BP and Clean Energy Fuels announced that BP will acquire the upstream portion of Clean Energy’s renewable natural gas business.
The oil and gas company will also sign a long-term supply contract with Clean Energy to support the firm’s continuing downstream renewable natural gas business.
The deal enables both companies to accelerate the growth in renewable natural gas supply and meet the growing demand of the natural gas vehicle fuel market.
The assets which BP will acquire are Clean Energy’s existing biomethane production facilities in Canton, Mich. and North Shelby, Tenn. as well as Clean Energy’s share of two facilities under construction in Oklahoma City, Okla. and Atlanta, Ga.
Renewable natural gas fuel, or biomethane, is produced entirely from organic waste. As a fuel for natural gas vehicle fleets, including heavy-duty trucks, it is estimated to result in 70 percent lower greenhouse gas emissions than from equivalent gasoline or diesel fueled vehicles.
Under terms of the agreement, BP will pay $155 million for Clean Energy’s existing biomethane production facilities, its share of two new facilities and its existing third party supply contracts for renewable natural gas.
Clean Energy, in turn, will be able to expand its Redeem customer base at its North American network of natural gas fueling stations, allowing customers to take advantage of the ease and affordability of switching to a fuel that is both renewable and can significantly reduce greenhouse gas emissions compared with diesel.
Clean Energy will buy renewable natural gas fuel from BP and collect royalties on gas purchased from BP and sold as Redeem at it stations. This royalty payment is in addition to any payment under BP’s contractual obligation.