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Houston industrial decarbonization-focused PE firm scores $725M to launch new business unit

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HF Capital, the Knoxville, Tennessee-based investment arm of the Haslam family, made the multimillion-dollar commitment to set up Ara Energy Decarbonization. Photo via arapartners.com

Houston-based Ara Partners, a private equity firm that focuses on industrial decarbonization investments, is receiving up to $725 million from a Tennessee-based family office to launch an energy decarbonization unit.

HF Capital, the Knoxville, Tennessee-based investment arm of the Haslam family, made the multimillion-dollar commitment to set up Ara Energy Decarbonization. The new business will work toward reducing carbon emissions at ethanol plants, natural gas power plants, and other traditional energy assets.

The Haslam family founded Pilot Co., North America’s largest transportation fuel business and chain of travel centers. Shameek Konar, former CEO of Pilot, has been tapped to lead Ara Energy Decarbonization.

“It is an uncomfortable truth that highly pollutive energy sources are going to play an essential role in delivering an energy transition over the next several decades,” Charles Cherington, co-founder and managing partner of Ara, says in a news release. “We can ignore these staggering carbon emissions, or we can apply our proven methods and financing expertise to decarbonize the conventional energy value chain.”

The energy sector accounts for more than 75 percent of global greenhouse gas emissions.

“The world’s energy demands are increasing and complex, and renewable power needs time and support for it to fulfill rising global energy demand. Ara’s … skillset, portfolio network, and decarbonization management knowledge [are] perfectly positioned to attack the carbon-intensive energy sector,” Konar says.

Ara Partners closed its third private equity fund in December 2023 with over $2.8 billion in new commitments. As of June 30, 2024, Ara Partners had about $6.3 billion of assets under management.

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Ara Partners has announced the closing of its third fund. Photo via Getty Images

Houston energy tech PE group raises $3B third fund

money moves

A Houston-based private equity firm that focuses on industrial decarbonization investments has closed its latest fund.

Ara Partners has secured over $3 billion of new capital commitments for its Ara Fund III, closing $2.8 billion of limited partner commitments, which represents an oversubscription of its $2 billion initial target.

"We are grateful for the extraordinary interest in Fund III demonstrated by Ara's increasingly global, blue-chip investor base," Charles Cherington, managing partner of Ara, says in a news release. "The strong support from new and existing investors, is a testament to their confidence in our talented team, our investment strategy, and the compelling opportunities in the industrial decarbonization sector."

The third fund's institutional investors includes pension funds, insurance companies, sovereign wealth funds, endowments, and foundations from around the world. Ara Fund III will continue the firm's mission of investing in and buying out decarbonization-aligned industrial companies, specifically targeting ones headquartered in the United States, Canada, and Europe.

"The growing, global presence of Ara's platform and portfolio directly reflects the industrial economy's continued demand for the technological innovation and infrastructure needed to decarbonize," Troy Thacker, managing partner of Ara, says in the release. "The support we have received for Fund III will enable the Ara team to continue investing in high-growth companies globally that are positioned to build value while achieving positive environmental impacts."

The newly closed fund has already made four investments:

  • Vacuumschmelze, a global producer of advanced magnetic materials and rare earth permanent magnets
  • Genera, a sustainable pulp and packaging producer
  • CFP Energy, a provider of market-facing solutions in environmental and green energy products to industrial customers across Europe
  • CycleØ, a fully integrated developer of distributed biomethane facilities

Founded by Cherington and Thacker in 2017, Ara has around $5.6 billion in assets under management. It's previous fund closed in September 2021 at an oversubscribed $1.1 billion.

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ExxonMobil expands Gulf Coast CCS business with Louisiana deal

carbon contract

Spring-based energy powerhouse ExxonMobil has picked up another project in the carbon capture and storage (CCS) market.

Natural gas pipeline operator Williams Cos. has tapped ExxonMobil to transport and store up to one metric ton per year of CO2 from Williams’ natural gas collection and processing plant in southwest Louisiana’s Haynesville Shale.

