Chevron announces its first solar-to-hydrogen production project in California’s Central Valley

Rhea-AI Summary

Chevron New Energies, a division of Chevron U.S.A. Inc., is developing a 5-megawatt hydrogen production project in California's Central Valley. The project aims to create lower carbon energy using solar power and non-potable produced water. The facility will produce two tons of low carbon intensity (LCI) hydrogen per day, supporting an expanding hydrogen refueling network.

Insights

Energy Sector Analyst

The development of a 5-megawatt hydrogen production project by Chevron New Energies signifies a strategic move within the energy sector. This initiative aligns with the broader industry trend of traditional oil and gas companies diversifying their energy portfolios to include renewable and lower carbon sources. By utilizing low carbon intensity electrolytic hydrogen, Chevron is positioning itself within the emerging hydrogen economy, which is anticipated to play a crucial role in the energy transition.

From a financial perspective, the investment in hydrogen production could offer Chevron a competitive advantage as demand for cleaner energy solutions rises. Hydrogen, particularly when produced through electrolysis powered by renewable sources like solar, holds promise for significant emission reductions in sectors that are hard to electrify, such as heavy industry and transportation. The market for hydrogen as a transport fuel is nascent but growing and Chevron's entry could stimulate further development of the infrastructure needed for a hydrogen refueling network.

Environmental Impact Analyst

The environmental implications of Chevron's project are substantial, particularly in the context of California's stringent climate policies and goals for reducing greenhouse gas emissions. Producing hydrogen using non-potable produced water from Chevron’s oil fields is an innovative approach to resource utilization that minimizes the project's environmental footprint. By using land and resources Chevron already possesses, the project mitigates the need for additional land use and water consumption, which are common environmental concerns associated with new energy projects.

However, it is important to scrutinize the actual carbon intensity of the hydrogen produced. The term 'low carbon intensity' suggests a significant reduction in emissions compared to traditional hydrogen production methods, such as steam methane reforming, but the exact figures and lifecycle analysis would be crucial for stakeholders to assess the project's true environmental benefits.

Renewable Energy Expert

Electrolysis is a process that has garnered attention in the renewable energy space because of its potential to produce green hydrogen when powered by renewable electricity. Chevron's use of solar power to fuel the electrolysis process is a clear commitment to sustainable energy practices. The scale of the project, at 5 megawatts, is relatively modest compared to some of the larger-scale hydrogen projects globally, which suggests a strategic, incremental approach to scaling up hydrogen production capabilities.

It is also worth noting that while the production of two tons of hydrogen per day may contribute to the local hydrogen economy, the impact on Chevron's overall business and the global hydrogen market will depend on the pace of expansion and the adoption of hydrogen technologies. The expertise in managing large energy projects that Chevron brings could accelerate the maturation of the hydrogen market, potentially leading to cost reductions and technological advancements.

SAN RAMON, Calif.--(BUSINESS WIRE)-- Chevron New Energies, a division of Chevron U.S.A. Inc., announced it is developing a 5-megawatt hydrogen production project in California’s Central Valley.

The project aims to create lower carbon energy by utilizing solar power, land, and non-potable produced water from Chevron’s existing assets at the Lost Hills Oil Field in Kern County. This low carbon intensity (LCI) electrolytic hydrogen will be produced through electrolysis, which is the process of using electricity to split water into hydrogen and oxygen.

Chevron’s strategy is to leverage our strengths to safely deliver lower carbon energy to a growing world. Chevron believes in the value of delivering large-scale hydrogen solutions that support a lower carbon world. The facility is designed to produce two tons of LCI hydrogen per day, with the goal of supporting an expanding hydrogen refueling network.

“Hydrogen can play a vital role in our journey toward a lower carbon future,” said Austin Knight, vice president for hydrogen at Chevron New Energies. “Chevron already offers lower carbon fuels like sustainable aviation fuel, renewable diesel and others, and this project is expected to expand the portfolio of solutions Chevron could supply to the region.

“I’m excited about the scalability of this solution,” Knight continued. “However, our ability to meet growing hydrogen demand and help build hydrogen fueling infrastructure in California to a commercial scale with more widespread adoption will be strongly led by state and federal energy policies that promote new lower carbon energy solutions.”

The development of the project is expected to span multiple years, and the start of commercial operations will depend on several factors including flexible and supportive legislative and regulatory energy policies, final engineering design, timely permitting, and obtaining the necessary materials.

