BP announced the acquisition of Archaea Energy, one of the major generators of Renewable Natural Gas (RNG) in the United States, in a deal valued at over $4 billion, including $3.3 billion in cash and the assumption of $800 million in net debt.
According to bp, the acquisition will increase the company's capacity to assist the decarbonization ambitions of its clients and its own ambition to lower the carbon intensity of the products it offers.
RNG is a biomethane of pipeline quality obtained from the decomposition of biological waste materials and treated to be totally interchangeable with natural gas derived from fossil fuels for uses such as transportation fuels, heating, and power production.
Archaea, headquartered in Houston, Texas, constructs and runs RNG plants to absorb landfill waste emissions and convert them into low-carbon fuel, partnering with landfill owners to transform their sites into renewable energy centres. The company runs 50 RNG and landfill gas-to-energy facilities across the United States, producing roughly 6,000 boe/d of RNG, and its development pipeline supports a fivefold growth in RNG volumes by 2030. Earlier this year, Archaea and Republic Services launched a collaborative venture to create forty RNG projects around the United States.
The CEO of Archaea Energy, Nick Stork, stated:
"Archaea has become one of the largest and fastest-growing RNG platforms in the United States, and the agreement made today will allow this business to reach its full potential. bp is a world-class partner with operational experience in the RNG value chain that is entirely aligned with ours and our partners', and I look forward to our hardworking team joining the bp company to assist them accomplish their bioenergy objectives."
The acquisition follows bp's announcement earlier this year of plans to significantly increase energy-transition investments, with a goal to increase CAPEX in 'transition growth businesses' – which include bioenergy, convenience, electric vehicle (EV) charging, renewables, and hydrogen – to 40% of company CAPEX by 2025 and approximately 50% by 2030. bp's objectives include achieving 50 GW of renewable electricity generation by 2030 and investing in five big biofuel projects.
In 2020, bp launched a long-term strategy to transition itself from a multinational oil corporation into an integrated energy firm, with goals to cut oil and gas production while boosting investments in low-carbon energy sources.
Bernard Looney, the CEO of bp, stated:
BP's evolution into an integrated energy firm is predicated on investing judiciously in the energy transition and generating additional value through integration.
bp forecasts a huge increase in biogas consumption over the next few years, predicting in its "Energy Outlook 2022" that biogas will climb by more than 25 times between 2019 and 2050. The acquisition of Archaea will provide an immediate 50% increase in bp's biogas supply volumes, creating the potential for the company to reach 70,000 boe/d of biogas supply volumes by 2030, while expanding the company's position in the U.S., as well as potentially other regions, such as the United Kingdom and Germany.
The Chairman and President of bp America, Dave Lawler, stated:
"This transaction accelerates our potential to provide greener energy, produce substantial profits in a rapidly expanding area, and reduce emissions. This might help bp make substantial progress toward our goal of net zero emissions."