The year was 1999. Apple’s iPhone was a distant dream, and internet telephone calls were a novelty. It was also the year that California-based supermajor Chevron greenlighted a $60 million investment into a new corporate venture that would become widely known as today’s Chevron Technology Ventures (CTV).
In the 25 years since, the iPhone holds a 29% share of the global smartphone market, and internet-based phone calls have evolved into video calls. CTV has invested hundreds of millions into more than 140 companies.
The company aims to access external innovation and use venture capital to gain insights into change. It provides a window to external innovation and an on-ramp for startup companies to bring their ideas and technologies into Chevron.
CTV’s investment dollars flow through two fund families. The Core Energy fund started in 1999 and focused on operational enhancement, digitalization, and lower-carbon technologies. There have been five Core funds, with the latest $90 million fund launched in 2019. It is investing $90 million in startups with technologies that have the potential to improve performance in Chevron’s core oil and gas business.”
The other is its Future Energy fund, the most recent of two such funds launched in 2021. In total, the two funds have committed $400 million to invest in technologies that support industrial decarbonization, emerging mobility, energy decentralization, and circular carbon economies.
For Jim Gable, the president of CTV, it is an exciting time to be engaged in the energy technology investment space. He has been with Chevron for more than 25 years, with his early years focused on technology commercialization, leading the venture capital team within CTV.
Gable’s roles have changed over the years, most of which were spent with a downstream focus. He returned to CTV in 2022 as vice president within the Chevron Technical Center and president of CTV.
In this Q&A, JPT talks with Gable about the insights gained over the past 25 years, advice for new tech ventures, and how SPE members can help support an innovative ecosystem.
JPT: What do you consider some of CTV’s most significant contributions to the industry throughout its 25-year history?
Gable: Corporations, including Chevron, have evolved their relationships with early-stage external companies. We helped facilitate that transition to viewing external innovation not as a terrible competitive threat but as an incremental part of our overall R&D system.
Think about the number of different technologies that a large multibillion-dollar project requires. You cannot be an expert in all of those. Chevron focuses on a few core technology areas that we’re excellent at with our fantastic internal folks and, to some degree, we rely on external partners to provide all the other technologies needed to build an offshore platform, develop a field, or build a new refinery. But that hasn’t always been the case. Thinking back to the 1990s, we were much more focused on being an expert at everything. Helping Chevron develop that new view on external innovation has been one substantial contribution we have made.
Another is helping industries understand that Chevron and energy companies are part of the solution. Energy companies are committed to the future and a world where all energy is needed, but it must be lower carbon.
CTV had a large hand in that, being the front end of the process to access lower-carbon technologies, and then Chevron New Energies formed in 2021 to try and help scale those technologies.
JPT: How does CTV maintain balance in its R&D portfolios?
Gable: In the technology domain, we access external companies and invest in technologies that touch Chevron. We diversify across the different technologies that impact us and invest in Series A to C, our sweet spot.
We also have a program called Catalyst, where we engage the earliest of companies and help them get started and reach a point where they fit our venture capital model. We will work with companies that are no more than an idea and give them both dilutive and nondilutive financing to help them achieve milestones.
That could be $100,000, $200,000, or $300,000 to reach the milestones of company formation, reaching business milestones with a potential customer interest or technology milestone, and helping them along the way to get to a point where they are ready to raise a venture capital round, and that fits our model. That is one way we get involved on the front end.
Another program we have is Chevron Studio, a partnership we started about 2 years ago with the National Renewable Energy Laboratory to link entrepreneurs looking for their next gig in lower‑carbon energy with IP [intellectual property] sitting on the shelf in universities and national labs. Four national labs and 24 universities have contributed their IP, and we’re now in our fourth cohort of entrepreneurs.
We will contribute up to $500,000 per opportunity and allow these folks to achieve milestones and build initial traction for their idea. They will eventually reach the final stage, at which point they can attract a venture capital round.
