Global major BP accelerates net zero plan with Archaea buy
SUMMARY
BP sees 50% of capital spend in transition energy by 2030. [Image credit: BP]
By Dale LunanGlobal major BP said October 17 it was accelerating its path to net zero by 2050 with a deal to acquire leading US renewable natural gas (RNG) producer Archaea Energy in a $4.1bn transaction, consisting of $3.3bn cash and $800mn of debt.
Subject to regulatory and shareholder approval, the transaction is expected to close by the end of this year.
“Archaea is a fantastic fast-growing business, and BP will add distinctive value through our trading business and customer reach,” BP CEO Bernard Looney said. “It will accelerate our key bioenergy growth engine, creating a real leader in the biogas sector, and support our net zero ambition.”
Archaea operates 50 RNG and landfill gas-to-energy facilities in the US, producing about 6,000 barrels of oil equivalent (boe)/day of RNG, with a development pipeline supporting a potential five-fold increase in RNG volumes by 2030. Included in that pipeline is a joint venture with Republic Services, announced earlier this year, that will develop 40 landfill RNG projects across the US.
“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 realize its full potential,” Archaea CEO Nick Stork said. “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.”
Alongside the growth opportunities offered by the Archaea acquisition, BP sees the potential for its biogas supply volume to increase to around 70,000 boe/day globally by 2030.
The acquisition will double BP’s expected EBITDA from biogas to around $2bn by 2030 and push its anticipated EBITDA from energy transition businesses past the $10bn mark by 2030. Bioenergy is one of five strategic transition growth engines BP expects to develop this decade, claiming about 40% of its total annual capital spend by 2025 and 50% by 2030.
“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,” Looney added.
