Operator: We’ll go next to Devin McDermott with Morgan Stanley.
Devin McDermott: I wanted to bring it back to TCO. And Mike, I think you’ve talked in the past about how there is some similarity in the design between BNP and FGP as a result of that. As you bring WPMP online, it helps derisk part of the FGP ramp as well. I was wondering if you could remind us what some of that commonality is. And as you look at the milestones you look out over the next few months at WPMP, which are the ones that you think about as being key to help derisk FGP as well?
Mike Wirth: Yes. So just to remind everybody, this is a massive field. Some of you have visited it. And FGP, the Future Growth Project, is taking things we did almost 20 years ago now with the second-generation plant in sour gas injection, where we injected about half of the sour gas. And we’re now injecting all the sour gas, increasing production. And at the same time, we’re reducing back pressure on the field and using compression to push the production into the facilities so that we’re not relying on field pressure to do that. And that increases the life and longevity of the production out of the field. The other thing this project brings with it is, what I’ve described sometimes as urban renewal. And it takes infrastructure that was built back even before Kazakhstan was independent.
And it brings power and utility infrastructure, control infrastructure up to modern technology and modern-day standards. So the projects are quite integrated. The start-up sequencing in terms of what you do to walk down systems, ensure they’re ready for operation, do all testing start-up is very similar, whether you’re in one portion of the project or another. And the productivity of the field resources that we see on WPMP reads across to FGP as well. And so while they’re fundamentally different project scopes and objectives, so much of the work is similar across equipment and the commissioning and start-up activities that I think the positive progress we’re making, the success we’re seeing in commissioning and start-up at FGP reads straight at WPMP, reads straight across to FGP as well.
Operator: We’ll go next to Ryan Todd with Piper Sandler.
Ryan Todd: Maybe one on the renewable side of your portfolio. I mean you announced FIDs on a couple of different renewable projects, one in biofuels, one in solar to hydrogen. Can you provide some color on what underpins confidence in these specific projects, whether it’s commercial or technical or regulatory support? And do you see further opportunities to develop similar projects in the portfolio going forward? Or are there specific things about these ones in particular that make them attractive?
Mike Wirth: Yes. So the two projects. One is an oilseed processing plant in our joint venture with Bunge. It’s a project at Destrehan, Louisiana. And so FID was announced for a new oilseed processing plant there. This one will feature a very flexible design, and that’s important because it gives you feedstock flexibility, which matters in any fuels manufacturing business. So in this case, we can process soybeans and soft-seeds, but we can also be able to process winter oilseed crops, think winter canola, cover crest. And so it gives us a greater range of potential feedstocks that can then feed into our renewable fuels business, particularly the Geismar real diesel project, which will start up later this year. And it’s really important that we have exposure across these value chains.
The margins can move from the crush margin into the upgrading margin or what you consider the refining margin into the marketing margin. And just like in our traditional business, being able to catch all margin across the value chain as it moves is important. Having flexibility, scale and reliability are important. So all of those underpin the investment decision there. The project in California on green hydrogen is smaller in scale. And it really uses existing solar production capacity. We’ve got a 5-megawatt production facility in our Lost Hills oilfield in Kern County. And we’re going to produce about a metric ton per day of hydrogen for retail fuel stations. So we’re using existing infrastructure. We’re integrating into the value chain.
We’ve got another venture that is building hydrogen refueling facilities in California. And so we’re leveraging existing assets, existing value chains and capabilities to invest here. As I say, smaller scale, and I don’t want to overplay it, but it’s very consistent with our strategy. And these things have got to start small and then scale. And so we’re pleased with both of these. There are markets, maybe to your point about economics that are in some ways heavily influenced by government policy, be it the renewable fuel standard and the Low Carbon Fuel Standard, which affect renewable fuels or some of the things in the investment or the inflation reduction act that affect hydrogen. And so it makes them a little bit different than our traditional business, which really works off market fundamentals.
But we look at a lot of cases there, and we invest in projects where we believe there’s confidence that over time, we can generate a good return.
