Shell Buys Renewable Natural Gas Producer For $2 Billion

Shell Buys Renewable Natural Gas Producer For $2 Billion
Shell has reached an agreement to acquire Nature Energy Biogas for nearly $2 billion.

Shell Petroleum, a wholly owned subsidiary of Shell, has reached an agreement with Davidson Kempner Capital Management, Pioneer Point Partners, and Sampension to acquire Nature Energy Biogas for nearly $2 billion.

The acquisition will be absorbed within Shell’s current capital range, which remains unchanged. Based in Denmark, Nature Energy is a producer of Renewable Natural Gas (RNG) from agricultural, industrial, and household wastes.

By purchasing the shares in Nature Energy, Shell will acquire the largest RNG producer in Europe, its portfolio of cash-generative operating plants, associated feedstock supply, and infrastructure, its pipeline of growth projects, and its in-house expertise in the design, construction, and operation of innovative and differentiated RNG plant technology.

This acquisition will further increase Shell’s ability to work with its established customer base across multiple sectors to accelerate its transition to net-zero emissions. It will also support Shell’s ambition to profitably grow its low-carbon fuel production and customer offering in our world-leading customer-facing marketing business.

“Shell’s competitiveness in low carbon fuels derives from capabilities across the value chain, combining a world-class Trading and Supply organization with access to differentiated technology and production assets. Acquiring Nature Energy will add a European production platform and growth pipeline to Shell’s existing RNG projects in the United States.”

“We will use this acquisition to build an integrated RNG value chain at a global scale, at a time when energy transition policies and customer preferences are signaling strong growth in demand in the years ahead,” said Huibert Vigeveno, Shell’s Downstream Director.

The transaction is subject to regulatory approvals and is expected to close in the first quarter of 2023. Nature Energy is cash generative, and the acquisition is expected to be both accretive to Shell’s earnings from completion and deliver double-digit returns.

Nature Energy established its first biogas plant in Denmark in 2015 and now has 14 operating plants with associated infrastructure, feedstock arrangements, and current 2022 production of around 6.5 million Btu per year.

The company also has a pipeline of around 30 new plant projects in Europe and North America. More than a third of these projects are in the medium to late development stage in Denmark, the Netherlands, and France and could deliver up to 9.2 million Btu per year by 2030, subject to future final investment decisions and relevant regulatory approvals.

As for RNG, also known as biomethane, it is chemically identical to conventional natural gas and can be used in existing transmission and distribution infrastructure. This makes it a competitive option to help decarbonize multiple hard-to-abate sectors including commercial road transport, marine, heating, and heavy industry. The sustainability benefits are amplified by the processing and use of methane that could otherwise be released into the atmosphere from the decomposition of organic by-products and waste.

Shell has one existing RNG operational site in North America as well as a wide range of RNG and bioLNG customers, including large corporate, road haulers, and marine customers.

To contact the author, email bojan.lepic@rigzone.com


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