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Shell to Buy Biogas Producer in $2 Billion Deal – WSJ

Acquisition of Danish company comes as major oil companies expand in renewable fuels

Shell and other top oil and gas companies are looking to tap into increasing demand for renewable natural gas as their customers try to trim greenhouse-gas emissions. (Peter Boer/Bloomberg)

Jenny Strasburg, WSJ

LONDON
EnergiesNet.com 11 28 2022

Shell PLC SHEL -0.58%decrease; red down pointing triangle has agreed to buy a European producer of biogas for nearly $2 billion, the latest move by a major oil and gas company to push into renewable fuels.

The London-based company said Monday it would buy Denmark’s Nature Energy Biogas A/S, which produces a renewable fuel called biomethane that can replace conventional natural gas in heavy road and marine transport, industry and heating. Nature Energy is Europe’s biggest producer of biomethane from organic waste.

The deal comes as some of the world’s largest oil-and-gas companies look to tap into rising demand for renewable natural gas as their customers try to cut greenhouse-gas emissions. Shell and British rival BP PLC BP -1.53%decrease; red down pointing triangle are shifting more resources into lower-carbon energy to meet long-term decarbonization targets, even as they continue to make most of their money producing and trading oil and gas.

Shell’s acquisition comes just six weeks after BP said it agreed to buy U.S. biogas producer Archaea Energy Inc. LFG -0.04%decrease; red down pointing triangle for $3.3 billion plus debt, for a total of $4.1 billion. And Chevron Corp. earlier this year agreed to pay $3.15 billion for Iowa-based Renewable Energy Group in one of its biggest clean-fuel investments.

Biogas can be captured from decomposing landfill and farm waste and made into alternative fuel for heavy trucks and power plants. The decomposition process releases methane, a harmful greenhouse gas. The goal is to cut emissions by processing the biogas into usable, transportable fuel.

Nature Energy, which started in 1979 as a natural gas distributor, opened its first biogas plant in Denmark in 2015. It now has 14 biogas plants in operation and more than two dozen additional planned projects in Europe and North America.

Nature Energy’s 2022 biogas production equates to about 3,000 oil-equivalent barrels a day of renewable natural gas, about half of Archaea’s.

Shell said Monday that one of its subsidiaries agreed to buy Nature Energy from Davidson Kempner Capital Management LP, Pioneer Point Partners LLP and Danish pension-fund manager Sampension Livsforsikring A/S. Nature Energy has 420 employees in Europe and North America and will initially keep its brand name as a Shell subsidiary, the company said.

Shell and BP are both looking to use their global oil-and-gas trading arms to reach existing customers willing to pay a premium for cleaner fuel, and to tap new markets as they invest in expanding the biogas businesses. Neither deal changes the dividend or buyback plans of Shell and BP, the companies have said, in a year of huge cash payouts to investors.

Write to Jenny Strasburg at jenny.strasburg@wsj.com

Appeared in the November 29, 2022, print edition as ‘Shell Sets $2 Billion Deal to Buy Denmark’s Nature Energy Biogas’.

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