Chevron may halt investment in biodiesel plant

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Many U.S. biodiesel producers have struggled this year amid a sharp increase in the price of soybean oil and other vegetable oils used to make the fuel in this country. In addition, the U.S. market for biodiesel remains so small that many producers are running plants far below capacity, and some are looking overseas to find buyers.

According to the National Biodiesel Board, U.S. biodiesel production more than doubled last year to an estimated 225 million gallons. The U.S. Energy Department estimates biodiesel could account for 10 percent of the domestic diesel market by 2015.

But challenges facing biodiesel may have dampened Chevron's enthusiasm toward the Galveston plant.

Kent Robertson, a Chevron spokesman, stressed that Chevron, through its Chevron Technology Ventures subsidiary, remains a minority investor in the Galveston plant. The unit holds a 22 percent stake.

But he declined to say whether Chevron will inject more money into the project. "We haven't announced plans for future investment," he said.

Chevron is one of the only U.S. oil companies to invest in the actual production of biofuels. Some competitors only blend biofuels with conventional petroleum fuels or invest in biofuels research.

Yet Chevron, the second-largest U.S. oil company, remains focused on oil and natural gas exploration, as it made clear today with the release of its 2008 capital expenditure budget. Capital spending will increase 15 percent to $22.9 billion, with more than $17 billion going to oil and gas production. The balance will go to oil refinery upgrades and other activities that include research in renewable fuels, the company said.

Chevron has said it expects to spend more than $2.5 billion between 2007 and 2009 on alternative and renewable energy technologies, including biofuels.

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