The fields of southern Indiana are an unlikely proving ground for BP Plc’s $4.1 billion bet on renewable natural gas.
There, in the small, rural town of Medora, a first-of-its-kind modular facility will start operating on Wednesday, converting waste gas released from decomposing trash in the area’s landfill into a pipeline-ready product. BP hopes the facility is just the start of things to come: The company has five more modular facilities on track to go online this year and plans to commission as many as 20 around the country annually.
The work will yield both environmental and economic benefits, by keeping a potent greenhouse gas out of the atmosphere and selling it as an energy source, said Starlee Sykes, chief executive officer of Archaea Energy, the RNG producer BP purchased last year.
“Rather than letting that go into the atmosphere and create odors for communities, we’re going to capture that gas, refine it and sell that gas back into the pipeline,” she said. “Our goal is to make a large, material business that’s going to be a strong profit center for BP.”
The facility represents the next phase of the British oil giant’s push into RNG, as the company looks to leverage Archaea’s modular designs to rapidly deploy facilities across the US. The plants, generally prebuilt in Pennsylvania, can be installed in nine months instead of the 18 to 24 months it would typically take to construct them on site.
BP’s Archaea Energy’s renewable natural gas plant operates at a landfill in Medora, Ind.Source: BP Plc
Conservationists have warned renewable natural gas is far from a long-term solution to fight climate change, since the product is still a greenhouse gas — and an especially powerful one at that, pound for pound at least 84 times more powerful than carbon dioxide at warming the atmosphere in the first 20 years after it’s released. When burned to produce electricity or heat, landfill-harvested methane produces carbon dioxide just like its fossil-based cousin.
The Medora plant is firing up amid surging interest in RNG, which is increasingly valued not just for helping oil companies shrink the carbon intensity of their products and hit net-zero targets — but also its economic benefits. RNG, converted from the mix of methane, carbon dioxide and other materials wafting from cow manure at farms and trash at landfills, is chemically no different from conventional natural gas. That means it can be transported in pipelines, compressed to power trucks or burned to generate electricity.
And while it is generally more expensive to produce than fossil-based methane, producers of RNG can tap into a suite of incentives, including credits under California’s Low Carbon Fuel Standard and the federal Renewable Fuel Standard that mandates the use of alternatives beyond gasoline and diesel. An alternative fuel tax credit worth 50 cents per gallon and an investment tax credit that was expanded in last year’s climate law — which can be worth as much as 50% of project costs — can provide additional support.
The incentives are helping drive the oil industry’s embrace of renewable natural gas. Last November, Shell Plc said it was buying Nature Energy Biogas A/S for nearly $2 billion — an acquisition that would make Shell the largest European producer of RNG. Chevron Corp. has worked with Brightmark LLC to produce dairy biomethane to fuel long-haul trucks.
Read More: Shell Buys Nature Energy in $2 Billion Push Into Biogas
Some environmentalists argue it’s a false solution. Burning methane from landfills and manure ponds to produce energy is better for the climate than letting it escape unfettered into the atmosphere. But some of that methane will still leak from processing equipment and pipelines. What’s more, critics argue, relatively small amounts of RNG are harvested at each site — even as the operations effectively prolong the world’s reliance on natural gas.
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