Chevron finalizes Renewable Energy Group purchase, making Ames its biofuel headquarters
Donnelle EllerChevron Corp. completed its $3.15 billion purchase Monday of Renewable Energy Group, the biodiesel and renewable diesel company based in Ames that will become the oil giant's renewable fuels headquarters.
Chevron executive Kevin Lucke, an Iowan who has been named president of Chevron Renewable Energy Group, said closing the deal makes way for growth. Chevron wants to produce about 4 million gallons of renewable fuel daily by 2030, he said.
Renewable Energy Group, called REG, already provides about a third of that production, Lucke told the Register.
"We have some large growth ambitions," he said.
He added that it's too early to say what the goal means for new jobs or capital investment in Iowa, but "there's just no question that we're going to have to do it with more resources on the people side."
Previously:Chevron sees 'bright future' for Ames-based Renewable Energy Group as its biofuels headquarters
Lucke has lived in Harlan in western Iowa, near where he grew up, for the past decade, commuting to his job at Chevron in California and Texas. The Iowa State University engineering graduate has been with Chevron's downstream and chemicals business for 40 years.
The U.S. and world are "going to need all forms of energy and renewable energy," especially given Russia's invasion of the Ukraine, he said. "It's just been a real challenge for the world to get enough energy.
"It's going to come from all sources of supply," he said. And "biodiesel and renewable diesel both are going to be part of that solution."
REG employs about 950 people, with 11 biodiesel and renewable diesel plants in the U.S. and Germany. It produced nearly a half-billion gallons of renewable fuel in 2021.
Chevron has said about 70% of the feedstock REG uses to produce renewable fuel is "waste or second-use" products, such as used cooking oil, corn oil produced from ethanol production and tallow, a fat rendered from livestock.
"REG has been a leader in our industry from its inception, being one of the very first companies to build a biodiesel plant in the United States," said Donnell Rehagen, CEO of Clean Fuels Alliance America, an industry advocacy group based in Missouri.
"This leadership in renewable fuels, coupled with the history and strength in the energy sector Chevron brings, will continue to build on the momentum our industry is experiencing as the country continues on its path of carbon reduction through cleaner fuels,” Rehagen said in a statement.
Former REG CEO joins Chevron's board
REG was founded in 2006 in Ames as a spinoff from West Central Cooperative in Ralston in northwest Iowa. The co-op started making biodiesel in 1996 as a way to add value to soybean crops.
Renewable Energy Group employs about 450 people in Iowa, 350 of them in Ames. In Iowa, the company owns three biodiesel plants — in Newton, Ralston and Mason City — and has terminals in Pleasant Hill, Ottumwa and Clear Lake.
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It also operates a fuel delivery business based in Des Moines.
Chevron purchased the company for $61.50 per share. In finalizing the deal, Chevron said Cynthia “CJ” Warner, formerly REG's CEO, was appointed to the company's board of directors, effective Monday.
“CJ Warner has deep experience across both the traditional and renewable energy sectors,” Chevron CEO Mike Wirth said in a statement. “Her perspective and guidance will be invaluable as Chevron leverages its strengths to deliver lower carbon energy to a growing world.”
Chevron announced the deal in February, saying it wanted to buy REG to expand its biodiesel and renewable diesel capacity. While biodiesel is often blended with petroleum-based diesel, renewable diesel can replace the fossil fuel — a conversion that's more complicated with ethanol and gasoline.
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Renewable Energy Group has said it's expanding production at its renewable diesel plant in in Geismar, Louisiana, by nearly 278%. That plant will be able to produce 340 million gallons each year.
Last month, REG reported revenues reached $936 million in the first quarter, ending March 31.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.