The company is casting an eye over fields that once supplied gas for Australia's first LNG exports, scanning a 160 kilometre radius around Karratha, Western Australia.  

 

Much of the focus of yesterday's annual general meeting was on climate goals and Paris commitments, but along the way investors learned plenty about Woodside's future plans on carbon farming, sequestration and pricing, along with hydrogen development. 

 

However nothing was revealed about the input costs or expected returns. This is because on the latter, the company doesn't know and on the former, won't tell. 

 

It is receiving government money for a Tasmanian hydropowered green hydrogen project, but little was said on Bell Bay yesterday. 

 

CEO Peter Coleman said the Angel gas and condensate project was a leading CCS candidate, but no more than that. 

 

The field  is inshore from the original NWS North Rankin and Goodwyn fields and 115 kilometres off the coast of Western Australia in shallow 80 metre deep water in permit WA-3-L. 

 

For Woodside to realise its Western Australia hydrogen plans it will need to deploy CCS but the maligned practice is misunderstood. 

 

"Reservoir quality is key," he said. They must also be proximate. 

 

Woodside has those in spades, unlike the coal-fired plant owners that took a shot, and goverment money, for CCS in the 2000s and failed.  

 

Angel was discovered by the former Woodside-Burmah in 1972 but online came online in 2008 at a cost of A$1.6 billion. Gas is sent through a pipeline to the North Rankin Platform and then to the Karratha gas plant. 

 

In June last year Woodside filed an environmental plan with the offshore petroleum authority for its Greater Western Flank development which involved tying the planned Lambert Deep development back to Angel. Drilling begins 2023. 

 

Woodside could also use other depleting North West Shelf fields and is looking at one onshore reservoir, the CEO said. 

 

Santos is much closer to sanctioning its own, far simpler onshore CCS project using depleted reservoirs in the Cooper Basin. Project Moomba will have an initial capacity of 1.7 million tonnes per annum, which could rise to 20MMtpa, boss Kevin Gallagher has said.

 

BP will invest A$20 million on sanction and once the project is eligible for Australian Carbon Credit Units as part of a good standing arrangement with Canberra after it pulled drilling in the Great Australian Bight in 2016. 

 

Bernstein's exhaustive hydrogen report of mid-2020 flagged Australia's two largest oil companies as leaders in hydrogen development, at least in terms of forward plans. 

 

Coleman, who leaves his position next week, said Woodside could also deploy the practice at its Browse fields "downdip of the aquifer". 

 

The Browse fields are high CO2 at 10%. This has driven both activist pressure and raised questions of how the greener BP and Shell can square the project with their carbon ambitions and climate conscious major investors. 

 

Last year after the price crash pushed Browse sanction to "from" 2023 Coleman told analysts Woodside was looking at CCS from the project's start up date, rather than 10 years down the line as the original concept stipulated. 

 

He said there would be no additional cost "but I'd hate to say that to a regulator". Rather than the gas being stripped from the stream then vented it could be sequestered from day dot. 

 

Venting 10% CO2 for years from multi-Tcf fields coupled with the energy load to send gas over 900km via pipeline to shore before liquefaction has always meant Browse was one of the more carbon intensive new LNG projects globally. CCS would cut some of that. 

 

Onshore-to-offshore CCS is tricky. There is one project offshore Victoria that has been the result of decades of work by the government- and industry-sponsored CO2-CRC but only takes the CO2 created from the gasification of stranded La Trobe Valley brown coal as part of a Kawasaki and Australian-goverment led hydrogen project. 

 

The legacy Gippsland Basin fields are closer to shore than Angel. 

 

‘Green' hydrogen using renewable-powered electrolysers to split water into its simple components is energy-intensive and costly. 

 

"The largest, best in class green hydrogen developments create 5000 tonnes of hydrogen," he said. "That's a fraction of the gas we produce every day."  

 

Though Coleman, never known as a sunbeam, may have sounded dour on the issue yesterday he was ahead of the curve to begin discussing the idea in 2018, seeing obvious symbiosis  in LNG customer Japan's hydrogen plans.

 

Mining billionaire Andrew ‘Twiggy' Forrest is a relatively later, but very enthusiastic, arrival to the party. His plans are entirely green and very, very big. His company did begin a smaller trial study with CSIRO in 2018 worth A$20 million. 

 

The FMG founder also doubts CCS can ever work. 

 

Woodside's plans remain to develop ‘blue' hydrogen or that made from steam reforming of methane, which is also the cheapest way to produce hydrogen given it is not naturally occuring on Earth.  To keep it carbon neutral the resulting CO2 must be offset or sequestered. 

 

Woodside already has a series of increasingly sophisticated, biodiverse carbon farms to offset emissions, part of government and ASX-listing requirements. 

 

Coleman said the days of simple, large tree plantations are over and one of its new projects is in WA's Great Southern, thousands of kilometres from its gas projects close to the state's wine country. Trees were planted in the path of migratory birds. 

 

Chairman Richard Goyder refused to answer a question from a shareholder on just how much capital was being spent on hydrogen, on grounds of commercial sensitivity but the CEO let slip that, unlike the larger European counterparts it watches closely for clues, the company has no real idea how to make money from cleaner energy. 

 

Hydrogen is currently a captive market  given it is produced on site for use in cracking at oil refineries. While input costs vary, there is no price index as with coal, oil, spot market gas or oil-linked LNG long term contracts. 

 

One path is to turn it into ‘green' ammonia, which solves the shipping issue but the commodity can only be switched in for fuel to replace coal given the relatively lower calorific value of both. 

 

The company retains its US$80 per tonne shadow carbon price for calculations but hopes to bring this down with more CCS work. 

 

Woodside must continue to deploy its capital in a way that maintains current returns to shareholders, he said.  So far, new energy doesn't do that.