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A pipe that carries natural gas is shown at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
The blower skid for RNG is shown at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
Workers drill a new gas well at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
A gas well is shown coming out of the ground at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
The city skyline can be seen in a distance from the working face of the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
Modesto Dominguez, general manager, stands next to a gas well at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
Work continues on the working face at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
Work continues on the working face at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
A Republic truck runs along a road at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
Birds fly above the working face of the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
A gas well is shown coming out of the ground at the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
Birds fly above the working face of the McCarty Road Landfill, run by Republic Services Tuesday, May 31, 2022 in Houston. Archaea Energy is teaming up with the waste management company Republic to develop renewable natural gas projects, which reclaim methane produced in landfills to power generator and other applications of natural gas.
As the old saying goes, “One person’s trash is another person’s treasure.” But in this case, to be more specific, it’s another person’s renewable energy.
The Houston company Archaea Energy is teaming with Republic Services, one of the nation’s biggest waste management firms, to reclaim methane produced by landfills and refine it to fuel power plants, homes and vehicles. In addition to matching the quality of natural gas produced from wells, landfill methane, known as renewable natural gas, or RNG, has the advantage of emitting lower levels of greenhouse gases and meeting federal and state standards as a low-carbon fuel.
The companies plan to develop 39 RNG projects across 19 state, representing the nation’s single largest development of renewable natural gas. Five projects are slated for Texas: one in the Houston area, one in Beaumont, two in the Dallas-Fort Worth area and one in Amarillo.
“We're really excited about this,” Tim Oudman, Republic’s vice president of environmental services, said in an interview. “No one else has done something like this.”
Under the joint venture, Archaea Energy will develop, engineer, build and operate the RNG processing plants located at landfills owned by Republic Services. Construction is slated to begin later this year, with completion and commissioning of the plants scheduled through 2027.
The 39 projects are expected to generate approximately 12.5 million MMBtu, (million British thermal units) of RNG annually – equivalent to the average annual natural gas usage of nearly 200,000 U.S. residential customers.
Nick Stork, CEO of Archaea Energy, said the joint venture represents a good fit for both companies. Republic, based in Phoenix, was seeking a partner with the capabilities to develop more than three-dozen RNG processing plants and maintain consistency across the projects in both efficiency and sustainability.
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Archaea, meanwhile, specializes in a standardized approach to designing and building RNG facilities, which is expected to lower costs.
The two companies signed a five-year agreement to create a joint venture valued at $1.1 billion. Under the terms of the deal, Archaea Energy will invest approximately $800 million, and own 60 percent of the joint venture, and Republic will contribute about $300 million and own 40 percent.
RNG, also known as biomethane, is produced from wastewater, food waste and livestock waste such as manure. But the major source of RNG comes from landfills, according to an economic analysis by the Coalition for Renewable Natural Gas, a trade group that advocates for RNG in North America.
As solid waste breaks down in landfills, it emits gas — primarily the potent greenhouse gas methane — into the atmosphere. But the gas, which otherwise would contribute to global warming, can be captured through various technologies and refined into biomethane by removing carbon dioxide, hydrogen sulfide and other unwanted gases.
The resulting RNG is interchangeable with natural gas from wells and can be injected into the natural gas distribution system.
By mid-2021, 176 RNG facilities were operating and 220 were under construction or planned, the Coalition for Renewable Natural Gas found. North American RNG production reached 87.3 billion cubic feet last year, but still represents a tiny fraction of the U.S. natural gas market, which consumes about 100 billion cubic feet of gas per day.
Stork, Archaea’s CEO, said he first got into the RNG business as a landfill owner in Pittsburgh. “I started in this industry as a garbage man, owning landfills and trash trucks,” he said.
With his landfill partner, Richard Walton, Stork decided to build an RNG plant. When he and Walton, now Archaea’s president, realized they could build the project themselves at less than half the cost estimated by contractors, they formed Archaea Energy in 2018. (The company is named for single-celled organisms that produce methane gas as a byproduct of decomposition.)
Last September, Rice Acquisition Corp., a special purpose acquisition company or SPAC led by former executives of Pittsburgh-based EQT, the largest U.S. natural gas producer, combined Archaea Energy and a long-established renewable energy company, Aria Energy, to form the new Archaea Energy, with headquarters in Houston.
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The Rice team, which had previously invested in Archaea, sought to combine Archaea’s RNG expertise and technology with Aria’s larger base of operating assets to create an RNG producer of a sufficient size to be able to expand into the market for new RNG projects. As a result of the merger with Aria, Archaea’s revenues jumped by more than 10 times to $73.7 million in 2021. The company has about 100 employees in Greater Houston and 400 employees nationwide.
Archaea operates 19 landfill gas-to-electric projects, that use largely unprocessed landfill gas to produce power on-site, as well as 12 projects that refine landfill gas into pipeline quality RNG. In addition to its RNG joint venture with Republic, Archaea recently announced the acquisition of another 14 North American landfill gas-to-electric projects through a merger with NextGen Power Holdings of Calgary.
Archaea markets its RNG production based on fixed-price, long-term contracts targeting customers seeking stable, dependable supplies of lower-carbon natural gas to help them meet their climate goals. Customers include the University of California system, and FortisBC, British Columbia’s largest utility.
“Our customers that are using renewable natural gas today like the benefits of natural gas, but also want to decarbonize,” Stork said.
Republic Services has traditionally focused its RNG marketing on the transportation sector, where the biomethane can be converted to compressed natural gas (CNG) or liquified natural gas (LNG) to power fleets of trucks, said Oudman. Republic runs about 20 percent of its own vehicles on CNG, he said.
The joint venture, because of its ambition, is expected to grab the attention of transportation fuel markets, which view RNG as a cheaper way cut carbons emissions standards than alternatives, such as switching to electric vehicles. Proponents of RNG, such as the Coalition for Renewable Natural Gas, say it could provide a small piece of the puzzle when it comes to moving the country to a lower-carbon energy future.
RNG provides about two-thirds of the fuel for natural-gas powered vehicles, according to David Cox, founder and chief financial officer of Coalition for Renewable Natural Gas. Companies pay a premium for RNG because of its environmental benefits, which help them meet regulations and climate goals.
More: Read the latest oil and gas news from HoustonChronicle.com
RNG is projected to cost $7 to $20 per million British thermal units, according to 2019 study by the American Gas Foundation, an industry-financed research group. In comparison, spot prices for conventional natural gas are forecast to average $5.72 per million British thermal units by 2040, up from an average of $3.94 this year, according to the Energy Department.
But given the growing demand for cleaner sources of energy, the industry’s future looks bright despite the fuel’s higher costs, said Stork, Archaea’s CEO.
“We actually think that there's a supply-demand imbalance. There's more demand than there is potential supply of renewable natural gas,” he said. “There are only so many landfills and so many cows in North America, but there's growing demand.”
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