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bp to acquire U.S. RNG producer Archaea Energy

bp to acquire U.S. RNG producer Archaea Energy
Photo courtesy of Archaea Energy

In a move that will expand and accelerate the growth of its strategic bioenergy business, bp has agreed to acquire Archaea Energy Inc., a leading producer of renewable natural  gas (RNG) in the United States. The acquisition, which is subject to regulatory and Archaea shareholder approval, will be for USD3.3 billion in cash, as well as around USD800 million of net debt.  

Bioenergy is one of five strategic transition growth engines that bp intends to grow rapidly through this  decade. bp expects investment into its transition growth businesses to reach more than 40% of its  total annual capital expenditure by 2025, aiming to grow this to around 50% by 2030. 

Based in Houston, Texas, U.S.A., Archaea Energy is a leading RNG producer, operating 50 RNG and landfill  gas-to-energy facilities across the United States, producing around 6,000 barrels of oil equivalent a day (boe/d)  of RNG. At closing its production would be expected to provide an immediate 50% increase to bpโ€™s  biogas supply volumes. 

Acquiring Archaea will expand bpโ€™s presence in the biogas industry in the United States, enhancing its ability to support customersโ€™ decarbonisation goals and also progressing its aim to reduce the average carbon intensity  of the energy products it sells. bp aims to reduce that carbon intensity to net zero by 2050 or sooner. 

โ€œArchaea is a fantastic fast-growing business, and bp will add distinctive value through our trading business and customer reach. It will accelerate our key  bioenergy growth engine, creating a real leader in the biogas sector, and support our net zero  ambition. And, importantly, we’re doing this while remaining focused on the disciplined execution of  our financial frame. Investing with discipline into the energy transition, creating further value through  integration โ€“ this is exactly what bpโ€™s transformation into an integrated energy company is all about,โ€ said Bernard Looney, bp chief executive.