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Oil and Gas

UPDATE 1-Weyerhaeuser, Chevron form biofuels joint venture

(Adds details from interview)

NEW YORK, Feb 29 (Reuters) - Oil company Chevron Corp CVX.N and forest products maker Weyerhaeuser Co WY.N on Friday said they are launching a joint venture to develop renewable fuels from nonfood sources like wood.

The 50-50 joint venture, Catchlight Energy LLC, will research and develop technology for converting cellulose-based biomass into economical, low-carbon biofuels, the companies said in a statement.

The venture, initially announced last April, will focus on developing technology to transform wood and other cellulose sources into clean-burning fuels for cars and trucks.

Ethanol from plant cellulose has the same chemical properties as ethanol made from corn and sugar cane, but it is produced from a variety of nonedible materials such as cereal straw, wood, sawdust and switchgrass.

In the United States, corn is the dominant feedstock used to make ethanol. As the number of corn-fed ethanol plants has mushroomed, the price of the crop has steadily risen. This has led a number of companies to explore alternative raw materials, which could help reduce the pressure on corn prices.

Both Chevron and Weyerhaeuser will contribute resources -- including funding, background technology and employees -- to Catchlight Energy. The companies declined to comment on the size of their investments in the project.

Michael Burnside of Chevron has been appointed chief executive officer of Catchlight, and Weyerhaeuser’s Densmore Hunter has been named chief technology officer.

The companies declined to disclose plans for any infrastructure build or eventual production from the venture.

“The focus is on the research and technology side at this point,” Mike Wirth, head of Chevron’s global downstream business, said in an interview.

“Success is dependent on a whole series of technical advances that are very difficult to predict the timelines on,” he added.

Chevron does not currently produce ethanol or biofuel. Wirth said the company does not view food-based biofuels as a sustainable long-term option.

Dan Fulton, president of Weyerhaeuser, said, “Our goal is to develop a sustainable, commercially viable business that can compete with other liquid transportation fuels, and I don’t think we can rely on subsidies in order to get there.” (Reporting by Euan Rocha, Additional reporting by Michael Erman; editing by John Wallace)

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