Oil conglomerate BP is planning to sell off Archaea Energy, the renewable natural gas business it acquired four years ago for roughly $4.1 billion, BP CEO Meg O'Neill said on the company's earnings call Tuesday. The announcement comes amid BP’s notable investment in the business, but shifting strategy in the energy sector.
On the call, executives outlined a plan to simplify BP's portfolio. O'Neill said that the company views Archaea as a “capital-intense” approach to the biogas world, rather than the “capital-light” approach it's now pursuing. BP has already received interest in buyers for the Archaea business, she noted.
“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 said.
In recent years, other energy companies that have traditionally focused on oil and gas also announced investments in the biogas space, particularly as the European Union has encouraged projects through the REPowerEU energy plan. Among that cohort is Shell, which acquired Europe’s largest RNG producer, Nature Energy, for nearly $2 billion in early 2023.
Nevertheless, analysts see room for growth in the biogas industry so long as policies like the federal Renewable Fuel Standard in the U.S. remain supportive of the fuel. A report released by WoodMackenzie in 2024 found about 90% of the potential for landfill-gas-to-RNG projects in the U.S. remains untapped. It also noted the RNG space was quickly consolidating, with seven developers responsible for 60% of active projects.
BP’s acquisition of Archaea still represents the high-water mark of transaction value in the U.S. RNG space. Prior to that, a fund managed by BlackRock acquired anaerobic digestion company Vanguard Renewables for $700 million in 2022.
Waga Energy, a French biogas company growing rapidly in North America, also recently sold to EQT Infrastructure in a deal valued at roughly $331 million. At the time, Waga had signed deals for 13 projects in the U.S., with a total of 50 RNG production units either in operation or under construction worldwide.
When BP acquired Archaea Energy, the company operated 50 RNG and landfill-gas-to-energy projects across the U.S. and had a pipeline of 80 projects in development.
In the years since, BP has continued to grow the business. It named Starlee Sykes Archaea’s CEO in 2023, and subsequently launched an updated modular design that it hoped would simplify project development at new sites.
Archaea has announced progress with projects at landfills owned or operated by WM, Republic Services, Waste Connections, Rumpke and Casella Waste Systems.
Last year, BP executives said they expected Archaea Energy to reach positive cash flow by 2026.
