BP and Clean Energy Fuels Corp. announced today that BP will acquire the upstream portion of Clean Energy’s renewable natural gas business. BP will sign a long-term supply contract with Clean Energy to support the firm’s continuing downstream renewable natural gas business. Renewable natural gas fuel, or biomethane, is produced entirely from organic waste. 

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. The assets which BP will acquire are Clean Energy’s existing biomethane production facilities in Canton, Michigan and North Shelby, Tennessee as well as Clean Energy’s share of two facilities under construction in Oklahoma City, Oklahoma and Atlanta, Georgia.

Closing the transaction is subject to regulatory approval. Clean Energy will continue to have access to a supply of its Redeem™ branded renewable natural gas fuel through a long-term supply contract with BP.

“Demand for renewable natural gas is growing quickly and BP is pleased to expand our supply capability in this area,” said Alan Haywood, chief executive officer of BP’s supply and trading business. “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 U.S.”

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.

“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 chief executive officer. “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.”

Clean Energy sold 60 million gasoline gallon equivalents of Redeem in 2016 to customers across multiple states including UPS, Republic Services, Ryder, Kroger and the City of Santa Monica’s transit agency. 

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