Williams will transport natural gas via its Louisiana Energy Gateway pipeline, then process the natural gas and deliver it to the Gulf Coast for export as liquefied natural gas (LNG). The LNG will be used in power generation, residential and commercial heating, and industrial processes.

Williams recently agreed to acquire Momentum Midstream for up to $5.5 billion to expand Williams’ LNG presence in the Haynesville Shale. Haynesville is the country’s third-largest producer of natural gas.

Once the deal closes, Williams will own a $1.5 billion project in southwest Louisiana that will expand capacity of the Transco natural gas distribution system. The system serves power and LNG-export customers. Williams will also gain over 4,000 miles of pipeline and more than one million acres.

While Williams is based in Tulsa, Oklahoma, it has a significant presence in Houston. Last month, Green Street’s Real Estate Alert reported Williams bought the 64-story, 1.4 million-square-foot Williams Tower south of The Galleria from Invesco Real Estate for more than $300 million. The company will occupy about 360,000 square feet in the skyscraper for its Houston hub.

Williams employs about 800 people in Bayou City, including roughly 700 who work at Williams Tower, and plans to hire another 100 by the end of this year.

The Williams deal is ExxonMobil’s seventh CCS contract. ExxonMobil’s CCS portfolio supports LNG, lower-carbon-intensity steel, ammonia, natural gas processing, industrial gases and methanol.

ExxonMobil has established a “carbon superhighway” along the Gulf Coast to fuel its CCS business. The company owns and operates a more than 1,300-mile CO2 pipeline system, the largest in the U.S.

“Carbon capture is becoming an increasingly important part of industrial operations, but capture alone doesn’t solve the problem of high emissions,” says ExxonMobil. “What matters next is how CO2 is transported, used, and stored.”

ExxonMobil’s CCS initiatives are aimed at capturing a chunk of the rapidly growing CCS market in the U.S. Straits Research forecasts the market will grow from $5.66 billion this year to $13.56 billion by 2034.

“It’s not every day you get to witness the birth of a new American industry, but that’s exactly what’s happening right now at the U.S. Gulf Coast,” Dominic Genetti, senior vice president of CCS at ExxonMobil, wrote in an article published last year on the company’s website.

Fervo Energy, Mercury Fund leaders named first experts in residence for TEX-E

energy mentors

Two leading companies in Houston's clean energy scene have been named the Texas Exchange for Energy & Climate Entrepreneurship's first experts in residence.

TEX-E announced this month that Houston-based geothermal unicorn Fervo Energy and venture capital firm Mercury Fund have joined the nonprofit's new Expert-in-Residence partnership. The program aims to connect TEX-E Fellows with "the people and organizations shaping the future of energy and entrepreneurship."

The 2026 TEX-E Fellows were named in June and include 67 students from six Texas universities and the Massachusetts Institute of Technology. Nineteen are from Houston universities. See the full list here.

Through the Expert-in-Residence program, fellows will be able to network and work with:

"More than anything, students need the determination and creativity to step outside of their comfort zones and tackle problems that lack clear answers. At Fervo, we've consistently bet on young people who lack traditional 'hard skills' but are willing to embrace uncertainty and learn on the job. That open-mindedness will take students far," Jewett said in a prepared statement. Fervo named Jewett as COO in June.

TEX-E was founded in 2022 through partnerships with MIT Martin Trust Center for Entrepreneurship and Greentown Labs. It works with university students from six schools: Rice University, University of Houston, Prairie View A&M University, The University of Texas at Austin, Texas A&M University and MIT.

The organization named Houston venture capital and innovation leader Sandy Guitar as its new executive director last year. Guitar previously served as general partner and managing director at Houston-based VC firm HX Venture Fund and is co-founder of Weathergage Capital.

TEX-E is known for its student track within the Energy Venture Day and Pitch Competition at CERAWeek. It awarded $50,000 to student teams from the University of Texas and Rice University. Read more here.

BP to sell Houston’s Archaea Energy after $4.1 billion bet on biogas

RNG exit

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.

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