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BP, Clean Energy Ink Deal to Extend Cooperation on RNG Supply

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Taking advantage of the growing demand from fleets for clean energy, BP plc (BP - Free Report) and Clean Energy Fuels Corp (CLNE - Free Report) have inked an agreement. The move will boost supply of renewable natural gas (RNG) through Clean Energy Fuels’ widespread fueling infrastructure.

Over the next several years, the supply of RNG is expected  to increase, as numerous RNG production facilities are under construction and many other projects have been announced. These developments will position BP to transport larger volumes to Clean Energy stations. Consecutively, Clean Energy will split the additional environmental credit revenues generated from the incremental RNG volume.

The increasing awareness to reduce emissions has propelled companies to use cleaner fuel or alternative sources of energy. RNG fuel, or biomethane, is being used increasingly in natural gas vehicles that include heavy-duty trucks. RNG fuel is expected to reduce greenhouse gas emissions by 70% compared with gasoline or diesel fuel vehicles. This makes it the cleanest fuel available and is produced completely from organic waste.

Clean Energy RNG brand Redeem™, which was first available in 2014, sold 22 million gasoline equivalent gallons (GGEs). The sales have surged more than 350% in 2018 to an estimated 100 million GGEs.

Redeem™ renewable natural gas is produced from biogenic methane, biomethane or biogas. It is a form of methane that is naturally generated by the decomposition of organic waste. The gas is processed, purified and transported to the interstate natural gas pipeline. Currently, this fuel is made available solely to Clean Energy customers.

The latest agreement emphasizes BP’s commitment to support the shift to a lower-carbon energy future. In April 2018, the company announced intentions to maintain a steady emission of carbon without compromising production growth and focus more on clean energy, following consistent requests from investors.

Producing higher natural gas and restricting methane leakage is likely to help the integrated energy major lower carbon dioxide emission through 2025 by roughly 3.5 million tons. To focus more on the production of cleaner energy, BP is planning to allocate roughly $500 million annually toward solar and wind plants to generate renewable energy.

Price Performance

In the past year, BP’s shares have gained 13.1% compared with the industry’s 9.2% rally.


Zacks Rank & Other Stocks to Consider

BP currently carries a Zacks Rank #2 (Buy).

A few other top-ranked players in the same sector are Petroleo Brasileiro S.A. (PBR - Free Report) or Petrobras SA and Shell Midstream Partners, L.P (SHLX - Free Report) . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.

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