Australia’s LNG industry sees a somewhat green hydrogen future
Having scaled the peak of becoming the world’s top exporter of liquefied natural gas (LNG), Australia’s producers of the super-chilled fuel are contemplating switching their industry around to become the global leader in hydrogen.
The keynote sessions at the Australian Petroleum Production and Exploration Association’s (APPEA) conference on Tuesday were full of how the industry can, and should, embrace the challenges of climate change and move to producing the energy that can be free of carbon emissions.
The strongest call came from Kevin Gallagher, APPEA’s chairman and chief executive of Australia’s second-biggest oil and gas producer Santos STO.AX, who told the event that unless the industry de-carbonised, it would not be able to continue to develop its resources.
“Decarbonisation, through technologies like carbon capture and storage, and hydrogen production using natural gas, is critical,” he told the conference.
Gallagher’s call isn’t the first time switching to hydrogen has been touted as a solution to the emissions created by Australia’s resources industry, which is a major carbon producer given its leading LNG role and its status as the world’s biggest exporter of coking coal used to make steel, and second-biggest in thermal coal used in power plants.
What’s different this time is the industry is using its biggest event to talk about fundamental change, and to effectively recognise that it will die out if it doesn’t embrace a decarbonised future.
Perhaps the LNG industry has seen what is happening to coal, and decided to act before it goes irretrievably down the same path.
If you went to a coal conference in Asia a decade ago you would have found an industry confident in its future, with the attitude that its product was cheaper than alternatives, reliable and that climate change was really just hocus pocus.
Fast forward to today and coal-fired generation is under threat, apart perhaps from in countries with vast domestic reserves such as India, new mines are struggling to get approvals and funding, and countries across Asia are cancelling their coal-fired building plans in favour of now cheaper renewables backed by power storage.
Australia’s LNG industry faces much of the same pressure that was brought to bear on coal, namely difficulties in accessing capital and bank financing, shareholder revolts over climate change policies and the threat of longer-term obsolescence in a carbon-constrained future.
Hence the idea of switching to hydrogen, a fuel that doesn’t produce emissions when burnt, but can produce substantial emissions in being produced, depending how it is done.
The greenest way to produce hydrogen to is power the energy-intensive production process using electricity generated entirely from renewable sources, and some LNG producers, such as Australia’s biggest oil and gas company Woodside WPL.AX are planning such ventures, including a project in the island state of Tasmania, which predominantly uses hydropower to generate electricity.