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Lux Research provides snapshot of oil majors’ investments in alternative fuels; BP leads investment frequency

Lux Research has investigated the trends of corporate financing of alternative fuels from oil majors, based on a non-exhaustive database of more than 1,000 deals and partnership engagements from 2000 through September, 2014. Lux focused on financial engagement, only looking into the private placement, equity stake, joint venture (JV), mergers and acquisitions (M&A). For example, Lux included BP’s bioethanol JV plant with British Sugar, but we did not include BP’s research work with the Energy Biosciences Institute.

Lux charted the investment counts (rather than invested companies) of the seven most active oil majors in its database: Shell, BP, Total, Valero, Chevron, Petrobras and Reliance. Repeated investment activities on the same company were counted as multiple. Lux further sorted the investment by six core technology families: algae, biomass to sugar, catalysis, crop development, fermentation (and enzyme development), and pyrolysis/gasification. Click to enlarge.

Lux found that:

  • BP leads the investment frequency in a variety of technology families. The company has a strong focus on crop development by transgenics and breeding, with repeated investments made to Chromatin and Mendel Biotechnology. It also continues investing in biomass-to-sugar technology including handling cellulosic biomass, such as REAC Fuel.

  • Shell has wide interests in other, non-crop development technologies. Shell invested in multiple rounds and formed a JV with Iogen, but terminated the JV in 2012. Then Shell formed partnerships and JVs with Codexis, Cosan, and Novozymes to continue its interests in cellulosic ethanol. Shell shifted its shares in Codexis to Raizen, its ethanol JV with Cosan. It also partnered with Virent on biomass catalytic conversion to produce renewable gasoline, and Cellana (HR BioPetroleum) on algae biofuel. Shell Foundation also funded Husk Power System on gasification development.

  • Total and Chevron are the most active corporate investors in the fermentation domain. Total did the private placement on the IPO of Gevo and formed a JV with Amyris with both focusing on corn and sugar cane feedstocks. Gevo is focusing on isobutanol fermentation and Amyris is doing the bioconversion to produce isoprenoids. On the other hand, Chevron invested in Codexis and LS9 with its concentration on genetic engineering; LS9 was acquired by Renewable Energy Group in early 2014. All invested companies by these two majors are diversifying their revenue streams with drop-in fuels, specialty chemicals, and/or drugs in downstream markets.

  • Valero has a strong focus on drop-in fuel production either by bioconversion or catalysis. Valero owns 10 facilities in the US with more than 1,000 MGY corn ethanol capacity. However, it is also interested in cellulosic ethanol with its funding of Qteros, Mascoma Corporation, and Enerkem. Additionally, the focus on waste feedstock can be reflected by its investments in the ill-fated Terrabon, which was focused on wet waste-to-gasoline.

  • Less active oil majors in this space include ExxonMobil and ConocoPhillips. They only made sporadic investments—such as Synthetic Genomics by ExxonMobil and ADM by ConocoPhilips. Additionally, ExxonMobil recently teamed up with Iowa State University to research pyrolysis.

  • Investments of oil majors in developing countries are more constrained by local resources and policy drivers. For example, Reliance is investing in the algae technology developers such as Algae.Tec, Aurora Algae, and Algenol Biofuels. Petrobras is concerned with fuel production from sugar cane or bagasse, such as BTG-BTL and BIOecon, which combine the feedstock advantage and local policy driver. Other oil majors not listed in the graph, such as Chinese oil majors, Sinopec and PetroChina (CNPC), are shifting their focuses from food ethanol to cellulosic ethanol and coal-to-ethanol, which is responding to the call of the Chinese government to discourage the food ethanol industry.


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