BP Brings Online First RNG Plant Post Archaea Acquisition
BP plc BP-owned company Archaea Energy announced the launch of its first Archaea Modular Design (AMD) Renewable Natural Gas (RNG) plant in Medora, IN. Strategically located next to a landfill owned by Rumpke Waste and Recycling, this RNG plant comes in the wake of BP's strategic $4-billion acquisition of U.S. biogas producer Archaea Energy in December 2022.
According to BP, landfill gas, a byproduct of waste decomposition in landfills, has long been recognized as a potent greenhouse gas. However, the Indiana-based RNG plant captures and converts this gas into renewable energy sources such as electricity, heat and renewable natural gas. It does so with the use of AMD. This transformation significantly improves air quality, reduces unpleasant odors and represents a sustainable alternative to traditional fossil fuels.
Notably, the Medora plant can process a staggering 3,200 cubic feet of gas per minute, equivalent to heating approximately 13,026 homes annually, per the EPA’s Landfill Gas Energy Benefits Calculator. One of the key innovations of the AMD is its ability to streamline and accelerate the construction of RNG plants. Traditionally, these plants were custom-built, which often led to prolonged construction times. In contrast, the standardized modular design allows for faster and more efficient construction.
BP has identified Archaea as a pivotal component of its objective to amplify biogas supply volumes nearly sixfold by 2030, aiming for a staggering production rate of 70,000 barrels of oil equivalent per day (boe/day). With the acquisition of Archaea, BP now stands as the largest RNG producer in the U.S.
Starlee Sykes, CEO of Archaea, expressed her enthusiasm for this achievement and emphasized its pivotal role in the company's commitment to net zero emissions. She envisions multiple AMD plants coming online in the near future, reflecting Archaea's dedication to sustainability.
Additionally, bioenergy is one of BP's five key transition growth drivers that are slated for rapid expansion through this decade. The company expects to generate approximately $2 billion in EBITDA by 2025 and sets an ambitious target of surpassing $4 billion by 2030.
Apart from bioenergy, BP's other transition growth drivers are convenience, EV charging, renewables & power and hydrogen. To achieve these goals, BP plans to inject an additional $8 billion into its transition growth businesses over the course of this decade. The company aims to increase its share of the total annual capital expenditure to more than 40% by 2025, and ultimately pushing it to 50% by 2030.
Zacks Rank & Key Picks
BP currently carries a Zack Rank #5 (Strong Sell).
Some better-ranked players in the energy sector are Matador Resources Company MTDR and Pioneer Natural Resources Company PXD, each currently sporting a Zacks Rank #1 (Strong Buy), and Core Laboratories Inc CLB, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources is among the leading oil and gas explorers in the shale and unconventional resources in the United States. The company’s prime intention is to create more value for shareholders and generate lucrative returns from the capital invested in unconventional plays. MTDR has witnessed an upward earnings estimate revision for 2024 over the past 30 days.
Pioneer Natural Resources is a leading upstream energy firm with primary operations in the Permian basin, which is among the lucrative oil shale plays in the United States with fewer risks. Pioneer's total holding of more than 1 million net acres in the Permian basin will support long-term oil production growth. PXD has witnessed an upward earnings estimate revision for 2023 and 2024 in the past seven days.
Core Laboratories’ strong presence in the emerging shale plays and its global footprint will provide for steady growth rates going forward. CLB’s technology-heavy portfolio of proprietary products and services gives it the opportunity to optimize production from new and existing fields. It has witnessed an upward earnings estimate revision for 2024 in the past 60 days.
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