the view from heti

Q&A: CEO of bp-acquired RNG producer on energy sustainability, stability

Starlee Sykes, Archaea Energy’s CEO, shares the details of bp’s acquisition of the company and their vision for the future. Image via bp.com

bp’s Archaea Energy is the largest renewable natural gas (RNG) producer in the U.S., with an industry leading RNG platform and expertise in developing, constructing and operating RNG facilities to capture waste emissions and convert them into low carbon fuel.

Archaea partners with landfill owners, farmers and other facilities to help them transform their feedstock sources into RNG and convert these facilities into renewable energy centers.

Starlee Sykes, Archaea Energy’s CEO, shared more about bp’s acquisition of the company and their vision for the future.

HETI: bp completed its acquisition of Archaea in December 2022. What is the significance of this acquisition for bp, and how does it bolster Archaea’s mission to create sustainability and stability for future generations?  

Starlee Sykes: The acquisition was an important move to accelerate and grow our plans for bp’s bioenergy transition growth engine, one of five strategic transition growth engines. Archaea will not only play a pivotal role in bp’s transition and ambition to reach net zero by 2050 or sooner but is a key part of bp’s plan to increase biogas supply volumes.

HETI: Tell us more about how renewable natural gas is used and why it’s an important component of the energy transition?  

SS: Renewable natural gas (RNG) is a type of biogas generated by decomposing organic material at landfill sites, anaerobic digesters and other waste facilities – and demand for it is growing. Our facilities convert waste emissions into renewable natural gas. RNG is a lower carbon fuel, which according to the EPA can help reduce emissions, improve local air quality, and provide fuel for homes, businesses and transportation. Our process creates a productive use for methane which would otherwise be burned or vented to the atmosphere. And in doing so, we displace traditional fossil fuels from the energy system.

HETI: Archaea recently brought online a first-of-its-kind RNG plant in Medora, Indiana. Can you tell us more about the launch and why it’s such a significant milestone for the company?  

SS: Archaea’s Medora plant came online in October 2023 – it was the first Archaea RNG plant to come online since bp’s acquisition. At Medora, we deployed the Archaea Modular Design (AMD) which streamlines and accelerates the time it takes to build our plants. Traditionally, RNG plants have been custom-built, but AMD allows plants to be built on skids with interchangeable components for faster builds.

HETI: Now that the Medora plant is online, what does the future hold? What are some of Archaea’s priorities over the next 12 months and beyond?  

SS: We plan to bring online around 15 RNG plants in each of 2024 and 2025. Archaea has a development pipeline of more than 80 projects that underpin the potential for around five-fold growth in RNG production by 2030.

We will continue to operate around 50 sites across the US – including RNG plants, digesters and landfill gas-to-electric facilities.

And we are looking to the future. For example, at our Assai plant in Pennsylvania, the largest RNG plant in the US, we are in the planning stages to drill a carbon capture sequestration (CCS) appraisal well to determine if carbon dioxide sequestration could be feasible at this site, really demonstrating our commitment to decarbonization and the optionality in value we have across our portfolio.

HETI: bp has had an office in Washington, DC for many years. Can you tell us more about the role that legislation has to play in the energy transition? 

SS: Policy can play a critical role in advancing the energy transition, providing the necessary support to accelerate reductions in greenhouse gas emissions. We actively advocate for such policies through direct lobbying, formal comments and testimony, communications activities and advertising. We also advocate with regulators to help inform their rulemakings, as with the US Environmental Protection Agency to support the finalization of a well-designed electric Renewable Identification Number (eRIN) program.

HETI: Science and innovation are key drivers of the energy transition. In your view, what are some of most exciting innovations supporting the goal to reach net-zero emissions?  

SS: We don’t just talk about innovation in bp, we do it – and have been for many years. This track record gives us confidence in continuing to transform, change and innovate at pace and scale. The Archaea Modular Design is a great example of the type of innovation that bp supports which enables us to pursue our goal of net-zero emissions.

Beyond Archaea, we have engineers and scientists across bp who are working on innovative solutions with the goal of lowering emissions. We believe that we need to invest in lower carbon energy to meet the world’s climate objectives, but we also need to invest in today’s energy system, which is primarily hydrocarbon focused. It’s an ‘and’ not ‘or’ approach, and we need both to be successful.

Learn more about Archaea and the work they are doing in energy transition.

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This article originally ran on the Greater Houston Partnership's Houston Energy Transition Initiative blog. HETI exists to support Houston's future as an energy leader. For more information about the Houston Energy Transition Initiative, EnergyCapitalHTX's presenting sponsor, visit htxenergytransition.org.

