Archaea Energy Inc., which produces renewable natural gas (RNG) from organic wastes at landfills and farms, plans to supply RNG to NW Natural subsidiary Northwest Natural Gas Co. under a 21-year agreement.

UGI

“This agreement, our first with a U.S. utility, is a testament to the strength of our commercial offerings and highlights our ability to help utilities provide lower carbon options to their customers and achieve their sustainability goals,” said Archaea CEO Nick Stork

Under the agreement, NW Natural would purchase up to 1 billion Btu/year of RNG from Archaea for a fixed fee. RNG deliveries to NW Natural’s Oregon customers are to begin early next year, reaching the full annual quantity in 2025. NW Natural provides natural gas service to about 2.5 million people via 780,000-plus meters in Oregon and Southwest Washington.

“We’re excited to work with the experienced leadership at Archaea to help lower emissions on behalf of our customers,” said NW Natural CEO David H. Anderson. “This agreement is another meaningful step on the path to achieving our long-term carbon neutrality goal, while also helping communities close the loop on waste.”

Archaea’s Megan Light, investor relations vice president, told NGI that the agreement includes “environmental attributes” for NW Natural. In addition to providing fuel, the company would help the utility to decarbonize and provide customers with low-carbon power.

“At the end of the day, there is a bit of an intangible but they’re buying the environmental benefit alongside,” she said.

West Coast Wave

NW Natural said the Archaea agreement marks its third RNG contract under Oregon Senate Bill 98, which became law in 2019. The law encourages natural gas utilities to procure renewable energy. NW Natural’s website states the company last December struck an RNG deal with Tyson Foods Inc., and another in August with Element Markets. The three RNG contracts represent about 3% of NW Natural’s annual sales volume in Oregon, the utility stated. 

Elsewhere on the West Coast, state and local governments are taking action to phase out the use of conventional natural gas. For instance, cities and counties across California are seeking to amend building codes to limit natural gas usage. San Diego recently said it may impose a ban on natural gas in building construction beginning in 2023. In Washington, utilities are under pressure to go 100% carbon-neutral in 2030 and 100% carbon-free by 2045.

Rice Investment Group owns the majority stake in Archaea, which merged with landfill gas specialist Aria Energy LLC earlier this year. Archaea said its commercial strategy hinges on long-term contracts to provide commercial customers with a “reliable, nonintermittent, sustainable decarbonizing solution to displace fossil fuels.” 

Light said Archaea’s asset base spans 27 operating sites across the United States. A map in Archaea’s third quarter 2021 earnings presentation shows nine of the sites are RNG facilities and the remaining 18 are landfill gas to electric facilities.