US – Chevron U.S.A., a subsidiary of Chevron Corporation, and California Bioenergy LLC (CalBio) have partnered to make a joint investment in their second holding company to produce and market dairy biomethane as a renewable natural gas (RNG) transportation fuel in California.
At the signing of the deal agreement, the holding company, CalBioGas Hilmar LLC, secured initial funding from Chevron to build infrastructure for dairy biomethane projects in California’s Merced County.
In the partnership, CalBio brings technology and operational experience to help dairy farmers build digesters and methane capture projects.
According to the company, the technology converts the highly potent greenhouse gas, methane, released from manure stored on dairy farms to beneficial use as renewable natural gas, which is considered carbon negative on a lifecycle basis under California’s Low Carbon Fuel Standard.
Meanwhile, Chevron will provide additional funding for as many as seven digesters and one central upgrading facility across a cluster of dairy farms in Merced County.
The cluster of digesters has been awarded California Department of Food and Agriculture grants, which must be augmented with additional capital to complete the projects.
When complete – expected in 2023 – Chevron will take 100 percent of the renewable natural gas produced to market in the California vehicle fuels market.
As part of its lower carbon objectives, Chevron is complementing the strength of its traditional products business with new offerings that help customers support a lower carbon future.
Carbon-negative renewable natural gas produced from dairy biomethane is an essential part of Chevron’s portfolio of solutions.
Neil Black, president of CalBio said: “This project brings together support from many groups, including seven California Dairy farmers, who are national leaders in milk and cheese production; Chevron, one of California’s largest energy companies; and grant funding from the California Department of Food and Agriculture.
The strong support from these partners will help California with its emission reduction targets. “These projects are also benefiting the local community through job creation and protecting local air and water quality.”
Andy Walz, president of Americas Fuels & Lubricants for Chevron commented that the investment underscores Chevron’s commitment to produce 40,000 MMBTU/D of the RNG by 2030 and grow the lower carbon businesses that it believes will be a bigger part of the future.
In May 2022, California Bioenergy LLC announced its MBL Biogas LLC joint venture closed on funding and gave its engineering procurement and construction (“EPC”) partner full notice to proceed (“FNTP”) to construct its Moody Biogas cluster of dairy renewable natural gas (“dRNG”) projects in South Dakota.
The joint venture’s partner, UGI Energy Services, LLC (“UGIES”), a subsidiary of UGI Corporation, will fund 100% of the approximately US$70 million cost. Reynolds Construction, LLC was selected as the EPC partner.
The first cluster of projects, called Moody Biogas, is expected to produce 300 million cubic feet of RNG annually once completed in 2024.
Dairy waste from each three dairy farms will be anaerobically digested on-site producing fertilizer waste and methane-rich biogas which will be cleaned of hydrogen sulfide, dried, and compressed into gathering lines at each dairy for delivery to a central upgrading facility.
The upgraded dRNG will be injected into the interstate natural gas system near Dell Rapids, SD. UGIES, through its wholly-owned subsidiary, GHI Energy, will be the exclusive RNG marketer.
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