BP acquires Clean Energy’s RNG business

By Anna Simet | March 03, 2017

BP plc has acquired the upstream portion of renewable natural gas producer Clean Energy Fuels Corp.’s business, and signed a long-term supply contract with Clean Energy to support its continuing downstream renewable natural gas business.

The companies said the transaction, announced March 1, would enable both companies to accelerate growth in renewable natural gas (RNG) supply and meet the growing demand for natural gas vehicle fuel.

Clean Energy, which launched its first stations in California in 2013, said it sold 60 million gallon equivalents of its RNG, dubbed Redeem, in 2016, to customers across multiple states, including UPS, Republic Services, Ryder, Kroger and the City of Santa Monica’s transit agency.

Under terms of the agreement, BP will pay $155 million for Clean Energy’s existing production facilities in Canton, Michigan, and North Shelby, Tennessee; its share of two new facilities under construction, in Oklahoma City, Oklahoma, and Atlanta, Georgia; and its existing third-party supply contracts for renewable natural gas.

Clean Energy will enter a long-term supply contract with BP, which will continue to subcontract the operations of these facilities to Clean Energy.  Under the contract, Clean Energy will buy RNG from BP, and collect royalties on gas purchased from BP and sold as Redeem at it stations. The royalty payment is in addition to any payment under BP’s contractual obligation.

Closing of the transaction is subject to receipt of regulatory approvals, the companies said.

“Demand for renewable natural gas is growing quickly and BP is pleased to expand our supply capability in this area,” said Alan Haywood, CEO, of BP’s supply and trading business. “BP is committed to supporting developments toward a lower-carbon future and, working with Clean Energy, we believe we will be well-positioned to participate in the growth of this lower-carbon fuel in the U.S.”

“We started our Redeem fueling business from scratch less than four years ago and have grown it into a significant enterprise,” said Andrew Littlefair, Clean Energy’s president and CEO. “This transaction will help to take it to the next level. BP’s investment in and focus on renewable natural gas supply will ensure that Clean Energy can meet the growing demand of our customers for low-carbon, renewable fuel.”