Industry News

Today the Western Australian environmental watchdog gave the all-clear to what will be the world’s biggest hybrid wind and solar hub.

In an Australian first, the Asian Renewable Energy Hub in the Pilbara region of WA will transfer energy via a lengthy subsea power cable to Singapore and produce green hydrogen at an "oil and gas scale" for export. 

"Having assessed the proposal, the Environmental Protection Authority recommends the proposal may be implemented subject to conditions," the state EPA said this morning. 

The project  will cost more than A$22 billion and is being led by a consortium spearheaded by Danish wind turbine manufacturer Vestas, US-based Intercontinental Energy and Macquarie Bank. 

The Asian Renewable Energy Hub will cover 6500 sq.km of land and is expected to generate more than 15 gigawatts of renewable energy in northern WA. 

Around 3GW of energy generated is earmarked for industrial users in the Pilbara, including miners and mineral processers. 

However, the bulk of the power generated will be used to produce green hydrogen for export markets, and directly exported through a subsea pipeline to Singapore. 

Four export cables will run across the seabed and through the Eighty Mile Beach Marine Port, for direct energy export to southeast Asia. 

It has taken six years to get to this stage, after project development studies began in 2014. 

Last year the project was given priority ‘Major Project' status by the state government. 

The A$22 billion hub will be constructed in phases over the next ten years and when complete will consist of 1,743 wind turbines with a generating capacity of 7.5 gigawatts and a 644,600 hectare 3.5GW solar plant generating more than 40 terawatt hours of electricity a year. It would also produce green hydrogen.

The project, some 220km east of Port Hedland, is being backed by CWP Energy Asia, InterContinental Energy, Vestas and Macquarie Group.

The developers are aiming for first exports of hydrogen by 2027. 

Once fully operational the hub will have a life span of more than 50 years. 

WA environment minister will have the final say on whether the project goes ahead.

Source: Energy News Bulletin

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THE Australian Renewable Energy Agency has launched A$70 million green hydrogen fund to help fast track the development of the gas to help Australia reach its goal of producing it for under $2 per kilo, or “H2 under 2” by 2030.

The funding round will support two or more large scale renewable hydrogen projects, with electrolysers of a minimum of 5 megawatt capacity, with a preference of 10MW or larger, which would make them some of the largest electrolysers in the world, according to ARENA. 

Electrolysis is the process in which water is split into hydrogen and oxygen, a process which when done by using renewable energy is emission free, however the technology has yet to be scaled up. 

Unlike other parts of the federal government's National Hydrogen Strategy, each project must be powered by renewables, either directly or through power purchase agreements or large-scale generation certificates. 

Shortlisted projects will be invited to submit full applications later this year ARENA said. 

"This $70 million funding round will help demonstrate the technical and commercial viability of hydrogen production at a large-scale using electrolysis," energy and emissions reduction minister Angus Taylor said in a statement this morning. 

In a similar vein to his other slogan on negotiating energy funding arrangements with the states, or "no gas, no cash", Taylor has adopted the mantra of "H2 under 2". 

"That's the point where hydrogen becomes competitive with alternatives in large-scale deployment across our energy systems," he said.  

Taylor pointed out the ways hydrogen could be used to decarbonise hard-to-abate industries, including heavy transport, ammonia production, blending hydrogen into existing local natural gas networks, as well as the export value of shipping it to trading partners like Japan and Korea. 

"Getting costs down will be key to establishing Australia as a world leader in the hydrogen sector," Taylor said.  

ARENA has already committed over $55 million in funding to support pre-commercial activities including power to gas and renewable ammonia and has invested in feasibility studies for commercial-scale deployments of hydrogen including Dyno Nobel, Queensland Nitrates, Yara and Stanwell.

"We've supported a range of feasibility studies and pilot projects over the past two years, but now we need to start the journey of producing hydrogen at scale," ARENA CEO Darren Miller said. 

"Through this round, ARENA aims to share knowledge on technical and commercial parameters for commercial-scale renewable hydrogen production for domestic and international markets."

Australia is joining the global race to scale up renewable hydrogen, with several demonstration projects underway. 

