Gold Hydrogen Ltd (ASX:GHY) managing director Neil McDonald has lived an eclectic life.
A high-level swimmer in university, a lawyer by profession, he followed an unusually scenic path into the resources industry, eventually venturing into energy and more specifically, natural hydrogen.
“There’s a worldwide political movement, environmental movement, toward clean energy and net zero, and now for hydrogen to form a major part of the effort toward decarbonisation and electrification,” McDonald said.
“I see hydrogen as one of the best potential replacements for fossil fuels as a baseload energy source.
“I think this could be revolutionary, a new energy source to contribute to decarbonisation and net zero. This could really work.”
In this article
- From the beach to the drill bit
- Natural Hydrogen as a net-zero solution
- Revolution in clean energy
Before he entered the resources industry, Neil McDonald lived and worked on one of the most famous resorts in Australia.
After serving as a solicitor for Gadens Lawyers, McDonald was invited to serve as the resident lawyer for the Oatley family, the newest (at the time) owners of Hamilton Island.
“It’s the largest resort in the Southern Hemisphere, so it offered a really good education in big, multi-faceted operations – I really liked the compliance and regulatory work,” he remembered.
The island netted revenue in the ballpark of $250 million a year, serviced by more than 1,000 staff, with facilities including everything from an airport to a golf course.
It also provided a window into how to run an operation of this size without sacrificing the pristine natural environment.
“I’ve always said that Australia has only a few things going for it on large scale, and one of those is natural beauty,” McDonald explained, “The offset of that is tourism – people come here to see our natural beauty.
“The other thing Australia has is abundant resources, including energy and mining materials.
“Working on Hamilton Island, you could see coexistence between the environment and economy was possible.
“We could run Hamilton Island, have domestic and international tourists come here to enjoy the beauty of the area, and still maintain and protect the environment and the (Great Barrier) Reef.
“It was an excellent learning experience before I joined the energy sector.”
Natural hydrogen as a net-zero solution
Hydrogen is quickly becoming the clean fuel of choice in a decarbonising world.
The International Energy Agency calls it “a versatile energy carrier, which can help tackle various critical energy challenges” and points to applications in “long-haul transport, chemicals, and iron and steel, where it has proven difficult to reduce emissions”.
The IAE’s 2022 Hydrogen Report estimates that global hydrogen demand is set to reach 115 million tonnes by 2030.
In contrast, if all projects currently in development reach fruition, the production of low-emissions hydrogen may reach only 16 million to 24 million tonnes per year by 2030.
A potential solution to that huge supply shortage is naturally produced hydrogen – hydrogen welled and pumped from within the Earth’s crust, rather than through energy- and resource-intensive electrolysis.
Read: Natural hydrogen: A passing curiosity, or energy disruptor?
“When you look at manmade hydrogen, you’ve got to mine the resources, spend a lot of money and carbon to manufacture and then install the energy and production facilities,” McDonald pointed out.
“To make those solar panels, wind farms, batteries – you need to get the nickel, the cobalt, the lithium, the copper. That’s a huge footprint on the environment.
“With natural hydrogen, you put a gas well in, a traditional gas well, on a very small footprint; when the well is completed, it takes up an area of about three metres by three metres, the size of a small office room.
“The footprint is small in terms of both the carbon footprint, and use of actual land.”
Revolution in clean energy
McDonald co-founded Gold Hydrogen in 2021, well before the company listed to the ASX this year with a $20 million IPO – an impressive showing, considering how IPO-adverse the market has become compared to just a couple of years ago.
The company, led by McDonald alongside executive director Roger Cressey, CFO Karl Schlobohm, chief operating officer Josh Whitcombe, non-executive director Katherine Barnet and independent non-executive chair Alexander Downer – yes, that Alexander Downer – leveraged historical South Australian State Department geological data to pick up a suite of hydrogen-prospective licences and permits.
Neil McDonald with independent non-executive chair and former Federal Minister for Foreign Affairs Alexander Downer.
“Back in the 1920s and 30s, geologists in South Australia went exploring for an equivalent to the Cooper Basin,” McDonald explained. “On three occasions they found up to 90% pure hydrogen, although they were unsuccessful looking for oil and gas, which was what they were really looking for.
“Our co-founder did some research nearly a century later, looked at their data and said, ‘Well, this is this is extremely interesting. This could become the new revolution in clean energy.’”
Gold Hydrogen’s flagship is the Ramsay Project, a collection of permits on the Yorke Peninsula and Kangaroo Island, where the company intends to drill two new wells in mid-October this year, the first ever drilled for hydrogen on the tenure.
Gold Hydrogen permits (green) over Yorke Peninsula and Kangaroo Island in South Australia.
The project has independently been assessed to hold a prospective resource of 1.3 billion kilograms of hydrogen, representing a huge clean energy bounty should it prove to be economically viable.
“We’ve confirmed that natural hydrogen definitely occurs on our project,” McDonald highlighted. “The CSIRO has done soil sampling at surface and encountered strategic areas where hydrogen was migrating to surface but in low to moderate volumes, meaning it’s not all escaping.
“Independent experts believe, based on a test case in Mali (check out the hydrogen feature above to learn more about this), that it’s possible to produce natural hydrogen to surface at $1 a kilogram or less before transport.”
That gives it a major economic advantage over green hydrogen, which currently averages about $5 a kilogram before transportation.
Fossil fuels differ in price, but a barrel of crude oil (West Texas Intermediate) goes for about $129 a barrel (136 kilograms), working out to something like $0.94 a kilogram. Hydrogen will need to rival this price point to fully replace fossil fuels.
“So, I’m pretty excited about not only the geological advantages of our potential resource in South Australia, but the potential commercial advantages that we have too,” McDonald said.
“Hydrogen is an amazing opportunity for Australia and a wonderful opportunity for producers and explorers, including Gold Hydrogen, to be part of that, to develop the world’s future energy mix and facilitate the decarbonisation process.
“I think if everyone’s serious about heading to net zero, not just in Australia but worldwide, this transition needs to move faster.
“Policy has to evolve faster. You still need to keep best practices, best environmental practices, but you need a clear framework, a streamlined framework, to move more efficiently.
“We need straightforward, efficient regulation that still ensures best practice and retains the social licence. This is in the best interest of all Australians.
“The opportunity is now.”
With the engine of decarbonisation gathering speed, we’ll need alternate cheap, accessible, and environmentally friendly energy sources to fuel our economies into the future.
Gold Hydrogen, and other companies like it, are betting natural hydrogen will be the answer. Only time will tell.
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