Australia’s “biggest” green hydrogen project inches closer to reality with design contract

The giant 2.2 GW Central Queensland Hydrogen Project (CQ-H2) – described by the state government as the biggest green hydrogen project in the country – has moved another step towards its 2028 opening target, with the appointment of Worley to do the Front End Engineering Design (FEED) work.

Worley will has one year to provide a study for two parts of the project, the hydrogen production facility (HPF) and hydrogen transfer facility (HTF), and it’s also doing the pre-FEED study for the hydrogen liquefaction facility (HLF).

The enormous project, backed by a consortium of Australian, Singaporean and Japanese companies,  includes plans to install up to 640 megawatts (MW) of electrolysers and produce up to 200 tonnes per day of gaseous renewable hydrogen by 2028, to be used as ammonia or liquid hydrogen.

The Queensland government wants to grow the facility to 2.24 GW of electrolysers to produce 800 tonnes per day  by 2030. To achieve that, it will need multiple gigawatts of new wind and solar capacity.

A FEED is the precursor to EPC (engineering, procurement and construction), and figures out technical issues and provides a rough cost. I will enable a final investment decision to be made by late 2024.

A feasibility study was done in 2022 which decided the huge project was technically feasible and commercially viable – with appropriate government support.

It got a cash injection in May when ARENA put in $20 million alongside $15 million from the Queensland government.

But kicking in the majority of the funding for the FEED study are the CQ-H2 consortium partners which are paying $81.8 million. These are Stanwell Corporation, Iwatani Corporation, Kansai Electric Power Company, Marubeni and Keppel Infrastructure.

The Asian buyers in the consortium have made it clear what price they will pay for green hydrogen, so Stanwell has visibility over “the price and the cost it needs to be to make this work”, Stanwell future energy executive general manager Steve Quilter told the Queensland Clean Energy conference on Tuesday.

Capitalising on existing infrastructure

The Gladstone location was key as it has a deepwater port, it’s close to energy connections and a workforce experience in working with this kind of technical equipment, and it’s close to manufacturing facilities, says Quilter.

“Gladstone in Queensland is a great jump off point to Asia and Japan, it’s a short sailing route, and when you when you’ve got the stuff that’s been refrigerated and compressed down to minus 253 degrees the less time it’s on a boat, the more of it that makes it to the other end,” he says.

Worley Australia and New Zealand president Gillian Cagney says the project will turn the region around Gladstone, which is already a hub for LNG exports, into a renewable energy exporter as well.

“We will be bringing together our local and global hydrogen technical expertise along with our breadth of services, spanning multi-discipline engineering, ports and infrastructure capability, sustainability and environmental services and our in-house construction and commissioning expertise,” she said in a statement.

Big expectations

If the project goes ahead as forecast, the government is anticipating it might deliver a jobs bonanza of 8,900 roles as well as adding $12.4 billion to the state’s gross state product over the 30 year life of the project.

Currently, the state is expected to receive $1.27 billion in royalties in fiscal 2023 alone from the $70 billion LNG export industry.

Worley says CQH2 is among the largest 10 in the world at pre-final investment decision stage, but the Queensland government is counting 50 green hydrogen projects underway in the state.

There’s Fortescue Future Industries’ 500 MW Gibson Island project, which will make circa 191 tonnes per day capacity to feed Incitec Pivot’s company-located ammonia plant if it goes ahead.

And, if the Abbot Point project is built  it would be the largest exporter, promising to ship 1.8 million tonnes of ammonia a day, making 1500 tonnes of its own ammonia a day, and liquefying 20 tonnes of hydrogen a day.

Green hydrogen part of coal replacement plan

With the writing on the wall starting to become very clear for coal fired power, Stanwell, the Queensland government-owned company leading the CQH2 consortium, began working on the project in 2018.

The bulk of Stanwell’s energy generation is still in coal. It has around 3 GW of renewable energy and storage committed or about to be committed, but needs as much as 15 GW to replace its fossil fuel generation.

Green hydrogen was a way to capitalise on possible demand from Japan and as a way to shift its engineering experience and employees away from coal, Quilter says

“It’s an opportunity to build a new industry, it’s energy intensive which is what we do, and that provides a natural pathway for our people to go into,” he says.

“For hard to abate parts of our economy, and also for overseas states where they don’t have that natural resource, this is a great opportunity.”

CQH2 is also an opportunity for Stanwell to partner with up-and-coming hydrogen technology companies, one of which is Hysata, into which the state-owned company recently invested $3 million.

Hysata claims an efficiency rate of 95 per cent for the electrolyser technology it is commercialising, which is much better than conventional electrolyser technology.

“We’ve partnered with Hysata to trial a 5.3 MW electrolyser [in Rockhampton]. There’s some milestones to be met along the way, but again, that’ll be installed in the FAITH energy testing hub, some supporting balance of plant equipment to go round it, and be able to test it in real world at scale conditions,” Quilter says.