Japanese giant backs QLD green hydrogen plant and Omani grey hydrogen competitor

Back in February 2020, the traditional coal and gas hub of Gladstone, Queensland (QLD), put its hand up among the many raised palms in Australia to become the country’s hydrogen mecca. The city was selected to host two ambitious projects, including a gigawatt-scale green hydrogen and ammonia project and a gas injection facility to blend green hydrogen into the city’s natural gas network. 

This week, Japanese corporate giant the Sumitomo Corporation has announced that it has signed a Front End Engineering and Design (FEED) contract with engineering company JGC Holdings Corporation (JSC Group) for a solar-powered green hydrogen production plant in Gladstone. 

The plant plans to produce 250-300 tonnes of hydrogen annually, and could scale up in the future. In a statement, the Sumitomo Corporation said that it “expects hydrogen to be one of the important energies in the future, and promotes hydrogen related business such as local production and consumption projects and large scale value chain projects, that utilises the regional requirements of energy and the characteristics of hydrogen. 

It is perhaps not surprising the Sumitomo Corporation is turning strongly to hydrogen, and green hydrogen to boot, considering the company’s stunning US$250 million loss on its Western Australian Bluewaters coal fired power station. The loss ensured that 2020 was the company’s worst ever annual performance. 

The 434 MW Bluewaters coal-fired power station is Western Australia’s (WA) newest coal power station, completed in 2009 and generates approximately 15% of the state’s energy. Interestingly, it is WA’s only privately-owned coal-fired power station. According to a report from the Institute for Energy Economics and Financial Analysis (IEEFA), the rapidly accelerating transition to renewables has ensured that Sumitomo is now left holding a stranded asset. 

JSC Group said that it “is making extensive efforts to expand the use of hydrogen energy, which is expected to be an energy source that does not emit CO2, when burned, and ammonia, which is expected to be one of the most promising hydrogen energy carriers in hydrogen transportation, where there are issues from an economic and safety perspective.” 

“In addition, we are proposing a hydrogen production system that will produce hydrogen from synthetic gas made from waste plastics, in order to continue to contribute to the realisation of a hydrogen society in Japan and abroad.” 

Competition from Oman

On the same day that the Sumitomo Corporation announced its Gladstone plans for a hydrogen production plant, the Japanese conglomerate also announced the commencement of a feasibility study on a grey-green hydrogen hybrid project in Oman. 

Sumitomo Corporation previously had a memorandum of understanding (MOU) with major Omani oil and gas producer, ARA Petroleum LLC (ARA), and now discussions on the project have commenced with this feasibility study. 

Using natural gas to produce grey hydrogen ARA hopes to commence operations in 2023, with the plan of producing 300-400 tonnes of grey hydrogen annually. The hybridity of the project comes with the addition of a 20 MW solar installation to power the site and hydrogen production facilities. 

Professor of Future Energy Systems at TU Delft in the Netherlands, Ad van Wijk, told pv magazine that Oman has great hydrogen prospects. “Very good solar resources,” said Wijk, and “they have the industry…that’s the interesting thing, due to the gas and other fossil fuel industries the harbour facilities may not be in place for hydrogen as such, but for ammonia they are in place…they make the hydrogen from natural gas and then make ammonia and ship it.” 

Oman already has the industry to service this hydrogen production plant then. At the outset, hydrogen industry has a lot in common with the fossil fuel industry. “Of course,” continued Wijk, “in a certain sense that (fossil fuel industry) is the enemy…but you could also say this is a lucky circumstance because we don’t have to develop a hydrogen industry from scratch. For example, the solar PV industry had to be developed from scratch because it was not there, but that is not the case with the total supply chain for hydrogen.” 

Oman, like Saudi Arabia, will look to provide Australia with stiff competition in the hydrogen economy throughout the Asia-Pacific. Initially, says Wijk, grey and blue hydrogen will be able to supply the market more easily and cheaply than green hydrogen, however this advantage will probably only last a few years. Eventually, solar and wind will be so cheap that they will out-compete fossil fuels.