Arbor Renewable Gas LLC on Aug. 18 announced an underlying capital commitment from EnCap Investments LP, as the private equity provider continues to expand its investment into the energy transition space.

Headquartered in Houston, Arbor Gas is developing state-of-the-art, industrial-scale renewable gasoline and green hydrogen projects to accelerate the U.S. transition to low carbon fuels. The Arbor Gas team most recently constructed and operated the world’s largest methanol plant in Beaumont, Texas, a multibillion-dollar project that converted natural gas into commercial methanol.

“Our commitment to the Arbor Gas team is continuing EnCap’s tradition of investing in the right management teams to take advantage of a growing opportunity in the energy space,” commented EnCap Partner Kyle Kafka in the release.

With an initial focus on the Texas and Louisiana Gulf Coast, Arbor Gas’ strategy is to design, build, own and operate facilities that efficiently convert woody biomass into low carbon intensity renewable gasoline and green hydrogen.

“We believe the platform is well-positioned to play a critical role in the production of cost-effective, low carbon intensity fuels at scale and concurrently deliver compelling returns to our limited partners,” Kafka continued.

Mercuria Energy Co. LLC also participated alongside EnCap in backing the Arbor Gas team. Further details on the commitment weren’t disclosed.

The commitment follows the successful close in May of a new billion-dollar fund by EnCap targeting renewable energy investments.

Since its launch in 1988, EnCap has raised roughly $38 billion for energy investments primarily in upstream and midstream oil and gas companies. However, in 2019, the firm formed a new energy transition team to expand its investments to “companies that advance the nation’s transition to a lower-carbon future.”

“The Arbor Gas team has an extensive and proven track record developing, constructing, and operating large scale alternative energy projects,” said EnCap Managing Partner Kellie Metcalf in the Aug. 18 release adding: “We believe this is a unique opportunity to supply renewable gasoline and associated low-carbon fuels to strategic markets.”

The team at Arbor Gas is led by co-founders, Timothy E. Vail and John G. Kennedy III, both of whom have a depth of experience in the development, financing and operation of world-scale facilities.

“The Arbor Gas team has been financing, building and operating world-scale energy conversion facilities for decades, with a focus on safe and efficient operations,” said Vail, who serves as CEO and chairman of Arbor Gas, in the release.

“Bringing proven industrial scale development leadership has been the missing component to delivering cost competitive broad scale distribution of low carbon transportation fuels,” he continued. “With the funding of Arbor Gas, we now have the opportunity to use these skills to advance the global fuel decarbonization effort in a meaningful way.”

Concurrently with the announcement of the capital commitment on Aug. 17, Arbor Gas also revealed that SunGas Renewables, a subsidiary of GTI International, had entered into an exclusive joint development agreement to provide its gasification systems to Arbor Gas projects. Additionally, Haldor Topsoe, a global leader in carbon emissions reduction technologies, licensed its proprietary process and technology for methanol and gasoline synthesis.

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