Source: Energy News Bulletin

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Due to the COVID-19 pandemic, the APPEA Conference and Exhibition, originally planned for May 2020, has been postponed to June 14-17, 2021 at the Perth Convention & Exhibition Centre in Western Australia.

The APPEA Conference and Exhibition is the largest annual upstream oil and gas event in the southern hemisphere, attracting thousands of delegates from across the country and around the world.

The conference’s technical and business papers already submitted will be published in the 2020 APPEA Journal (to be released in May, further information will be advised in due course).  Other elements of the Conference and Exhibition will however be postponed to the new date in 2021.

APPEA will contact all stakeholders including speakers, delegates, exhibitors and sponsors directly to advise of their options moving forward.

APPEA Chief Executive Andrew McConville said while the industry’s current focus was meeting the personnel, operational and community challenges posed by the COVID-19 pandemic, APPEA was committed to maintain its engagement with members, industry stakeholders and the broader community.

“Our industry’s first priority is the health and safety of our people, then ensuring vital energy supplies are maintained and we will continue to highlight the critical role we play in underpinning Australia’s economic and social well-being,” Mr McConville said.

“Next year, we are excited that we will be able to celebrate the APPEA Conference’s 60th anniversary in Perth.

“Such events are critical for the industry to stay informed, do business, find solutions to challenges and find pathways to opportunities.

“So, rest assured, we will be back – bigger and better than ever.”

APPEA’s national conferences and state-based events are a key part of APPEA’s support for the industry, and the association will continue to adapt to the circumstances to keep everyone informed and connected.

APPEA is also currently planning a webinar series for members and stakeholders.

For further information and updates, visit www.appeaconference.com.au

Santos today announced it had signed a Letter of Intent (LOI) to sell a 12.5% interest in Barossa to JERA.

JERA already has a 6.1% interest in Darwin LNG. Santos’ signing of the LOI with JERA advances partner alignment between the Darwin LNG and Barossa joint ventures for the development of Barossa as backfill for Darwin LNG.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said signing the LOI with JERA further builds partner alignment and follows the recent agreement to sell a 25% interest in Darwin LNG to SK E&S.

“Santos continues to build alignment between the Darwin LNG and Barossa joint ventures. Following completion of the ConocoPhillips acquisition and the sell-downs to JERA and SK E&S, Santos will hold a 43.4% interest in Darwin LNG and a 50% interest in Barossa. We are continuing to advance discussions with other parties for the sale of further equity in the Barossa project in line with our previously stated target ownership level of around 40% to achieve increased partner alignment and prudent future allocation of growth capital. We are also in discussions with buyers for Barossa volumes.”

“However as we announced on 23 March, given the uncertain economic impact of COVID-19 combined with lower oil prices, we expect to defer FID on Barossa until business conditions improve. Barossa remains an important project for Santos due to its brownfield nature and low cost of supply, and we will continue to use this time to achieve alignment and seek to further strengthen the economics of the project,” Mr Gallagher said.

The sale of the 12.5% interest in Barossa to JERA is subject to the negotiation and execution of a binding sale and purchase agreement, completion by Santos of the acquisition of ConocoPhillips’ northern Australia and Timor-Leste portfolio as announced on 14 October 2019, third-party consents, regulatory approvals and a final investment decision on Barossa.

Source: Santos Media Centre

THE ongoing COVID-19 pandemic is going to cut deeply into both global and Australian development of renewables this year, while yesterday the International Energy Agency said capital investments into renewables by oil companies will be affected by the low price environment.

The pandemic will postpone or cancel financial close of some 3 gigawatts of projects in Australia according to Rystad Energy which blames the falling Australian dollar, down 20% against the greenback since January. 

This has pushed up capital expenditure up for both solar PV and wind projects, making otherwise viable projects suddenly uneconomic. 

Hardware makes up 60% of capex and is usually priced in foreign currency. Suddenly developers are finding it more difficult to meet power purchase agreements profitably while cash is increasingly scarce and, in this environment, financiers won't lend cheaply.   

So far this year only 400 megawatts has broken ground down from Rystad predictions of between 2-3GW of projects beginning this year. 

