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Energy

Chevron Creates Business Unit In Emerging Biofuels Sector

Oil giant wants to find new ways to make ethanol, biodiesel, and other renewable fuels

by Glenn Hess
June 2, 2006

Chevron Corp., the nation's second-largest oil company, has formed a biofuels business unit that will pursue commercial ethanol and biodiesel production and distribution opportunities in the U.S.

The company announced the new business on May 31 in Galveston, Texas, at a groundbreaking ceremony for a large-scale biodiesel plant being built by Galveston Bay Biodiesel. Chevron Technology Ventures, a subsidiary focusing on emerging energy technologies, bought a 22% stake in the plant earlier in the month (C&EN, May 22, page 19).

Chevron currently blends about 300 million gal of ethanol per year for use in gasoline blends. And in January, the company announced it is participating with California, General Motors, and Pacific Ethanol in a one-year demonstration project that will test the performance and efficiency of E85, a fuel mix made of 85% ethanol and 15% gasoline.

Chevron's new business unit will also conduct research into novel ways of making biofuels, such as cellulosic ethanol, from crop waste or switch grass instead of corn. "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," says Donald Paul, Chevron???s vice president and chief technology officer.

The biofuels industry has experienced a surge in interest and investment over the past year as the price of oil has risen to record highs. Both the White House and many members of Congress have been touting ethanol and biodiesel as a way to ease the country???s dependence on imported petroleum.

Other oil companies are also investing in renewable energy sources. Last year, for example, BP established BP Alternative Energy, which plans to spend $8 billion over 10 years in solar, wind, hydrogen, and combined-cycle generation technologies. Royal Dutch Shell has invested more than $1 billion since 1998 to develop alternative energy technologies and has established Shell Renewables and Shell Hydrogen as business units.

Galveston Bay Biodiesel expects to complete construction of its plant in November and will initially produce about 20 million gal of biodiesel a year from soybeans and other renewable feedstocks. Chevron says the facility will have the potential to produce 100 million gal of biodiesel annually. U.S. biodiesel production totaled 75 million gal in 2005, according to the National Biodiesel Board.

A Chevron spokesman says the company spends about $300 million a year on developing alternative sources of energy, including biofuels. Chevron???s capital budget for 2006 is $14.8 billion.??

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