BP is set to take a major stake in the $US36bn ($48bn) Asian Renewable Energy Hub in the Pilbara, in a move that could catapult the global oil and gas giant into the hydrogen space at large scale.
BP had negotiated the acquisition of a major stake in the hub with the current partners in the scheme – Intercontinental Energy, CWP Global, Vestas and Macquarie’s Pathway Investments – and would take charge as the project’s operators when the deal was complete, two sources with knowledge of the discussions said.
BP is believed to be preparing to announce its involvement at a major hydrogen conference in Rotterdam this week, ahead of the company’s annual meeting on Thursday.
The full scale of BP’s direct investment in AREH is not clear, but the oil giant is seen as likely to take an equity stake of around 30 per cent of the project, and become its operator. A spokesman for BP declined to comment.
The 26 gigawatt West Australian project is one of the biggest hydrogen and renewable energy projects under planning in the world and will cover an area 10 times the size of Singapore.
The project was designed to include 1753 wind turbines and up to 10,800 megawatts of solar capacity, spread over a total area of more than 660,000ha northeast of Port Hedland.
Renewable energy produced by the solar and wind farms would power 14GW of electrolysers to convert desalinated seawater into green hydrogen, which would then be converted to ammonia for export to Australia’s major trading partners.
The proponents originally planned to run an undersea electrical cable from the project to Singapore, but have since pivoted to using the energy to create hydrogen and produce ammonia for export around the world.
AREH was the centre of controversy in mid-2021 when Environment Minister Sussan Ley knocked back the project’s revised plans – despite having previously granted the renewable energy hub environmental approval and major project status – on the grounds it would have a “clearly unacceptable” impact on birdlife in the area.
The nearby 80 Mile Beach is a Ramsar-listed wetland and a major habitat for migratory bird species. Despite the knock-back, the project has still attracted interest from a number of potential major investors, with French oil and gas major Total also believed to have run the numbers on the project. While the federal government’s refusal of its environmental approvals for the revised project was a major blow, the consortium backing the plan has said it plans to make a final investment decision on the hub by 2025, with first exports by 2027.
BP is also looking at the potential production of hydrogen at its mothballed Kwinana oil refinery, albeit on a far smaller scale, and recently announced it would spend up to £18bn ($31.6bn) in Britain, including offshore wind farms and hydrogen production facilities in the north of England.
The Asian Renewable Energy Hub is one of a new breed of giant renewable projects aimed at propelling Australia into becoming a major clean energy exporter.
In March Mike Cannon-Brookes and Andrew Forrest boosted their financial backing for Sun Cable’s ambitious Australia-Asia PowerLink, which aims to link solar farms in the Northern Territory to Asia through an undersea cable.
In a presentation to an energy conference last week, Dr Forrest’s Fortescue Future Industries said it planned to be producing 12 million tonnes of green hydrogen in Australia by 2030. FFI’s biggest Australian project so far is a 5.4GW wind and solar project in the Pilbara.
CWP Global, one of the proponents of AREH, is also backing the 50GW Western Green Energy Hub on the south coast of WA, which it says could export 20 million tonnes of green ammonia each year.
If there is a formal announcement of BP’s involvement in the project this week, it will come amid a tightly contested federal election campaign in which funding promises for future hydrogen developments have come thick and fast.
Political wrangling over how to manage Australia’s energy transition has emerged as a key issue in the federal election campaign, particularly after National Party senator Matt Canavan upset Scott Morrison’s plan to neutralise the climate change issue by declaring the government’s promise to reach net zero emissions by 2050 was “dead”.
While Mr Morrison has committed funding during the campaign for the development of eight hydrogen hubs across the country, including one in the Pilbara, his government has also pledged to help fund the development of new natural gas projects, and has said it will support so-called “blue” hydrogen projects – those that produce hydrogen from natural gas – as well as green hydrogen developments.
Labor has also pledged to help support the development of a hydrogen industry in Australia, including a $3bn promise to back the development of a low-emission manufacturing sector.
Labor leader Anthony Albanese has largely tied his green energy credentials to a $20bn plan to upgrade transmission lines to connect renewable energy generation to the grid.
Extracted from The Australian