When Australia’s second-richest person bets the future of his 62-billion-dollar iron ore behemoth on a foray into “green hydrogen”, we’d do well to pay attention.
The technology might not be there yet, but some major bets suggest it will be.
Ever since Andrew Forrest unveiled Fortescue Metals Group (ASX:ASX:FMG)’s $9.6 billion decarbonisation plan, the billionaire has been touring the globe, inking tentative deals and spruiking hydrogen’s game-changing potential.
His intention is to produce 15 million tonnes of green hydrogen by 2030 — enough to power the equivalent of 60 million diesel cars — which he claims will erase fossil fuels from FMG’s operations and supply huge quantities of the new fuel to others.
It’s a plan that’s won him no small number of supporters. “He’s not waiting around for people to do what we’ve been doing, which is procrastinate for years,” US climate envoy John F. Kerry said. “He could help change thinking.”
US Energy Secretary Jennifer Granholm, meanwhile, called Forrest “somebody who has vision and is putting his money where his mouth is.”
Yet others have pointed out one small problem: the technology, generally speaking, isn’t there yet.
Climate scientist Saul Griffith, speaking at The Australian Financial Review’s Energy and Climate Summit last year, said Forrest’s plan is misguided, not feasible, and downright dangerous.
“We do not have a viable technology for green steel,” he said. “Green hydrogen is not going to temper any domestic emissions this decade.”
The true nature of things is probably anyone’s guess — as is what, exactly, happens now. But it would be worth noting that Forrest’s FMG can trace its genesis to a similar gamble.
In the early 2000s, he bought up huge plots of land passed over by existing miners as unsuitable for extraction; the iron ore reserves being too sparse, too much work to pull out, even with the size of their bank accounts. But against those odds, the former stockbroker nevertheless dug in — literally — and grew his modest enterprise to become the iron ore mega-machine we know today.
Indeed, the technology required for green hydrogen may not be here yet. But it makes sense to expect it will come at some point in the future, and that tenacious little go-getters like Forrest are probably the ones who will make it happen. The aim of the game for now, at least, is to be ready.
Give me the elevator pitch
Hydrogen owes the greatest portion of its fame to its rank as the most abundant chemical in the known universe, accounting for roughly 75% of all matter. The rest comes from its potential uses in renewable energy.
Hydrogen is essentially an energy carrier; capable of storing, moving and delivering energy produced from other sources. The most common means of production are natural gas reforming and electrolysis, although solar-driven, biologic and nuclear processes also exist.
Though the exact applications for hydrogen energy remain a source of some conjecture, a report, published in January by The Business Research Company, found the global hydrogen market grew from US$14.7 billion (A$21.8 billion) in 2022 to US$15.9 billion (A$23.6 billion) in 2023, at a compound annual growth rate (CAGR) of 8.1%.
Partly due to a surge in interest over the last couple of years, the global hydrogen market is forecast to hit US$20.53 billion (A$30.5 billion) by 2027.
In the spotlight: ASX hydrogen stocks
HyTerra
HyTerra Ltd (ASX:HYT) claims to be the first ASX-listed company dedicated to the exploration and production of naturally occurring hydrogen. It currently holds a 14.36% interest in the Geneva project in Nebraska, USA, through a joint development agreement with Natural Hydrogen Energy LLC.
During the March 2023 quarter, HyTerra and Natural Hydrogen finalised planning of an extended flow test of the Hoarty NE3 exploration well, designed to measure hydrogen production potential, including gas composition, pressure and flow rate.
An initial phase involved the arrival of a drilling crew and the installation of necessary tubing and pumps. This work was completed in mid-March before a second phase began, which will record the flow of gas over several months.
Though testing activities have been paused while a pump-related issue is fixed, HyTerra is taking the opportunity to review the data collected so far.
“The testing activities have already produced key technical insights which are consistent with HyTerra’s geological model and petrophysical interpretations and have enhanced our understanding of natural hydrogen exploration,” HyTerra executive director Avon McIntyre said.
“The initial observations are encouraging, and we are eagerly working with (Natural Hydrogen) to resume operations and obtain conclusive testing results.”
Meanwhile, HyTerra has been adding to its portfolio of hydrogen assets. During the quarter, the company acquired a 100% interest in 2,241 acres of lease holdings in Riley and Morris Counties, Kansas, USA.
According to HyTerra’s March quarter update, the leases will be assigned to HyTerra’s US subsidiary, HYT Operating LLC, which will enjoy the exclusive right to explore for and produce minerals, oil and gases on the leased land.
Provaris Energy
The highlight of the March quarter for Provaris Energy Ltd (ASX:PV1) was the launch of its bulk-scale floating hydrogen storage solution, H2Leo.
Designed to carry between 300 and 600 tonnes of hydrogen, H2Leo represents an energy efficient and cost-effective method of storing compressed hydrogen. It offers greater operational flexibility compared to land-based solutions and — at an estimated per-tonne capital cost of between US$200,000 and US$300,000 (between A$296,800 and A$445,000) — is notably cheaper.
Further development of H2Leo will run parallel to ongoing engineering and approvals work for the H2Neo hydrogen carrier.
In addition to its hydrogen transport and storage solutions, Provaris signed a memorandum of understanding (MoU) with Norwegian Hydrogen NS — a Norway-based developer of hydrogen production hubs.
The intention is to collaborate on the development of green hydrogen value chain projects in the Nordic region through a joint concept design study. This will identify preferred locations for domestic and export volumes of hydrogen, and will include a technical and economic review of the production and supply of compressed green hydrogen to European ports.
The results of the study will be available in the June quarter of this year, and will act as a blueprint for the review of other European ports.
Written by Oliver Gray.
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