Chevron notes patchy APAC recovery as it vows to invest in existing and new fuels

Asia Pacific's conventional fuel markets are undergoing an uneven recovery from the coronavirus pandemic with aviation sector demand still well down on pre-pandemic levels, Mark Nelson, Chevron's executive vice president, downstream and chemicals, said Dec. 1.

Nelson said the US oil giant, which is the largest oil and natural gas producer in Thailand and a leading oil producer in Indonesia, would continue to invest in conventional fuels in the region. Chevron is also Australia's largest gas resource holder and has exploration and production operations in Bangladesh, China and Myanmar.

"Recovery in Asia Pacific is mixed by country and by product and that has to do with the implications of Covid-19 and the associated restrictions of what each country is attempting to balance," Nelson said at Reuters' Energy Transition Asia Pacific 2021 event.

"We are at or slightly above the pre-pandemic levels for motor gasoline and diesel, but jet demand is still hovering around 50% (of the usual level) . . . there is a road to recovery but still more to come," he said.

In Australia, Nelson pointed to an energy transition opportunity for Chevron in the production of blue hydrogen from natural gas with carbon capture and sequestration.

Large production hubs would evolve to drive down the costs of conventional fuels, renewable fuels and low-carbon hydrogen production, he said.

"I see our value chain from manufacturing to feedstock, all the way to the customer, remaining in place [for both conventional and future fuels] because it is the same customer that allows us to leverage all of those strengths and infrastructure," he said.

Chevron jointly owns the Gorgon liquefied natural gas facility with ExxonMobil and Shell. The site incorporates one of the world's largest CCS systems, expected to reduce emissions of more than 100 million mt over the life of the injection project into a sandstone formation 2-km beneath Barrow Island.

Among new products, meanwhile "sustainable aviation fuel will be an important part of Asia's future, and Chevron is well positioned to meet those demands over time," Nelson said.

Chevron had set up a new energies unit with a $10 billion budget through to 2028 to grow its renewable and low-carbon fuels business, Nelson said, targeting capacity of 100,000 barrels a day for renewable diesel and sustainable aviation fuel.

In September, Chevron announced a letter of intent with renewable liquid fuels innovator Gevo Inc to jointly invest in one or more new facilities processing inedible corn to produce sustainable aviation fuel.

Also in September, the Australian government announced its funding arm, ARENA, would provide baseline funding of A$1.43 billion ($1.02 billion) over 10 years to support the next generation of energy technologies, including zero and negative emission technologies.

S&P Global Platts assessed the cost of New South Wales hydrogen produced via alkaline electrolysis (including capex) at A$4.81/kg Nov. 30, up 15% from Oct. 29.

New South Wales hydrogen produced via coal gasification with CCS (also including capex) was assessed at A$2.67/kg, down 14% from Oct. 29.

Meanwhile the assessed price of sustainable aviation fuel in Asia has risen 20% year to date to $2,212/mt Dec. 1, Platts data showed.