RNG exit
BP to sell Houston’s Archaea Energy after $4.1 billion bet on biogas
Oil and gas conglomerate BP is unloading its Houston-based U.S. renewable natural gas business just four years after buying it.
The British company announced the planned sale of Archaea during its most recent earnings call but offered few details.
On the call, BP’s new CEO, Meg O’Neill, said her company had put Archaea on the market and already had attracted interest from potential buyers. BP acquired Houston-based Archaea Energy, the country’s largest producer of renewable natural gas (RNG), in 2022 for about $4.1 billion.
BP, whose North American headquarters is in Houston, is streamlining its portfolio. As such, O’Neill said Archaea represents a “capital intense” approach to biogas instead of the “capital light” approach BP now favors.
“If there’s somebody who sees an opportunity to create additional value, who will invest in that business, who will build on the foundation, because our team has made really good progress in improving the profitability of that business, then that will be a good outcome,” O’Neill told Wall Street analysts.
The proposed sale of Archaea is part of BP’s effort to sell about $20 billion in assets by the end of next year.
Archaea captures biogas, a natural byproduct of waste decomposition at landfills and dairy farms, and converts it into electricity or RNG. This process leads to cleaner air, less odor, and more sustainable energy than traditional fossil fuels.
Archaea was slated to be a cornerstone of BP’s plan to boost its biogas supply by roughly 600 percent to the equivalent of about 70,000 barrels of oil per day.
Bioenergy had been identified as one of bp’s five pillars of its multibillion-dollar energy transition initiative.
Another pillar: EV charging. Last month, BP agreed to sell its EV charging business in Austria to Switzerland’s Volenergy, along with 250 BP-branded stores and a fleet of business vehicles.
“By concentrating our capital on the assets and markets where BP can be most competitive and best serve customers, we are strengthening our balance sheet and creating a stronger downstream portfolio,” Richard Harding, interim executive vice president of downstream at BP, said of the Volenergy deal.