deserts (not cactus or other sensitive/bio-diverse areas) oil algae production facilities in the US, (Salton Sea and Southwest US), Mauritanian, Austrailian, and Atacama deserts (Chile/Peru) could provide the world with all the fuel needed. Pakistani and Indian deserts could production bases to provide for future demand.

It would be curious to see where they get their feedstocks to support production at these levels. Soybeans are touted as the main current feedstock to be used, but soybeans have a limited growing window throughout a normal year. We wont even talk about a major natural disaster like a Rita or Katrine, and the effects on the soybean production.

But we must be careful in introducing new species of plants, like Allen Zheng is proposing, into our natural environments. Uncontolled non native vegetation has caused alot of expense throught our history.

I would like to see the oil algae thing takeoff, but the cost of separating the algae from the water seems to be expensive, due to needing centrifugation. Perhaps that is why we do not see alot of efforts put into it, or any major stories about it. Perhaps someone will figure it out.

I read that the oil fraction in the algae is highest in relatively low light scenarios, i.e. you need more land rather than more sunlight for them. Of course, selective breeding and/or GM could modify these characteristics.

The centrifugal separation is only one issue. You also need to supply the bioreactors with a lot of CO2 and nutrients to achieve the desired high growth rate. Siting the pools near large coal power stations w/ sulphur scrubbers is one option, more than doubling the usable energy per unit of carbon dioxide ultimately released. Not sequestration exactly, but an improvement over plain coal.

Mark:

Are you familiar with Green Fuel Technologies? Since last October the company, which specializes in using powerplant emissions as a feedstock to accelerate growth, has gotten $16 million in venture capital. They recently updated their website with new information, and are currently evaluating in the field somewhere in the southwest.

They also recently partnered with NRG of New York state.

Algae is the only feedstock I've found that has a chance of replacing oil, with the yields Allen cites above. One article I read last year argued that there's about 1,000 powerplants nationwide with enough land for GreenFuel's process. Enough to produce about 40 billion gallons of biodiesel per year. That's about 2/3 of 2005 diesel demand.

And of course there is also a net reduction in CO2 emissions. A double-winner.

Chevron has the right idea in getting involved in the business of biofuels. We'll have to see though if the other oil companies decide to cash in on the emerging business of alternative fuels or remain on a sinking ship.

{sarcasm}
This is the perfect opportunity for Chevron to create synergies among their business units. The old unit, petroleum exploration and transmission, needs pipelines through pristine rainforests in Asia and South America. The rights of way can be made extra wide (perhaps 1 or 2 miles) to create opportunity for the new biofuels unit. Most of that newly cleared land can be planted with palm oil trees or soybeans to create a continuous stream of feedstock for the biofuel plants.
{/sarcasm}

I wonder how the "biodiesel will save the world" crowd will look at this. Do they think that Chevron is in it for anything but profit maximization?

Congress mandated 2.58% ethanol for this year and higher percentages in future years. Oil company refineries can either buy their ethanol or make it.
Low sulfur diesel has been mandated and biodiesel helps with that. Some would like less government action, but history has shown that it does get results.

Mark A:
Dry the Algae with powerplant waste heat....Sterile plants; sterile seeds. Coconut and Palm trees can be chopped down; they need years to mature, and can be easily destroyed (maybe for firewood).

Rafael Seidl:
Algae needs a little bit of sulfur for biological processies. If the low light is true, then cloudy locations or white translucent (recycled plastic) sheets could provide the conditions. Also semi-submerged containers (reservoirs could provide this) could do this. Waste water ponds converted for fuel production may provide the environment as well.

Cervus:
5,000 gallons/acre is a low estimate; theoretical gallons/acre is over 20,000. However, these yields would be harder to reach. Use emissions from peak demand gas fired plants, beacuse they match daytime sunshine.

____Another possibility would be to construct temporary/non-permanent offshore (near river mouths with excess nutrients) containers/facilities semi-submerged with water ports and sunlight access. They would provide a environment conducive to algae production for aquaculture/carbon sink/boosting wild aquatic life in certain situations/fuel. Schedule against typhoons/stormy season.

Marc -

capitalism is the worst way to run an economy, except for all the others. I for one have no problem with Chevron if it is pursuing the right policies in order to maximize its profits and/or reduce its business risk.

It's not Chevron's fault that biofuel production will consume significant tracts of land, both domestically and abroad. For that, you should thank those US consumers who insist on driving SUVs and pick-up trucks when they have no need to do so. Don't blame the fuel producer, blame the consumer. The system is demand-driven.

Does anyone, other than me, see a conflict with all this farmland needing to be planted in corn for ethanol, in soybeans for biodiesel, and regular vegetables for human consumption, all at the SAME TIME!? A free market will allow the farmer to plant whatever crop will make him the most money, not what is needed the most. I could see our energy costs rising significantly, along with our food costs rising. Is rationing to be in our future?

Also, in sarcasm, can someone please tell George Bush, Hilary Clinton and the rest of our political leaders here in the US about this algae thing. Obviously they know nothing about it, or else they would be talking about it. And the problems with handling and delivering ethanol will also just automatically be solved.

Cellulose ethanol uses the corn stalk and not the corn, the plants stalks and not the food product. If the growth in ethanol production is cellulose, then it should have little effect on the food supplies.
Corn can now produce ethanol, the rest can be used to make corn oil for biodiesel and the remains can be dried and used as high protein animal feed. Corn is not the best feedstock to use for ethanol, sugarcane is much better and using the stalks of both is better yet.

Well, Mark, the free market will solve the problem.
If it is more profitable to produce one product over another, producers will switch over and the price of the less profitable product will rise, attracting new suppliers in to the market and eventually reducing the price.

Demand destruction and substitution are also options that reduce prices, so it is virtually impossible that there will ever be a serious conflict between food production and biofuels. Also, there is a lot of land underutilized for food or fuel production that was intentionally left fallow in the past due to low prices so arable land is still plentiful enough to increase supply dramatically...not that that is a desirable outcome.

There are no shortages on the free market. The only time rationing occurs is if price controls are in effect or if government causes it directly; otherwise, people will be priced out of the product and demand will have to fall to correct the destruction bringing down prices.

"There are no shortages on the free market."
I am not sure there is such a thing as a totally "free market".
It depends on how you define your terms. If the price is very high, only the people that can afford it will buy. This does not mean the price will drop. You don't have to be the biggest,
just the most profitable.

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