"New South Wales will be the biggest loser, as 65% of solar PV and 67% of wind projects which are expected to, but have not yet reached financial close in 2020 are located in the state," it said.

Solar companies hardest hit will be UPC, Neoen, Wollar Solar and Canadian Solar while wind companies impacted will likely be Tilt and Goldwind.   

Things were not ideal through 2019 as grid challenges finally came to the fore and "these issues slowed the number of projects and associated capacity to break ground at the end of 2019," Rystad said. 

Globally Wood Mackenzie estimates solar and storage will contract by 20% compared to its base case for 2020 while in the shorter term the impact on onshore wind will be "muted in the near term" however cascading supply chain and construction risk present further downside risk.

Overall COVID-19 will result in a 4.9GW decline in wind additions compared to the consultancy's previous outlook. 

"We highlight India as presenting additional downside risk. Further risks exist in Asia, as travel restrictions and mitigation efforts impact Japan, Australia, Vietnam and others," it said. 

There is little impact to offshore win, thanks to China's recovery and a nascent industry in the US.  

It has revised down its outlook for solar installations by 18% from pre-coronavirus levels from 129.5 GW to 106.4 GW. 

"In the absence of prolonged recession or  profound changes to financing and utility procurement, 2021 will recover to be 3% below pre-coronavirus expected levels," it said. 

Storage installations could fall 20% compared to its 2020 base case, with the risk stemming largely from project execution delays. 

Yesterday in its April Oil Outlook report the IEA said global capital expenditure by oil and gas companies in 2020 is forecast to drop by about 32% versus 2019 to $335 billion. 

"This reduction of financial resources also undermines the ability of the oil industry to develop some of the technologies needed for clean energy transitions around the world," it said.

Source: Energy News Bulletin

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THE offshore oil and gas regulator has issued a draft recommendation on decommissioning of oil and gas rigs, which is open for public comment after former resources minister Matt Canavan issued a ‘statement of expectations’  in November that it step up oversight of decommissioning activities.

All this already comes under section 572 of the Offshore Greenhouse Gas Storage Act but the National Offshore Petroleum and Safety Authority has outlined how it plans to oversee and enforce the section in more detail. 

It will not prevent another NOGA fiasco, however. 

Canavan said he expected NOPSEMA would "ensure that titleholders are appropriately planning for, and executing decommissioning activities in a timely and responsible manner". 

It was around this period when Northern Oil and Gas Australia went into administration and it was clear the small private company had little ability to decommission the aging floating storage production and offloading vessel, The Northern Endeavour, NOPSEMA had shut down in July over safety concerns. 

NOGA has since been liquidated and Canavan replaced by Keith Pitt  but the Northern Endeavour remains moored in the Timor Sea in lighthouse mode and no closer to a long term solution. Upstream Production Solutions, which had the original contract to run the vessel on a third-party basis, is taking care of maintenance. 

The vessel is under official control of the federal government.  

NOGA bought the vessel from Woodside Petroleum in 2016 and took over its operations along with the depleted Coralina-Laminaria oil fields, saving the latter significant decommissioning costs. 

New minister for natural resources Keith Pitt called the debacle a "wake up call to the Australian oil and gas industry" but did not outline what steps he might take as minister to prevent a recurrence of a similar event.  

Taxpayers could be liable for a $200 million-plus decom bill, despite Pitt's promises otherwise, but the new draft on section 572 does not take into account title transfer, or if an operator can meet the costs of its decommissioning plan under its wider Environmental Plan. 

New titleholders must submit EPs and decommissioning plans at that point but they are generally spartan given the long life of offshore assets.  

However each five year EP review must provide increased details. 

However unlike the titles administrator - which oversaw the transfer from Woodside to NOGA - NOPSEMA does not take into account an operator's ability to meet financial demands outside of its ability to manage oil spills. 

Given the issue is now with Australia's aging offshore infrastructure it is hard to see how the expanded rules could prevent the issue recurring. 

NOPSEMA said titleholders must remove all property in their title once it is no longer used "and only accepts alternative arrangements where justification is appropriate". 