Operator: We’ll go next to John Royall with JPMorgan.
John Royall: So my question is on West Coast refining. We now have one West asset producing gasoline on the West Coast, and TMX should be increasing the availability of heavy crudes once it’s ramped. But it’s a tough regulatory climate. And you’re well positioned as one of the players that still has multiple assets in California. How are you thinking about that region today? And should we see structurally higher gasoline margins in California given we’ve had some capacity come out?
Mike Wirth: Well, look, we’ve been in California for our entire existence, 145 years. We’ve got an integrated value chain that allows us to serve two competitive refineries and advantaged logistics that take us out into a market where we’ve got a very strong brand and where the demand for all forms of energy continues to grow, be it power, be it transportation fuels. It’s an economy that is large and demand continues to go up. That said, the policy environment has been one that is geared towards reducing investment in traditional energy, encouraging investments in these lower-carbon energies. And you’ve seen assets go out of the system, fossil fuel-fired power plants. There’s a lot of questions about the one remaining nuclear power plant in the state.
And you’ve seen refineries close down, as you say, some permanently, some to convert to uses, including to renewable fuels. And what that does is it creates a tighter supply-demand balance, particularly as demand continues to be strong and you need to have strong operations out of that entire system, or you need to bring in supplies from somewhere else if you’ve got planned or unplanned issues that the system is dealing with. And so on an average, what does that mean? It means margins are probably under more pressure. It means reliable operations are very important. And it’s a place where we’ve operated for a long time and expect to continue to do so. But putting new investment into the state is a different question. And I think we’ve been pretty clear that we’ve got a global portfolio, and we’ll invest where we see the best conditions, and I wouldn’t describe California that way today.
Operator: We’ll go next to Alastair Syme with Citi.
Alastair Syme: Mike, can you help me understand a bit the sequencing of the base case on the Hess timetable? I’ve read all the documents, but just to get your sort of view. We’ve got a shareholder vote in May that we go in limbo pending regulatory issues, but obviously, importantly, the arbitration. But maybe just talk about the arbitration timetable.
Mike Wirth: Yes. So there are, I think, really three things, if you’re looking at sequencing and timing here. One is the shareholder vote. And as I said, the proxy will be mailed out in April, and the shareholder vote will occur in May. You’ve got regulatory approval through the FTC, and we’re making good progress on that. We’re working closely with the FTC in respect to their role in the process and expect that to us to be substantially complete with that here by midyear. And then, we have the arbitration, which is, I think, a little bit less well defined at this point. The specific scheduling and timeline will be established by the arbitration tribunal. In our S-4, we indicated that Hess has asked the tribunal to hear the merits of the cases in the third quarter with an outcome in the fourth quarter, which would allow us to close the transaction shortly thereafter.
We see no legitimate reason to delay that timeline. It’s consistent with what Exxon has outlined is what they would expect. But I can’t say that’s exactly how it unfolds because we haven’t seen specific scheduling from the tribunal yet.
Operator: We’ll take our last question from Neal Dingmann with Truist.
Neal Dingmann: My question is on broad capital spend question specifically. Could you just maybe speak to, do you have sort of broad strokes what percent of total spend would be directed towards the New Energies and maybe the Chevron technology ventures? And I’m just wondering how you think about margins, even though it’s still early for some, how the margins of these compare to your higher-return traditional margin business.
Mike Wirth: Yes. So there’s a couple of kind of broad framing points, I think, to bear in mind as you think about that. Number one is, we’ve guided to a long-term capital spend at around $16 billion. This year, we’ve got $15.5 billion to $16.5 billion as a range. And we intend to be very disciplined with our capital investment and only invest in the most attractive opportunities. We’ve also indicated that over a period of time, beginning in 2022 through 2028, I think it was when we announced, we had our energy transition spotlight that we expected to spend about $10 billion in our New Energies business over that period of time. $8 billion in kind of the new emerging business lines of carbon capture and storage, renewable fuels and hydrogen and then another couple of billion in decarbonizing our own operations and businesses.
