U.S. oil major Chevron Corporation ( CVX - Analyst Report ) is planning to build a solar thermal demonstration project at its Kapolei refinery. The project, led by Chevron’s Hawaii operation, will be used to balance burning fossil fuels to produce heat and steam for internal use.

The site for the project is presently used to store equipment and as a transitory staging and working area for other projects on the refinery.

Chevrons’ research and development team – Chevron Technology Ventures – will deal with the project. However, the proposed initiative also requires many permits, including a special management area permit.

The 15.5-acre project, which is also known as “Chevron Hawaii Concentrated Solar Process”, is expected to be operational by early 2014.

This venture will help Chevron in reducing costs and enhancing efficiency as the business of refining crude oil into byproducts is very expensive.

San Ramon, California-based Chevron Corporation is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.

The company currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.

Even though the bulk of Chevron’s sales and earnings are dependent on non-renewable energy sources like crude oil and natural gas, the company also focuses on developing alternative energy solutions. In this regard, Chevron has made strategic investments in geothermal, solar technologies and other sources of energy. It is also involved in the development of solutions, which takes waste streams of organic material and converts them into renewable energy that provides on-site power for waste-water treatment plants.

However, being one of the largest integrated oil and gas companies in the world, Chevron is particularly susceptible to the downside risk from continued weakness in the global economy. We are also concerned about the company’s high level of capital spending, which may result in reduced returns going forward.

But there are certain other companies in the oil industry that are expected to perform well in the coming 1 to 3 months. These include Royal Dutch Shell plc ( RDS.B - Snapshot Report ) with a Zacks Rank #1 (Strong Buy), as well as Total SA ( TOT - Analyst Report ) and Repsol SA ( REPYY ) with Zacks Rank #2 (Buy).