UPDATE: Woodside’s US hydrogen project part of a $5 bil low-carbon investment program
Australia's Woodside Energy has proposed its first overseas clean hydrogen plant as the natural gas producer seeks to add low-carbon products to its business mix.
Woodside, which is planning to spend $5 billion on decarbonization activities by 2030, announced 7 December its third project in the space this quarter to underscore its climate ambitions.
The ASX-listed company said it had secured a lease and purchase option for 38 hectares of vacant land to develop the H2OK facility at the Westport Industrial Park in Ardmore, Oklahoma, targeting the heavy transportation sector.
Initially, the plant will produce up to 90 metric tons (mt) of hydrogen per day based on a 290-MW electrolysis capacity. Woodside said the location allows the plant to expand its production to 180 mt per day with a 550-MW electrolysis capacity.
"With H2OK we will be bringing Woodside's extensive liquefaction experience from LNG to deliver large-scale hydrogen production," Woodside CEO Meg O'Neill said in a statement.
"H2OK would be located in a highly prospective part of the US market, close to national highways and the supply chain infrastructure of major companies that have signaled their interest in securing reliable, affordable, and lower carbon energy," she added.
Woodside plans to source power for the project from Oklahoma's existing grid, a large portion of which is wind powered, and acquire Renewable Energy Certificates to abate any remaining emissions.
Wind power accounted for more than one-third of the state's net electricity generation of 82.3 million TWh in 2020, according to the US Energy Information Administration. Overall, 40% of Oklahoma's electricity came from renewable sources last year.
Woodside has completed the preliminary design for the modular, scalable production facility for H2OK and may issue tenders for front-end engineering design before the end of this year. The project is due for a final investment decision (FID) in the second half of 2022 and would begin production in 2025.
The facility will aim to meet hydrogen demand from heavy-duty trucks and equipment, warehouse forklifts, ground-handling equipment, and fuel-cell microgrids for warehouses and data centers, according to Woodside.
Separately, Woodside signed a memorandum of understanding with Nasdaq-listed Hyzon Motors to develop zero-carbon hydrogen supply for medium- and heavy-duty commercial vehicles in Australia and the US.
The two companies will explore opportunities to build green hydrogen production facilities and supply infrastructure. Hyzon, which makes fuel cell-powered trucks, could use the hydrogen to supply its customers.
Parker Meeks, chief strategy officer of Hyzon, a spinoff from Singapore's Horizon Fuel Cell Technologies, suggested the partnership could potentially help his company reduce infrastructure development costs for long-range trucks.
"This is particularly relevant for the Australian market, where freight corridors face especially long distances between refueling, as well as for coast-to-coast trucking in the US," Meeks said in a statement 7 December.
Some industry players—including Trafigura—believe trucks will provide the best entry point in the embryonic marketplaces for clean hydrogen. Fuel-cell trucks are already up-and-running in the market, and the infrastructure costs for refueling them are relatively low compared with other hard-to-abate sectors like steelmaking.
"I expect the fuel cell electric truck market to grow rapidly as there is increasing pressure to reduce the tailpipe emissions of freight movement," said Tim Sasseen, board president of the United States Hydrogen Alliance trade group.
"Fuel cell electric trucks are the only zero-emission option that can replace a diesel truck in terms of distance and performance," he told Net-Zero Business Daily.
As part of the US infrastructure bill signed into law last month, the federal government will provide $2.5 billion in grants to public entities to deploy low-carbon transportation projects including hydrogen fueling infrastructure.
"We expect significant infrastructure funding from the federal government, which will be administered to infrastructure projects through state agencies and metropolitan planning organizations," Sasseen said.
If the US is to reach carbon neutrality, IHS Markit estimates 20% of the light-duty vehicle fleet, 40% of medium- and heavy-duty trucks, and 50% of transit buses will be powered by hydrogen by 2050. This translates to 27 million mt/year of demand.
"We expect to see large-scale hydrogen production internationally by 2030, and Woodside intends to play a role in this emerging global industry," Woodside Executive Vice-President for Sustainability Shaun Gregory said. "Our collaboration with Hyzon supports Woodside's strategy to develop lower-carbon energy products and services alongside our existing portfolio of energy assets."
