BP to acquire Archaea Energy Inc.

The agreed acquisition, which is subject to regulatory and Archaea shareholder approval, will be for US$3.3 billion in cash, as well as around US$800 million of net debt.

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

Acquiring Archaea will expand BP’s presence in the US biogas industry, enhancing its ability to support customers’ 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.

Bernard Looney, BP Chief Executive, said: “Archaea 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 – this is exactly what BP’s transformation into an integrated energy company is all about.”

Based in Houston, Texas, Archaea Energy is a leading RNG producer, operating 50 RNG and landfill gas-to-energy facilities across the US, producing around 6000 boe/d of RNG. At closing its production would be expected to provide an immediate 50% increase to BP’s biogas supply volumes.

Archaea has a development pipeline of more than 80 projects that underpin the potential for around five-fold growth in RNG production by 2030. Earlier this year, it announced a joint venture with Republic Service, Inc. to develop 40 RNG projects across the US, part of this pipeline. The joint venture will convert landfill gas into pipeline-quality RNG that can be used for a variety of applications to displace conventional natural gas.

Nick Stork, CEO of Archaea Energy, said: “Archaea has become one of the largest and fastest growing RNG platforms in the US and today’s announcement will further enable this business to realise its full potential. BP is a world-class partner with an operational history in the RNG value chain that is fully aligned with ours and our partners’, and I look forward to our hard-working team joining the BP organisation to help achieve their bioenergy goals.”

Jon Vander Ark, Republic Services President and Chief Executive Officer, added: “The acquisition of Archaea by BP allows us to accelerate decarbonisation through our innovative joint venture with Archaea. With our shared focus on sustainability, this joint venture provides additional opportunities to work together on other decarbonisation and environmental services initiatives.”

The acquisition of Archaea has a strong strategic fit with BP’s existing biogas business, enabling expansion of its position in the US and potentially also in key geographies globally, including the UK and Germany. Alongside growth in BP’s existing portfolio, the addition of Archaea’s production and pipeline has the potential to take BP’s biogas supply volumes to around 70 000 boe/d globally by 2030.

Dave Lawler, chairman and president of BP America, said: “Our biogas team is already one of the leading suppliers of renewable natural gas in North America. This deal accelerates our ability to deliver cleaner energy, generate significant earnings in a fast-growing sector and help reduce emissions. This could help BP take a significant stride toward our net zero ambition.”

Read the article online at: https://www.hydrocarbonengineering.com/the-environment/18102022/bp-to-acquire-archaea-energy-inc/