“This project will help develop key technical and commercial proof points as Chevron New Energies assesses concepts for future scale-up and new lower carbon intensity hydrogen production opportunities,” said Richard Chapman, President and CEO, Kern Economic Development Corporation. “By locating expected production in the Central Valley, we believe the project will be well positioned to meet the demand of customers along an important transportation corridor, as well as having proximity to key California urban markets.”

About Chevron

Chevron (NYSE: CVX) is one of the world’s leading integrated energy companies. We believe affordable, reliable and ever-cleaner energy is essential to enabling human progress. Chevron produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance our business and the industry. We aim to grow our oil and gas business, lower the carbon intensity of our operations and grow lower carbon businesses in renewable fuels, carbon capture and offsets, hydrogen and other emerging technologies. More information about Chevron is available at www.chevron.com.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release contains forward-looking statements relating to Chevron’s operations and energy transition plans that are based on management's current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words or phrases such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “advances,” “commits,” “drives,” “aims,” “forecasts,” “projects,” “believes,” “approaches,” “seeks,” “schedules,” “estimates,” “positions,” “pursues,” “progress,” “may,” “can,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on track,” “goals,” “objectives,” “strategies,” “opportunities,” “poised,” “potential,” “ambitions,” “aspires” and similar expressions, and variations or negatives of these words, are intended to identify such forward-looking statements, but not all forward-looking statements include such words. These statements are not guarantees of future performance and are subject to numerous risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices and demand for the company’s products, and production curtailments due to market conditions; crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries; technological advancements; changes to government policies in the countries in which the company operates; public health crises, such as pandemics and epidemics, and any related government policies and actions; disruptions in the company’s global supply chain, including supply chain constraints and escalation of the cost of goods and services; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine, the war between Israel and Hamas and the global response to these hostilities; changing refining, marketing and chemicals margins; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; development of large carbon capture and offset markets; the results of operations and financial condition of the company’s suppliers, vendors, partners and equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond the company’s control; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant operational, investment or product changes undertaken or required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures related to greenhouse gas emissions and climate change; the potential liability resulting from pending or future litigation; the ability to successfully integrate the operations of the company and PDC Energy, Inc. and achieve the anticipated benefits from the transaction, including the expected incremental annual free cash flow; the risk that Hess Corporation (Hess) stockholders do not approve the potential transaction, and the risk that regulatory approvals are not obtained or are obtained subject to conditions that are not anticipated by the company and Hess; uncertainties as to whether the potential transaction will be consummated on the anticipated timing or at all, or if consummated, will achieve its anticipated economic benefits, including as a result of regulatory proceedings and risks associated with third party contracts containing material consent, anti-assignment, transfer or other provisions that may be related to the potential transaction that are not waived or otherwise satisfactorily resolved; the company’s ability to integrate Hess’ operations in a successful manner and in the expected time period; the possibility that any of the anticipated benefits and projected synergies of the potential transaction will not be realized or will not be realized within the expected time period; the company’s future acquisitions or dispositions of assets or shares or the delay or failure of such transactions to close based on required closing conditions; the potential for gains and losses from asset dispositions or impairments; government mandated sales, divestitures, recapitalizations, taxes and tax audits, tariffs, sanctions, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; higher inflation and related impacts; material reductions in corporate liquidity and access to debt markets; changes to the company’s capital allocation strategies; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; the company’s ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and the factors set forth under the heading “Risk Factors” on pages 20 through 26 of the company’s 2023 Annual Report on Form 10-K and in subsequent filings with the U.S. Securities and Exchange Commission. Other unpredictable or unknown factors not discussed in this news release could also have material adverse effects on forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240229037192/en/

Chevron

Allison Cook

ACook@chevron.com

(228) 623-4616

Source: Chevron Corporation

FAQ

What is Chevron New Energies developing in California?

Chevron New Energies is developing a 5-megawatt hydrogen production project in California's Central Valley.

How will the project create lower carbon energy?

The project will utilize solar power and non-potable produced water to produce low carbon intensity (LCI) hydrogen through electrolysis.

How much LCI hydrogen will the facility produce per day?

The facility is designed to produce two tons of LCI hydrogen per day.

What is the goal of the project?

The goal is to support an expanding hydrogen refueling network.

Who is the vice president for hydrogen at Chevron New Energies?

Austin Knight is the vice president for hydrogen at Chevron New Energies.