Chevron Corporation is a multinational oil and gas company, part of the original Standard Oil Company. While it has extended its businesses into clean energy, its oil and gas operations involve production, refining, marketing, transportation, chemicals manufacturing, and power generation. The California-based company does business in 180 countries. Only ExxonMobil is bigger — measured by revenues — than Chevron in the United States; Exxon is also a descendant of Standard Oil.
Chevron is responding to calls to expand into sustainable energy forms and to clean up its current operations. To that end, it is involved in carbon capture and storage, hydrogen production, and solar energy.
It launched a carbon capture and storage project in San Joaquin Valley, California, which aims to limit CO2 emissions at a local cogeneration plant. And Chevron Corp. and BrightSource Energy installed a 29-megawatt solar-to-steam facility at the Coalinga Oil Field in Fresno County, Calif. in 2011.
It wants to develop green hydrogen and green ammonia projects using renewable energy in Indonesia. The goal is to build a green hydrogen facility, producing at least 40,000 tons annually, powered by 250-400 megawatts of geothermal energy. It could scale up to 80,000-160,000 tons yearly if enough geothermal energy exists and the market demands it.
“We have identified nearly 100 greenhouse gas abatement projects to reduce the carbon intensity of our operations and expect them to deliver approximately 4 million tonnes of emissions reductions per year when completed. In 2021, we started 36 decarbonization projects and completed five. In 2022, we are more than doubling the number of projects to 75 and expect to spend approximately $2 billion total on similar projects through 2028,” says Mike Wirth, chief executive.
Big Oil has come under intensive scrutiny from investors, climate activists, and state attorneys general, forcing it to become more transparent about how it values its climate risks while also doing more to curb its CO2 releases. That dynamic is part of what is behind this move to diversify their portfolios and to accept their role in human-caused climate change. But their strategies are also premised on the fact that they are significant natural gas developers, a cleaner alternative to coal for electricity generation.
Chevron On Board with CO2, Methane Cuts
That is why Chevron, ExxonMobil Corp., and Occidental Petroleum have joined the Oil and Gas Climate Initiative, all to put a value on each ton of carbon released and develop the technologies to capture carbon and reduce methane leaks.
Natural gas, of course, has become the fuel of choice — a fuel that markets itself as far less pollutive than coal. But methane is its main component, 84 times more potent than CO2, although its lifespan is 20 years compared to 100. Indeed, methane makes up about 25% of global warming today. Certainly, Chevron is on board with cutting CO2 emissions.
“We continue to lead in methane management in our U.S. operations, particularly in the Permian, where our methane intensity is 85% lower than the basin average,” says Wirth. “Chevron is on track to meet our 2028 target to reduce enterprise methane emissions intensity by more than 50% from 2016 levels and eliminate routine flaring by 2030. He adds that the company uses methane detection tools such as ground-based sensors, satellites, aircraft, and drones.
The goal is to reduce carbon intensity by 35% by 2028 from a 2016 baseline, and it will invest $8 billion to get there. It will also reduce the flaring of natural gas — found when drilling for oil — by 50%. “We believe growth in renewable fuels, hydrogen, carbon capture, and offsets may enable 30 million tonnes of CO2e reductions by 2028.”
The company aims to achieve net-zero upstream emissions by 2050. To reduce its carbon intensity in its operations, Chevron identified about 100 projects last year and 36 the year before. When completed, the projects will reduce annual emissions by 4 million tonnes.
“To reduce emissions, we believe a price on carbon is the most efficient mechanism for public policy because it harnesses market forces,” the company says in its annual report. “For example, our Eastern Mediterranean business unit supported Israel’s adoption of a price on carbon as the primary policy tool for fulfilling the state’s carbon reduction goals. By adopting a market-based approach to carbon reduction, Israel has shown it’s at the forefront of countries around the world in addressing global climate change.”
Oil and Hydrogen Do Mix
Oil companies can also play a central role in the hydrogen economy. Today most hydrogen is produced in reactions involving coal and natural gas — considered “grey hydrogen” that does nothing to limit CO2 emissions. Skeptics contend that oil and natural gas companies think of hydrogen as a vehicle to sell more hydrocarbons — the engine central to producing hydrogen.
In other words, hydrogen and oxygen are split using a hydrogen source. Right now, 99% of that is fossil-based. The goal is to produce hydrogen from low-carbon energy sources and expand its use in the transportation and power generation sectors. Consulting firm Wood MacKenzie says that “grey hydrogen” produced from fossil fuels now costs $1-$3 per kilogram and that the price for sustainable or “green hydrogen” is at least $3-$4 a kilogram.
Chevron is advancing the hydrogen cause through strategic partnerships. That includes one with the U.S. Department of Energy to explore the potential for renewable natural gas — gas from landfills, for instance — to make hydrogen. The oil company also collaborates with Toyota and Cummins to build new hydrogen value chains for heavy-duty trucks.
“We currently produce approximately one million tons of grey hydrogen per year through our traditional business and have experience in retail hydrogen dating back to 2005,” says Wirth, in congressional testimony.