BP to Buy Natural Gas Supplies Derived From Cow Manure in Iowa

(Bloomberg) -- Oil major BP Plc is stepping up its involvement in the production of natural gas from organic waste with an agreement to take supplies derived from cow manure in Iowa.

BP will obtain the gas -- or what the fossil fuel industry calls renewable natural gas -- from Gevo Inc.’s project in northwest Iowa and sell it in California, Gevo said in a statement Monday.

RNG production is a relatively new source of natural gas, with manure-based capacity increasing last year by 14%, according to BloombergNEF. BP, along with Chevron Corp. and Kinder Morgan Inc., is among companies attracted to RNG because it offers lower emissions than some other fuels, while also utilizing methane that would otherwise escape into the atmosphere. Methane is the second-biggest contributor to global warming, after carbon dioxide. Critics say such efforts are unlikely to make much difference and will only delay the energy transition.

Gevo says its Iowa project will be completed early next year and produce 355,000 million British thermal units of gas on an annual basis. It’s expected to generate $9 million to $16 million in cash per year for Gevo in late 2022.

BP announced in 2018 a $25 million trash-to-gas project with Republic Services Inc. And in December, it agreed to form a 50-50 RNG joint venture with Clean Energy Fuels Corp.

The gas produced by the Gevo project will be sold in California under agreements between BP and Clean Energy Fuels., which operates RNG fueling infrastructure, to take advantage of the state’s low carbon fuel standard program.

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