BP to buy renewable natural gas producer Archaea

Energy major BP seeks to expand its portfolio for gas derived from animal waste or landfills

Energy giant BP is buying a company that can produce natural gas from either landfills or the decomposition of animal waste. Photo by Scott Bauer/Agricultural Research Service
Energy giant BP is buying a company that can produce natural gas from either landfills or the decomposition of animal waste. Photo by Scott Bauer/Agricultural Research Service

Oct. 17 (UPI) -- British energy major BP said Monday it will acquire U.S.-based Archaea Energy Inc. as part of its effort to build up its portfolio in what it sees as responsibly sourced natural gas.

Archaea, which has headquarters in Houston, is getting bought out by BP for around $4 billion in cash, with the British energy giant covering another $800 million in net debt. For BP, the move expands its so-called renewable natural gas business included as part of its strategic focus on a greener portfolio.

Renewable natural gas is sourced from the decomposition of animal manure or the organic matter in landfills. Archaea operates 50 renewable natural gas and landfill gas-to-energy facilities across the United States.

"Archaea is a fantastic fast-growing business, and BP will add distinctive value through our trading business and customer reach," BP's 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."

BP said it believes the acquisition could lead to a five-fold increase in its renewable natural gas production by the end of the decade. Archaea already had plans to develop another 40 projects across the United States that would eventually provide a substitute resource for conventional natural gas.

The deal is expected to close by the end of the year, subject to regulatory and shareholder approval. Once completed, Archaea will operate as a subsidiary of BP.

BP turned in a $9.3 billion profit during the second quarter, its largest quarterly return in 14 years. Third quarter figures will be released Nov. 1.

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