Chevron to ZEVron: CVX’s acquisition of Renewable Energy Group powers its search for net zero

It’s probably not well known that Chevron’s original name was Standard Oil of Iowa, you’d be 116 years old this week if you were around back then to notice it. Congratulations on your longevity.

This summer, the Iowa-Chevron tie has been revived with Chevron’s acquisition of Iowa-based Renewable Energy Group, which now becomes Chevron Renewable Energy Group. They might as well have named it The Ambition Division — the company has set a goal of 100,000 barrels per day of advanced biofuels by 2030. That’s 1.53 billion gallons per year, and REG in its current size represents around a third of that.

That’s good news for Chevron, the company’s been stuck in a low-growth petroleum box canyon for so long, it’s hard to remember the days when it could play to its greatest strengths — expansion, scale, vision. So, break out the bands and bunting, it’s a homecoming.

Enter the new division president, Kevin Lucke

Tasked with the responsibility of throwing 500,000 barrels into the air and having 1,5 billion come down is the new division president, Kevin Lucke. New to REG that is. Not new to Chevron or Iowa, however — 40 years with the former and Iowa born-and-bred. “It’s a dream assignment for me, an opportunity to come home,” Lucke told The Digest.

There’ll be some dreaming in this assignment all right, that is, dreaming up a pathway to all that feedstock at affordable prices. You know how it is in the world of bioeconomy feedstocks—there’s affordable, available, sustainable, pick any two out of three.

“We believe the future is lower carbon,” Lucke told The Digest. “The company si committed to producing 100,000 barrels per day of biofuels by 2030. REG is a third of that, so we have a long ways to go. A joint team of REG and Chevron heritage people are working right now on the question of how do we grow together. The company has made the high-level commitments, we have to work out the tactics.”

How long until the team is ready to outline that plan? “I think it’s going to be no more 60 days,” Lucke said. “It’ll be quick.”

First impressions? After visits in the past few months to REG operations in Madison, Albert Lea, Newton and Geismar among other locations, Lucke points to the passion and renewable experience that can’t be missed at the old REG. “They’ve been doing this for 20 years, through tough times in the early days when margins were very difficult to come by. These are super talented people.”

The search for 100,000 barrels per day

How broad and deep will Chevron go in its pursuit of its corporate 100,000 barrel commitment? Lucke wasn’t ruling anything out just yet. He mentioned that that company is deeply engaged in ethanol because of its blending requirements, and also has the afore-mentioned assets in renewable natural gas. It shouldn’t be assumed that all future growth will come on the heavy-duty side via biodiesel, renewable diesel or SAF.

Yet, for now, the biggest project going is the Geismar expansion. In recent months, competitiors like Diamond Green Diesel, Phillips66 and the Neste-Marathon partnership have outlined projects with capacities near 800 million gallons per year. Not to mention newcomers like Grön Fuels, DG Energy and USA BioEnergy.

It comes down, like real estate does, to three important things: feedstock, feedstock and feedstock. Without an expansion of supply, ftyer oil is going to be harder to find than baby formula and wickedly expensive.

Doesn’t mean you should double down on your algae investments just yet — the expansion will be less about the Feedstocks of the Glorious Future and more about A Lot, Lot More of the Same Old Same Old. Think plant-based oil — especially crops less limited by demand from the animal meal market, such as camelina. Add in Ev’ry Lovin’ Spoonful of Fryer Oil This Side of Neptune. Plus, later in the decade we’ll start to see the first volatile fatty acids on the market — the VFAs.

Looking to 2030 – from Chevron to ZEVron

Because 2030 is not far away in the world of large-project engineering, procurment and construction, reinvention of feedstock supply will likely not be the focus in Ames or elsewhere in the industry where 2030 goals are looming, for the reasons cited above. We might see more emphasis on technology like UPM’s wood-to-diesel, and gasifying crop waste to make diesel is an idea that badly needs affordable, reliable tech, but we won’t rule it out.

For now, all of Chevron’s activities in heavy-duty biofuels, shifting the orbit from Texas and California. We’ll see if that’s something for the long-term — Chevron’s got big public commitments on renewables — and some good-sized assets in its RNG projects with Brightmark — and it remains to be seen how much of Chevron’s ambitions will be concieved or deployed from the conference rooms in Ames. Pursuing low-carbon fuels may feel to some like ZEVron more than Chevron. Given the times, it’s probably the fastest and best way for Chevron to decarbonize.

Looking at it another way, Chevron’s back in Iowa and found a path to happy growth again. Just as in days of yore.