Property applies to all equipment, including subsea and wells, brought into the area but the policy "does not cover financial liabilities that may be associated with property as addressed in the Australian Government Offshore Petroleum Decommissioning Guideline". 

Should property not be removed or an environmental plan submitted on how it might meet removal obligations "NOPSEMA may escalate to enforcement action… whether in relation to failure to maintain property or failure to remove property". 

Enforcement includes  "directing a titleholder or former titleholder to comply with the OPGSS act" or it may prosecute and "have either civil or criminal penalties applied".

Source: Energy News Bulletin

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AUSTRALIA’s biggest gas producer, Woodside Petroleum, will join a consortium of Japanese companies to explore commercial hydrogen exports from Australia to Japan.

In one of the biggest studies of hydrogen exports to date, Woodside announced it had inked an agreement with JERA, Marubeni Corp and IHI Corp to explore rapidly exporting clean hydrogen to gas-hungry Japan. 

The study will appraise options to transport hydrogen from Australia as ammonia, then convert it back into hydrogen for power generation in Japan. 

According to a statement from Woodside, the scope of the research will also consider using ‘blue' hydrogen, produced using natural gas as the feedstock with carbon emissions will then be offset, as well as ‘green' hydrogen created from renewables. 

In both cases the hydrogen will be combined with nitrogen to form ammonia. The ammonia will then be shipped as a liquid. 

Woodside chief Peter Coleman said the company would "forge new energy pathways" through the research, and even went so far as to say he expected large-scale hydrogen production by 2030. 

Source: Energy News Bulletin

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THE Northern Territory government has approved the buy of a large scale battery for the Darwin-Katherine grid for A$30 million, with estimates suggesting it will pay for itself in five years.

The battery will help manage greater amounts of behind the meter solar used by households and businesses. 

The top end government said it will decrease the need for gas-fired spinning reserve which will save $6.4 million a year and 50,000 tonnes of CO2 emissions. 

It will also allow more renewable energy into the grid from private projects and the battery may be later used provide system services to the private sector.

The battery will be in operation in the second half of 2022. 

The government also has two smaller new initiatives in place to encourage households and businesses to take up solar panels, batteries and inverters with a $6000 grant. 

It has also developed a new standard feed-in tariff of 8.3 cents per KWh to be offered by Jacana Energy which will apply to all new businesses and households with behind-the-meter solar installations of up to 30 kilowatts. 

An initial allocation of $800,000 will be provided for the scheme, funding grants for about 130 batteries. 

Source: Energy News Bulletin

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ORIGIN Energy will buy a further 7.5% interest in its Beetaloo Sub-basin project, in the Northern Territory, from joint venture partner Falcon Oil and Gas.

Under the new agreement, Origin will increase its stake to 77.5% in exchange for paying a further $25 million on development of the Kyalla project in coming years. 

It comes a day after the company announced cost cuts. 

The onshore Kyalla shale project, dubbed a ‘game changer' by analysts, was put on ice last week over concerns that workers would not be able to access restrictions imposed by the Northern Territory government over COVID-19 concerns. 

The JV drilled the Kyalla 117 N2-1H ST2 well to a total depth of 3809 metres including a 1579 lateral section in February. Further appraisal work including fraccing has now been postponed and the well has been shut in. 

Elevated gas shows with relatively high liquids were observed in all three of the target reservoirs encountered while drilling. 

"Results to date from the Kyalla 117 well demonstrate good reservoir continuity, conductive natural fractures, and continuous gas shows," Origin said in a statement today. 

As operator, Origin hopes to frac the well in the first half of next year. The JV is also planning a section well, Velkerri Flank, to spud in the second half of 2021.

Citing the unprecedented circumstances, Falcon CEO Philip O'Quigley said last week the company would act quickly to protect local communities. 

Source: Energy News Bulletin

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APPEA have put together a valuable industry fact sheet for to assist with information on meeting the COVID-19 challenges and the upstream oil and gas industry protocols and framework. Get more information here:  https://www.appea.com.au/chief-executive-updates/latest-appea-covid-19-updates/