BP has announced it will buy Clean Energy Fuels’ renewable natural gas business for $155m, expanding its gas supply portfolio in the US.
Clean Energy Fuels, the largest provider of natural gas fuel for transportation in North America, builds and operates vehicle-fuelling stations, manufactures natural gas equipment and technologies and develops natural gas production facilities under the name Redeem.
A statement released by BP said its deal with Clean Energy Fuels would enable both companies to accelerate the growth in renewable natural gas supply and meet growing demand in the natural gas vehicle fuel market.
Alan Haywood, chief executive of BP’s supply and trading business, said the move reflected increased demand for natural gas and BP’s shift away from carbon-intensive projects.
“Demand for renewable natural gas is growing quickly and BP is pleased to expand out supply capability in this area,” he said.
“BP is committed to supporting developments towards 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 US.”
According to Reuters, renewable natural gas fuel, or biomethane, is produced entirely from organic waste and if used to fuel natural gas vehicle fleets, including heavy trucks, it is estimated to reduce greenhouse gas emissions by 70% compared to equivalent gasoline or diesel fuelled vehicles.
Under terms of the agreement, BP will pay $155m to take over Clean Energy’s existing and two new biomethane production sites along with supply contracts to third parties.
As part of the deal, Clean Energy Fuels has also signed a long-term biomethane supply contract with BP and will be able to expand its Redeem customer base and its North American network of natural gas fuelling stations.
According to the company, Clean Energy sold 60m gasoline gallon equivalents of the biomethane fuel last year to customers including logistics firm UPS and the City of Santa Monica’s transit agency.
UPS, the largest user of Redeem, currently fuels close to 400 vehicles in California and a portion of its delivery vehicle fleet in Texas.
Clean Energy’s president Andrew Littlefair told Business Wire the deal would ensure natural gas supply would meet increased demand.
“We started our Redeem fuelling business from scratch less than four years ago and have grown it into a significant enterprise,” he said.
“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.”
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