Chevron Biodiesel Plant Expansion in Louisiana Receives $100 Million Bonds

Louisiana has designated $100 million in bonds to facilitate the expansion of Chevron Corp’s renewable diesel production facility located in Geismar. The announcement was made by Governor Jeff Landry during the Louisiana Mid-Continent Oil and Gas Association’s annual conference held at the Four Seasons Hotel New Orleans. In addition to disclosing the bond allocation, Governor Landry expressed his support for the oil and gas industry, reinforcing the state's commitment to fostering economic growth in the sector.

The expansion project, initially unveiled in 2020 by Renewable Energy Group Inc. (REG) and then-Governor John Bel Edwards, marked a significant development for the region. Chevron took over the facility, boasting a biorefining capacity of 90 gallons per year, after acquiring REG in 2022. The project aimed to enhance the plant's processing capacity to an impressive 340 million gallons per year. In a news release by the Louisiana Office of Economic Development, it was revealed that the state would contribute a $5 million workforce grant and provide tax incentives in support of the expansion.

The Geismar Facility, initially commissioned in 2010, was the first standalone renewable diesel production facility in the United States. The groundbreaking expansion project commenced in 2021, and according to REG's announcement, the estimated cost increased to $950 million from the initial $825 million unveiled in 2020. Mechanical completion is scheduled for 2023, with full operation expected in 2024.

Governor Landry's office anticipates that the expansion project will generate significant economic benefits, including the creation of 90 new permanent jobs and 1,500 temporary jobs. The announcement came amidst the governor's proclamation and executive order affirming the state's support for the oil and gas industry. The proclamation declared Louisiana as "open for business," with the administration pledging to work tirelessly to ensure the industry's thriving presence in the state. The executive order directs the Louisiana Department of Natural Resources and the Louisiana Department of Environmental Quality to streamline permitting processes associated with the oil and gas sector.

For Chevron, the developments in Louisiana represent a welcomed relief, especially considering the challenges faced in its home state of California. In the earnings report for the last quarter of 2023, the energy giant confirmed impairment charges of $1.8 billion from its US upstream assets, with most of the impaired assets located in California. Chevron attributed these challenges to "continuing regulatory challenges in the state that have resulted in lower anticipated future investment levels in its business plans." The bond allocation in Louisiana serves as a strategic move to enhance Chevron's position and contribute to its broader goals in the renewable energy sector.