Page 4 - NorthAmOil Week 37 2021

NorthAmOil COMMENTARY NorthAmOil

Chevron to more than triple

low-carbon investments

Super-major Chevron will more than triple its planned spending on

lower-carbon energy to $10bn by 2028, but is not yet ready to adopt

a net-zero target

US SUPER-MAJOR Chevron has announced that The company also set a target of raising its
it will more than triple its planned investments renewable fuels production capacity to 100,000
WHAT: into lower-carbon energy to $10bn up to 2028, barrels per day (bpd) by 2030 to meet growing
Chevron is tripling its from $3bn previously. The announcement fol- customer demand for renewable diesel and sus-
planned investments into lows a series of low-carbon projects that the tainable aviation fuel. It said it would expand its
lower-carbon energy. super-major has unveiled in recent days and hydrogen production to 150,000 tonnes per year
weeks. The latest of these include a partnership (tpy) by that year to supply industrial, power
WHY: with Enterprise Products Partners to explore and heavy duty transport customers. And it set
The super-major is carbon capture and storage (CCS) opportunities, a target of increasing its carbon capture and off-
increasingly under and a collaboration with Caterpillar to develop sets to 25mn tpy by developing regional hubs
pressure from investors hydrogen demonstration projects. through various partnerships.
and others to do more on However, even as Chevron ramps up spend- “Renewable fuels, hydrogen and carbon cap-
decarbonisation. ing on low-carbon initiatives, it is holding back ture target customers such as airlines, trans-
from committing to a net-zero greenhouse port companies and industrial producers,”
WHAT NEXT: gas (GHG) emissions target. Chevron’s CEO, said Chevron New Energies’ president, Jeff
The company does not Michael Wirth, told investors this week that the Gustavson. “These sectors of the economy are
want to adopt a net-zero company does not want to “be in a position in not easily electrified, and customers are seek-
target while it considers which we lay out ambitions that we don’t believe ing lower-carbon fuels and other solutions to
such a goal to be are realistic and deliverable”. Nonetheless, com- reduce carbon emissions.”
unrealistic. pany executives talked about Chevron being on The company also reaffirmed its 2028
a “pathway to net zero” during the Energy Tran- upstream production GHG intensity targets,
sition Spotlight event on September 14 at which which equate to a 35% reduction from 2016
the planned spending increase was unveiled. levels.
Separately, speaking to CNBC, Wirth said At a Brent oil price average of $60 per bar-
Chevron’s lower-carbon investments are rel, Chevron anticipates earning double-digit Wirth said
focused on areas including renewable natural return on capital employed by 2025 and gener-
gas (RNG) and hydrogen, because this is where ate $25bn of cash flow, above its dividend and Chevron’s
the super-major sees significant potential to capital spending, over the next five years. lower-carbon
create shareholder value. At the same time, “With the anticipated strong cash generation
the company is opting to stay away from more of our base business, we expect to grow our div- investments
mature technologies such as wind and solar, in idend, buy back shares and invest in lower-car-
which there is already plenty of capital available. bon businesses,” stated Wirth. “We believe a are focused on
strategy that combines a high-return, low-
Strategy er-carbon traditional business with faster grow- areas including
Further details of Chevron’s lower-carbon spend- ing, profitable new energy ones positions us to renewable
ing increase have emerged from the Energy deliver long-term value to our shareholders.”
Transition Spotlight event. The super-major said natural gas (RNG)
that of the planned $10bn investment between No net zero
now and 2028, $2bn will be used to lower the While Chevron noted that it was not commit- and hydrogen.
carbon intensity of its operations. ting to a net-zero target yet, Wirth did not rule
As well as increasing its planned spending, out one being adopted in the future. Indeed, he
Chevron has set several targets for 2030 for its said that Chevron’s directors may re-address the
new energy business. These include growing question of net-zero in the super-major’s climate
its RNG production to 40,000 mmBtu (1.1mn report later this year.
cubic metres) per day to supply a network of sta- In the meantime, though, he told inves-
tions serving heavy duty transport customers. tors that some of the technologies that will be

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