BP takes major position in one of world’s biggest green hydrogen hubs in Pilbara

Oil giant BP has taken a 40.5 per cent stake in the $30 billion Australian Renewable Energy Hub in the Pilbara, one of the biggest renewable and green hydrogen projects in the world.

BP will use its massive balance sheet and big project know-how to advance the project, which proposes a combined 26GW of wind and solar to create green ammonia for export and shipping fuels, and green hydrogen for the domestic market.

The transaction, first flagged last month, is one of the most significant to date in Australia – and indeed in the world’s transition to green energy – and it involves a major reshuffling of shareholdings in the project.

Australian-based founding shareholder CWP Global will see its stake reduced to 17.8 per cent, Macquarie’s Green Investment Group will emerge with a slightly bigger stake of 15.3 per cent, while InterContinental Energy, another co-founder will have a 26.4 per cent stake.

“The race to green energy is on,” says Alex hewitt, the chair of CWP Global which is also developing the even bigger 50GW Western Green Energy Hub in Western Australia and has a pipeline of 140GW of projects.

“Recent months have demonstrated the uncertainty and disruption that comes with over-reliance on fossil fuels.  Green hydrogen is a critical pathway for enhancing energy security and decarbonising hard-to-abate sectors, like mining, steel-making and long-range shipping.”

Hewitt says AREH is clearly the company’s most advanced project and finding a like minded oil and gas major is crucial to turn the project into reality.

“By partnering with bp, we bring in a new level of engineering know-how and technical expertise, a track record of developing large and complex projects in remote locations, and deep experience in trading energy products globally,” he said.

Hewitt told RenewEconomy that the partners had approached a number of big oil giants, but bp stood out as the most forward looking on green energy.

BP is looking to use AREH to supply some of its own electricity needs, and grab a significant part of the emerging green hydrogen market. 

At full scale AREH could produce 1.6 million tonnes of green hydrogen or 9 million tonnes of green ammonia per annum – making it one the largest green hydrogen projects in the world. It will also take up a lot of space, with the wind and solar farms spread over 6,500 square kms of land of the Nyangumarta people.

Financial close is expected in 2024, subject to approvals, with the first production in 2026.

Bp says the Pilbara is a good site because it has large expanses of land, good wind and solar resources, and capacity for major mining and manufacturing industries.

At full capacity, AREH is expected to abate around 17 million tonnes of carbon in domestic and export markets annually, which would equate to roughly 0.5 gigatonnes (Gt) of carbon savings over the lifetime of the project.

By contrast, the controversial Scarborough gas field proposed by Woodside petroleum is expected to produce 0.8 gigatonnes of Co2, although analysts say the real number of that project is a lot higher.

“AREH is set to be one of the largest renewable and green hydrogen energy hubs in the world and can make a significant contribution to Australia and the wider Asia Pacific region’s energy transition, ” said Anja-Isabel Dotzenrath, bp’s executive vice president of gas and low carbon energy.

“ It truly reflects what integrated energy is – combining solar and onshore wind power with hydrogen production and using it to help transform sectors and regions.

“It also reflects our belief that Australia has the potential to be a powerhouse in the global energy transition, benefitting from both its existing infrastructure and abundant renewable energy resources. 

Bp intends to use the project to assist its clients in the Asia-Pacific, particularly Japan and South Korea, to lower emissions, and as a significant source of renewable generating capacity.