Chevron to invest in Bunge crushers

Under a recent agreement, Chevron would have the right of first refusal for the soybean oil crushed by Bunge.  | Reuters/Lucy Nicholson photo

(Reuters) — Chevron plans to invest $600 million in two soybean crushing facilities owned by Bunge Ltd., securing future feedstock for renewable fuels, the two companies said Sept. 2.

The investment will result in a 50-50 joint venture.

Oil companies in the United States have been building their production of renewable fuels, spurred by federal and state financial incentives, and are seeking to secure guaranteed access to vegetable oils, animal fat and used cooking oil, which some refiners say are already difficult to source.

Chevron would have the right of first refusal for the soybean oil crushed by Bunge, the companies said.

Refiners are eyeing partnerships with agricultural producers to source and process vegetable oils so they can produce green fuels such as renewable diesel. Oil companies want to use their existing crude refineries and avoid costly retrofits and conversions.

Chevron and Bunge’s proposed joint venture will include expanding Bunge’s facilities in Destrehan, Louisiana, and Cairo, Illinois, to nearly double their capacity by 2024. The facilities currently crush 7,000 tons of soybeans per day, which can produce roughly 330,000 to 340,000 gallons of soybean-based diesel.

Vegetable oil can then be treated in refining units such as hydro-treators, which currently yield mainly diesel and jet fuel.

“Given Chevron has extensive hydro-processing capacity, we see the possibility to produce renewable diesel or even sustainable aviation fuel in the future,” Chevron executive vice-president Mark Nelson said.

Bunge already supplies soybean oil to Chevron, which co-processes small quantities of renewable diesel at its El Segundo, California, refinery.

Nelson said the amount of renewable diesel it will produce will be driven by market conditions but expects over time to process renewable feedstocks at its West Coast and Gulf Coast refineries.

Meanwhile, legislation is being considered that would make sustainable aviation fuel (SAF) more economically viable to produce at scale. SAF can be three or four times more expensive than making traditional jet fuel.

Last month, Marathon Petroleum announced it would build a soybean processing complex with ADM in Spiritwood, North Dakota, as part of a joint venture in which Marathon will receive exclusive access to the soybean oil.

Unlike other green fuels such as biodiesel, renewable diesel can power auto engines without being blended with diesel derived from crude oil, making it a lower-pollution option.

“In terms of the energy transition, our companies can do more working together than either of us individually,” Bunge chief executive officer Greg Heckman said.

In July, Heckman told investors that renewable fuel demand, in particular, has triggered a “structural improvement” in the oilseed market and is lifting Bunge’s expectations for earnings.

Soybean oil prices have more than doubled in the past year, hampering some refiners’ plans. Soybean oil is more carbon intense and thus less lucrative than processing used cooking oil and animal tallow, which are in shorter supply. Chevron and Bunge said they will explore low-carbon feedstocks and pretreatment possibilities.

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