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A View From HETI

Texas has also officially claimed the No. 1 spot in the U.S. for existing and under-construction data center capacity, according to the report. Photo courtesy JLL

Houston stands to benefit from constraints dogging data center markets elsewhere in Texas, a new report indicates. This comes against the backdrop of Texas surpassing Virginia as the country’s top state for data centers — and amid deepening opposition to these facilities.

The report, published by commercial real estate services provider JLL, foresees Houston continuing to gain traction in data center development as occupants seek “scalable alternatives” to Texas markets experiencing supply-and-demand imbalances.

The Houston area currently hosts data centers with 287 megawatts of capacity, well below capacity levels in the Dallas-Fort Worth, Austin-San Antonio and West Texas markets.

However, the region is witnessing a spike in capacity, with 390 megawatts of capacity under construction, according to the report. Counting newly built data centers, Houston would be home to 677 megawatts of data center capacity, an 80 percent increase from the current inventory, the report says.

Developers target West Houston for large-scale data centers

Developers increasingly are evaluating West Houston and surrounding areas for large-scale campuses capable of supporting behind-the-meter power, according to the report. Data center development in the region is likely to remain concentrated in those areas, where power is readily accessible and flood risks are lower, the report adds.

The report notes that Houston is evolving from a traditionally enterprise-focused co-location market for data centers into a “credible large-scale growth market,” buoyed by rising interest in hyperscale facilities and increased development activity.

Corporate, energy and healthcare users are still active in Houston’s data center market, the report says, with cloud computing and technology tenants making inroads. The Houston market absorbed 25 megawatts of data center capacity in the first half of this year.

Texas crowned No. 1 state market for data center capacity

The growth of Houston’s data center sector is occurring in tandem with Texas’ ascent as a data center market. The report shows Texas now boasts 26 gigawatts of existing and under-construction capacity, followed by Virginia at 13 gigawatts.

JLL declares that “Texas has cemented its position as the state for data centers.”

The “frontier” markets of West Texas, the Carolinas, Louisiana, and Ohio account for 77 percent of all capacity being developed nationwide, according to the report.

As evidence of Texas’ heightened stature in the data center sector, commercial real estate services provider Cushman & Wakefield recently ranked Dallas as the world’s No. 1 primary data center market, while Austin-San Antonio led the list of second-tier markets and West Texas topped the third-tier ranking.

These rankings underscore “Texas’ growing importance as a large-scale AI infrastructure hub,” Cushman & Wakefield says.

Opposition to new data centers in Texas grows

While businesses see the value of adding data centers in Texas, the state’s data center boom is rattling residents and politicians alike.

A recent University of Houston survey finds that although 85 percent of Houston-area residents use AI—a key driver of data center growth—nearly 63 percent oppose construction of a data center within a mile of their home. Experts estimate 6.5 gigawatts of capacity, or roughly one-fifth of the total U.S. pipeline, will join the Texas power grid by 2030, with Houston serving as a main hub.

A poll taken recently by the University of Texas/Texas Politics Project yielded similar results: 56 percent of Texans oppose development of data centers in their community.

“Texas’ grid is already facing pressure from population growth, extreme weather and rising industrial demand,” UH researcher Soran Mohtadi says. “When residents say they are concerned about data centers, they’re mostly referring to grid reliability and affordability.”

Data center backlash prompts action by politicians

Responding to Texans’ concerns over power and water consumption, Gov. Greg Abbott recently imposed a moratorium on new data centers in the state to allow time for regulatory agencies to assess the projects’ impact. Meanwhile, some state lawmakers are calling for a crackdown on data center development.

Last month, a state legislative committee chaired by Sen. Joan Huffman, a Houston Republican, held a hearing on the effects of state sales tax exemptions given to data centers. The cost of these exemptions has climbed from an estimated $14.6 million in 2014-15 to a projected $3.3 billion in 2028-29, according to law firm Holland & Knight.

Two backers of massive data centers in Texas, social media giant Meta Platforms and AI powerhouse OpenAI, agreed this week to comply with Abbott’s recently issued standards regarding data center projects—and more have followed suit.

Dan Diorio, executive vice president of state policy and government affairs for the industry-backed Data Center Coalition, fears backlash against data centers may curb economic growth in Texas.

“I worry that communities that put moratoriums ultimately create too much uncertainty and unpredictability, and what that ultimately means is that those communities may shut themselves off to data center development but also may shut themselves off to broader economic development,” Diorio told Fox 7 News in Austin.

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