BP has announced its largest ever low-carbon energy acquisition which plans to purchase a US-listed biogas producer, Archaea Energy, for $1.4bn as the company aims to accelerate its push into greener fuels.
The proposed deal for the Houston-based company would almost instantly increase BP’s biogas supply volumes by 50% and could allow the development of more than 80 projects that could see volumes quintuple by 2030, BP said in a statement.
Archaea Energy was founded by the owner of a landfill in Pittsburgh. The company describes itself as a leading producer of renewable natural gas in the U.S and produces low-carbon fuel by processing organic waste from landfill sites and the farming industry.
Archaea has 50 renewable natural gas and landfill gas-to-energy facilities across the U.S producing around 6,000 barrels of oil a day. BP is said to be paying $3.3bn in cash and Archaea has approximately $800mn of net debt.
“Archaea is a fantastic fast-growing business, and BP will add distinctive value through our trading business and customer reach,” BP chief executive Bernard Looney said.
BP has said that it has invested in five transition businesses: biofuels, convenience, charging, renewables and hydrogen. The company has said that they expect it to reach 40% of total group expenditure by 2025 and 50% by 2030.
Nick Stork, Chief Executive Officer and Co-Founder of Archaea, said, “Archaea was founded with a mission to build the world’s leading RNG development company to reduce global emissions and make multi-generational sustainability impacts. In a very short period of time, we have rapidly become a leading RNG platform in the U.S., and today’s announcement will further enable this business to realize its full potential. bp is a world-class partner and a strong fit for Archaea, with a strategic focus on bioenergy and an operational history in the RNG value chain that is fully aligned with ours and our partners’.”
“We are excited to join them in our mission to increase the role of RNG in helping customers reach their long-term climate goals, and I look forward to our hard-working team joining the bp organization to help achieve their bioenergy objectives. I am incredibly proud of our employees at Archaea who have driven this tremendous value creation and will continue to push forward Archaea’s drive to foster clean energy growth and promote domestic energy reliance.”
Through this partnership, BP will provide Archaea access to world-class platforms and resources to aid its expansion plans while also being an integral part of bp’s existing bioenergy business.
The deal is still subject to regulatory approvals, however both parties are expecting to close the acquisition by the end of 2022.