JPT: How does CTV manage investor expectations/enthusiasm and do the due diligence necessary to invest while also trying to ramp up the use of the technology inside Chevron?
Gable: It always takes longer and costs more than you think, as a rule of thumb. But after 25 years Chevron is getting pretty good at trialing new ideas. We’ve trialed solutions from around 80% of the more than 140 companies we’ve invested in, with roughly half of those ultimately becoming suppliers to some degree. Technology amplifies human ingenuity, as they say, and our people across the company are at the heart of that success. But not everything succeeds, as we know. And it’s important to be upfront about the risks in any venture and plan capital, timing, cash generation, and tech development pathways accordingly.
Think about the capital intensity of the transition and the fact that if you aspire to get to net zero by 2050, that will take $131 trillion, according to the International Renewable Energy Agency. It will take $3.5 trillion in incremental spending each year, according to McKinsey. Those are amazing sums, and so it is going to take a while for decarbonization to reach society’s ambitions.
Chevron has a role to play and is lowering the carbon intensity of its existing operations, aiming to reduce carbon intensity per barrel by 35% by 2028.
We know exactly what capital is required, and time is a related concept. So, we have tried many times to rein in expectations and help folks understand the hard yards needed to get a real solution in the marketplace.
I would not describe it necessarily as a balance; I describe it more as a kind of realism. We have experience and scale and are trying to impart that knowledge to folks trying to change molecules. We know exactly what that requires. We always have more to learn about how to move faster and be more aggressive. Those are the great things that startups teach us. But we also have plenty to share about engineering and how to make things big.
JPT: What advice would you give to emerging tech ventures looking to make a long-term impact?
Gable: First, be laser-focused on your value proposition. Know your beachhead market and unique competitive advantages, then leverage everything based on that advantage. Your management team, sales, and operations should be based on these advantages.
Everything should be focused on understanding why you’re different from the others. If you looked at four companies similar to yours, then what makes you different? Do you know why your technology or value prop differs from what I’ve already seen?
Second, know how you’re going to solve the problem of scale. Many folks come to us with big processes to do something differently, but they don’t understand how to de-risk it to allow capital to come in and fund the first unit. They think the next step is to spend $500 million to build it because it’s been proven in the lab.
But you need at least two interim steps before that. How will you help somebody de-risk the technology so they’re not taking a risk when writing that check? You don’t want to be in that position.
JPT: What are the major challenges or barriers inhibiting funding and uptake of new oil and gas technologies? Of future energy?
Gable: For oil and gas technologies, it is risk and how much risk one can take in operating assets. I worked in a refinery for 3 years and in a chemical plant before that. It is grueling, and one must remain focused on the day’s challenges and continue operating the unit successfully. You must carve out a separate sandbox, as it were, to allow for trials.
Our Mid-Continent business unit, for example, has done an outstanding job creating a separate system where they can apply new technologies and try new things. They have a fantastic track record of trying new, typically incremental technologies that allow us to continue our journey to deliver the lower-carbon energy the world needs. They’re the example I often cite about an organization focused on the factory model, delivering on current metrics while carving out space for trials.
Regarding future energy, the fundamental challenge might be that we’re developing supply and demand simultaneously in many of these markets. If you’re developing something with the tremendous advantage of existing infrastructure, like renewable diesel, that’s a great way to introduce it. You already have a displaceable demand where you can drop in the fuel.
But if you’re building a new hydrogen generation program or value chain, you’ve got to scale up supply and demand simultaneously. And that takes a long time commercially, from an infrastructure perspective, and from an investment perspective.
JPT: What role should SPE and its members play in supporting an innovative ecosystem?
Gable: Recruiting, training, and helping great people become more accustomed to the challenge of accessing external innovation and understanding the principle that in today’s world, not everything is developed internally.
Also, by helping them develop the skills to scale businesses. What does that entail? Understanding balance and how things fit into other systems on the same site. All those skills will be important when we think about how to get to the size and scale we need for the energy transition.
