Oil conglomerate BP is planning to sell off Archaea Energy, the renewable natural gas business it acquired four years ago for roughly $4.1 billion, BP CEO Meg O'Neill said on the company's earnings call Tuesday. The announcement comes amid BP’s notable investment in the business, but shifting strategy in the energy sector.

During the call, executives outlined a plan to simplify BP's portfolio. O'Neill characterized Archaea as a “capital-intense” approach to the biogas market, contrasting it with the “capital-light” strategy the company now favors. She noted that BP has already fielded interest from potential buyers for the Archaea business.

“If there’s somebody who sees an opportunity to create additional value, who will invest in that business, who will build on the foundation, because our team has made really good progress in improving the profitability of that business, then that will be a good outcome,” O'Neill said.

Over the past decade, a growing number of landfill, wastewater treatment plant and farm operators have installed systems to convert biogas into RNG. The RNG production process captures methane emissions from organic waste—methane that would otherwise exacerbate climate change—and transforms them into fuel. This fuel carries a lower carbon intensity than fossil natural gas because it utilizes carbon that would otherwise enter the atmosphere.

In recent years, other traditionally oil-and-gas-focused energy companies have also announced investments in the biogas sector, particularly as the European Union has encouraged projects through the REPowerEU energy plan. Among that cohort is Shell, which acquired Europe’s largest RNG producer, Nature Energy, for nearly $2 billion in early 2023.

Nevertheless, analysts see room for growth in the biogas industry so long as supportive policies such as the U.S. federal Renewable Fuel Standard remain in place. A report released by WoodMackenzie in 2024 found that roughly 90% of the potential for landfill-gas-to-RNG projects in the U.S. remains untapped. The report also noted rapid consolidation in the RNG space, with seven developers accounting for 60% of active projects.

BP’s acquisition of Archaea still represents the high-water mark of transaction value in the U.S. RNG sector. Prior to that deal, a fund managed by BlackRock acquired anaerobic digestion company Vanguard Renewables for $700 million in 2022.

Waga Energy, a French biogas company expanding rapidly in North America, also recently sold to EQT Infrastructure in a deal valued at approximately $331 million. At the time of that transaction, Waga had signed agreements for 13 projects in the U.S., with a total of 50 RNG production units either operational or under construction worldwide.

When BP acquired Archaea Energy, the company operated 50 RNG and landfill-gas-to-energy projects across the U.S. and maintained a development pipeline of 80 additional projects.

In the years since, BP has continued to expand the business. It named Starlee Sykes Archaea’s CEO in 2023, and subsequently launched an updated modular design intended to streamline project development at new sites.

Archaea has announced progress on projects at landfills owned or operated by WM, Republic Services, Waste Connections, Rumpke and Casella Waste Systems.

Last year, BP executives said they expected Archaea Energy to reach positive cash flow by 2026.