Woodside, one of the world's largest LNG suppliers, has committed to net-zero GHG emissions from its operations by 2050. In the interim, the Perth-based company aims to cut its emissions by 15% before 2025 and by 30% before 2030, relative to the average level between 2016 and 2020.
Woodside has stated it plans to meet the goals via operational efficiency enhancements, carbon offsets, carbon capture and storage (CCS), and blue and green hydrogen development.
In an investor update 8 December, O'Neill said the company plans to invest $5 billion in new energy products and low-carbon services—including sequestering emissions from potential CCS projects for third parties—by 2030.
"This significant investment…will position Woodside as an early mover in the new energy market and support the decarbonization goals of our customers," she said, added: "We have a growing portfolio of new energy opportunities with line of sight to producing hydrogen, ammonia, and renewable power this decade."
Woodside has been mulling over plans to build a 5-MW AI-enabled solar power facility in California, the US and two 50-MW solar plants near Karratha, Western Australia.
In October, the company unveiled a hydrogen project in southern metropolitan Perth, Western Australia, where the proposed capital expenditure exceeds A$1 billion ($711 million).
Based on Woodside's proposal, the plant will initially produce 300 mt of hydrogen per day from a 35-MW electrolyzer and natural gas reforming. It can scale up to 1,500 mt per day.
Subject to an FID, the company plans to begin construction in 2024 and export the hydrogen in the form of ammonia or liquid hydrogen beginning in the second half of this decade.
However, the project's environmental credentials were questioned by some observers, including former Australian Prime Minister Malcolm Turnbull. Woodside did not announce any CCS or renewable expansion projects along with the hydrogen plan and only said it will offset emissions by carbon offsets.
In November, Woodside proposed a 300-MW electrolyzer in Bell Bay, Tasmania, the Australian island state, which will be fully powered by renewable energy.
The plant's hydrogen output could be converted into 200,000 mt of ammonia per year for exports to Asia and Europe or for domestic use, according to the company. The production can be expanded as Woodside will have the capacity to scale the electrolyzer up to 1.7 GW.
An FID is due in 2023, with construction and commissioning expected to take approximately 24 months.
Woodside announced the hydrogen projects as it decided to go ahead with the BHP Petroleum merger and the $12-billion Scarborough-Pluto LNG project.
The merged entity is expected to emit over 6 million mt of CO2 equivalent per year, increasing Woodside's operational emissions by more than 75%, according to IHS Markit estimates. Nonprofit Climate Analytics said direct and indirect emissions from the LNG facility will amount to 1.37 billion CO2e in its expected lifespan.
IHS Markit Principal Research Analyst Jason Keely said Woodside's recent interest in hydrogen and ammonia projects was part of its evolving strategy to meet long-term decarbonization goals. "Woodside plans to grow oil and gas production over the next several years, so it will need to offset baseline and growth emissions—a difficult task," he said.
Keely suggested that the projects would make strategic sense as Woodside is already handling gaseous products as an exploration and production company, especially for blue hydrogen produced from gas reforming with CCS.
"The company's knowledge of the infrastructure picture in Western Australia, where its operations are currently focused, may give it a competitive advantage if it green lights a project there," he added.
--Adds CEO's comments on the company's low-carbon investment plans from an 8 December investor update.
- To jumpstart hydrogen economy, China needs more than subsidies for fuel-cell vehicles
- Absent from COP26, oil companies zero in on hydrogen, CCS
- EU-US green steel trade deal bullish for hydrogen
- Chemical, renewables players pile into green hydrogen as EU readies the road
- Rotterdam Port spots barriers to industrial CCUS, hydrogen plans
- Plug Power inks green hydrogen deals with Airbus, Phillips 66
- Investment firm Ardian, FiveT Hydrogen launch $1.7-billion fund for clean hydrogen, world’s largest
- Plug Power to build 30 mt/day green hydrogen plant in California
As we all embark on a new year of discoveries, may curiosity light your way forward. Wishing health, peace, and h… https://t.co/cxz7jIxMUy