Oil-ag partnership trend continues as Chevron teams up with Bunge for soybean oil
Another petroleum company has teamed up with a soybean processor to lock in feedstock for the growing renewable diesel industry. Chevron and Bunge announced Sept. 2 a memorandum of understanding (MOU) to form a 50/50 joint venture (JV) to “establish a reliable supply chain from farmer to fueling station for both companies,” the two firms stated. “Bunge is expected to contribute its soybean processing facilities in Destrehan, Louisiana, and Cairo, Illinois, and Chevron is expected to contribute approximately $600 million in cash to the joint venture. Through the joint venture, the two companies anticipate approximately doubling the combined capacity of the facilities from 7,000 tons per day by the end of 2024. The joint venture would also pursue new growth opportunities in lower carbon intensity feedstocks, as well as consider feedstock pretreatment investments.”
Under the proposed arrangement, Bunge will continue to operate the facilities and Chevron would have offtake rights for the soybean oil to manufacture biofuels like renewable diesel and sustainable aviation fuel.
Chevron’s El Segundo Refinery in Southern California “is set to become the first refinery in the U.S. to ratably coprocess biofeedstock in a fluid catalytic cracker unit making gasoline, jet fuel and diesel fuel with renewable content,” the company states on its website. “The refinery is expected to start supplying consumers in Southern California with biofuel products by mid-2021.”
Chevron executive Mark Nelson said, “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.”
The news follows other recent partnerships between oilseed processors and petroleum refiners. In April, Phillips 66 announced that it was investing in Shell Rock Soy Processing, a new soy-crush project in northeast Iowa, and getting rights to all the soybean oil for its renewable diesel operation near San Francisco. Two weeks ago, ADM and Marathon made public a deal for a 75/25 JV in a soy-crush project in Spiritwood, North Dakota, from which Marathon would claim exclusive rights to all the soybean oil produced for its renewable diesel manufacturing facility in Dickinson, North Dakota.