At last week’s Australian Petroleum Production and Exploration Association Conference, Woodside Petroleum’s chief executive officer Peter Coleman spoke about the “huge” opportunity in hydrogen energy that will develop for the company over the next 10-15 years. Coleman sees the Japanese market for hydrogen as a promising destination for Woodside’s substantial reserves of natural gas, and indicated the company is evaluating alternative methods of hydrogen transport including as liquid H2, a liquid organic hydride, and ammonia.
Woodside describes itself as “Australia’s largest independent oil and gas company.” Its geographic footprint includes exploration and development activities in “Australia and the Asia-Pacific region, the Atlantic margins and sub-Saharan Africa.” It reported 2017 revenues of AUD 3.6 billion (USD 2.7 billion) and net profit of AUD 1.0 billion (USD 0.8 billion). For comparison, annual revenues for Saudi Aramco, the world’s largest petroleum company, are approximately USD 500 billion. Even though Woodside has reserves (“contingent resources”) of only 5 billion equivalent barrels of oil (BOE), compared to 311 billion for Aramco, it is responsible for 7% of the global supply of liquefied natural gas.
Woodside’s Australian natural gas is extracted from geological formations off the country’s northwestern coast. Most of the produced gas is processed into LNG and sent to offshore markets. Japan has been a destination since 1989; China since 2002.
During his remarks at the APPEA Conference, Coleman said that the company is taking “a keen interest in the development of hydrogen as an energy source, driven largely by Japan. Our foundation customers were Japanese and they remain very important partners for us.”
Woodside’s “carbon and climate approach” is centered around natural gas – not as a part of the problem but as a part of the solution.
In 2016, we elevated climate change in our risk register and evolved how we will manage this risk. We have refined our approach to Carbon and Climate Change and published a Climate Change Policy. Our approach highlights our belief that the benefits of natural gas will see gas and LNG play an increasingly important role globally in reducing greenhouse gas emissions, supporting intermittency of renewable energy and improving local air quality. We will also continue to pursue energy efficiency, [and] support global carbon pricing . . .
“Woodside’s Strategic Response to Climate Change Risk,” May 2018
(For the record, per unit of energy, carbon dioxide is emitted from the combustion of natural gas at about 60% of the rate associated with the combustion of coal.)
But Coleman made it clear that Woodside’s strategic response will continue to evolve in response to market opportunities. “It’s worth remembering that LNG is predominantly methane, containing four hydrogen molecules,” he said at the conference. “Japan is already using our LNG to generate hydrogen. If Japan wants its future energy needs to be met through a combination of LNG and hydrogen, we are well-placed to deliver both.”
In later remarks to the press, Coleman said that “it makes more sense to produce hydrogen in Australia and then ship it, rather than sending liquefied natural gas (LNG) to Japan to make hydrogen as the production process requires a lot of energy, which Japan is short on.”
The Pilbara region of Western Australia is host to a number of current and potential renewable energy installations. The backers of one project, the Asian Energy Hub, announced last month a 50% increase in investment (to AUD 20 billion / USD 15 billion) and planned capacity “to power local industry and produce hydrogen.” The reference to local industry presumably includes Yara’s Pilbara plant, which is currently studying the feasibility of producing green ammonia using renewably generated electricity. (Click here for Ammonia Energy’s post on the topic.)
Coleman indicated that Woodside may become another customer for the green electricity. A Reuters account of Coleman’s remarks reported that the company “is looking to tap the abundant sunshine in Western Australia’s Pilbara region for the energy needed to release hydrogen from methane.” Although Coleman was not explicit about which process the company would use to effect the hydrogen “release,” his mention of ammonia as a potential hydrogen carrier suggests that solar-powered ammonia production is a leading option. An Australian Financial Review account included mention of a “process [that] reforms methane – using super-critical heated steam – into ammonia . . . which is then stabilised to be transported at atmospheric pressure.”
The Australian Financial Review story included Coleman’s best guess for the time frame of the hydrogen play. “It’s a game-changer is hydrogen, but it’s a 2030-plus commerciality. That’s not that far away, so we are thinking about that today as we start to make our next steps around what power generation looks like and who we are partnering with to understand where that goes … CSIRO is on the same page as us, the Japanese are definitely on the same page, but it’s a few years away yet.”