The CEO from BP, the global energy company, reaffirmed the company’s target for its recently acquired RNG business on its second quarter earnings call, charting a rapid scale-up in capacity.
CEO Bernard Looney said BP is aiming for $500 million in earnings before interest, taxes, depreciation and amortization by 2025 as it builds out 80 new facilities, more than doubling present capacity for the Archaea Energy business unit.
“The fundamentals remain very, very strong. A great resource base albeit in landfills that would otherwise be damaging the environment,” Looney said, according to an earnings call transcript from Aug. 1.
The target comes after BP acquired the renewable natural gas company for $4.1 billion at the end of 2022. Looney described the acquisition as a “real game changer” on his company’s fourth quarter earnings call in February, as BP views bioenergy as one of its five alternatives to oil and gas.
BP expects the buildout to bring its biogas output to 40,000 barrels of oil equivalent per day by 2025 and to reach 70,000 barrels of oil equivalent per day by 2030. In the first half of 2023, biofuel production volumes were already up 10% year over year in part due to the acquisition, per the company’s investor presentation.
BP has continued investing in the sector this year, announcing a $10 million investment in WasteFuel to assist in its buildout of a “global network of plants to convert municipal and agricultural waste into bio-methanol,” including a planned facility in the United Arab Emirates.
To lead Archaea’s expansion, BP also appointed one of its own executives, Starlee Sykes, as CEO of the business unit in April. Looney described Sykes as “one of our most trusted leaders,” and said the move was made to ensure the “right culture” was built into the newly acquired business.
“As I remind people, and as we remind each other, this is a BP business. Archaea is no longer Archaea, it's BP. And we want it to be run by our people,” Looney said.
The bullishness comes as BP and other companies in the RNG space feel tailwinds from a favorable update to the federal Renewable Fuel Standard and ongoing opportunities via the Investment Tax Credit and other federal climate initiatives.
During the first quarter earnings call, Looney said the Inflation Reduction Act was “clearly providing more benefits than we thought,” and said enthusiasm for the bioenergy business remained “very, very high.” He also said this month that Sykes would update investors on progress in the Archaea integration and expansion at a Denver event in October.