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Chevron to invest $600 million in soybean processing partnership for renewable fuels

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Chevron to invest $600 million in soybean processing partnership for renewable fuels

Highlights

Increase capacity for soybean crushing facilities

Help alleviate pressure on soybean oil supplies

Produce more renewable feedstock for diesel, jet fuel

Chevron said it will invest $600 million in a planned joint venture with Bunge, the world's largest oil seed processor, to expand soybean processing capabilities in Illinois and Louisiana to provide more feedstock for the production of renewable fuels.

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Chevron and others oil companies are pushing forward with more investments in renewable fuels, especially using low-carbon-intensity soybean oil as a feedstock. But increased demand for the soybean oil is contributing to lower supplies and higher prices.

"Chevron's proposed joint venture with Bunge positions us to expand into the renewable fuel feedstock value chain, which will advance our higher returns, lower carbon strategy," said Chevron Executive Vice President Mark Nelson in a Sept. 2 statement.

Upon finalization of the JV, Chevron and Bunge said they would establish a reliable supply chain from "farmer to fueling station" for both companies. Bunge would contribute its soybean processing facilities in Destrehan, Louisiana, and Cairo, Illinois, and Chevron would invest $600 million in cash. They would fund the approximate doubling of the combined capacity of the facilities from 7,000 tons/d by the end of 2024.

"This relationship with Chevron would enable Bunge to better serve our farmer customers by accessing demand in the growing renewable fuels sector," Bunge CEO Greg Heckman said in the statement.

Bunge currently supplies Chevron with soybean oil for its El Segundo Refinery in California.

The JV also would also pursue new growth opportunities in lower carbon intensity feedstocks, as well as possible feedstock pretreatment investments, the companies said.

Under the JV, Bunge would continue to operate the facilities, leveraging its specialization in oilseed processing and farmer relationships. Chevron would have offtake rights to the oil to use as renewable feedstock to manufacture diesel and jet fuel with lower lifecycle carbon intensity.

According to S&P Global Platts Analytics, renewable diesel production is expected to reach 4,081 million gallons annually by 2025, compared with the 538 million gallons produced in 2020.

The majority of new US renewable diesel facilities plan to use soybean oil because of the easy availability and relatively low carbon intensity, which improves the economics for complying with the US Environmental Protection Agency's Renewable Fuel Standard and California's Low Carbon Fuel Standard.

However, increased transportation fuel demand for soybean oil also has increased its price, which has pulled up the costs of other renewable fuel feedstocks like beef tallow.