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APPEC: Qatar could surpass Australia in hydrogen, energy transition, says Woodside ex-CEO


Qatar 'can move faster' at government-to-government level in hydrogen value chain

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This is a fundamental change that 'needs to be government-led,' says Coleman

Qatar can utilize being a planned economy to gain the first-mover advantage over Australia in the emerging market for hydrogen and hydrogen-derived energy products, Peter Coleman, former CEO of Australia's largest oil and gas independent company Woodside Petroleum, said Sept. 27 at APPEC 2021.

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"The Qataris may move first -- [riding on their] planned system, they can work on a government-to-government level [to] establish the infrastructure at both ends, supply and demand," Coleman said during his scheduled APPEC 2021 CEO conversation with S&P Global Platts Global Director of News Beth Evans.

"It gets harder for an individual company to start a new industry from the grass roots like in Australia," said Coleman, who was appointed the chairman of Australia's hydrogen-focused start-up Infinite Blue Energy in August after retiring as Woodside CEO.

Perth-based IBE is building one of the first plants in Australia to tap solar and wind energy to produce green hydrogen, scaling up from daily production of 25 mt when it is due to come online in 2022 to 120 mt during subsequent phases targeting overseas exports.

Coleman has advocated for Australia to embrace hydrogen as a future growth option for several years, having piloted a green hydrogen project in Tasmania while as Woodside CEO.

In 2018, he advocated for Woodside to draw on its vast natural gas reserves to produce blue ammonia, widely considered one hydrogen carrier, for export to Japan.

Three years on at APPEC 2021, Coleman acknowledged that the lack of a coherent energy policy has not helped with Australia's wider energy transition, including developing a hydrogen industry from scratch.

Click here for our complete APPEC 2021 coverage

Government should lead in energy transition

"The reality is this is a fundamental change... that needs to be government-led," Coleman said, suggesting that in this respect, Australia does not have the same muscle as Qatar to effect change.

However he noted that the situation differed to some extent across Australia's states. Privatized utilities in the eastern states "react to market signals" and "cannot invest in something they don't get returns for," while power generation capacity in Western Australia is majority controlled by its state government.

Australia's capitalist economy has also shaped the direction its state and federal governments take in tackling carbon emissions. Coleman alluded to an apparent reluctance among many politicians to enact policies deemed as disadvantaging export industries competing with rivals in countries with no emission caps.

"It's not clear to me there will be a carbon price in Australia – there are caps on major emitters, based on historic averages rather than best practices, particularly for export industries," he said.

That said, oil and gas producers like Woodside Petroleum are confronted with tough decisions over how to evolve to stay relevant.

Woodside-BHP M&A 'most logical'

Coleman viewed Woodside's acquisition of resource giant BHP's oil and gas business as the "most logical" decision, providing the merged outfit with a revenue pipeline lasting five to 10 years and extra runway to "think through" its next moves on renewables or decarbonization.

That transaction, when finalized in second quarter 2022, would create the largest energy company listed on the Australian stock exchange with a global top 10 position by LNG production.

It will also facilitate a final investment decision on the Scarborough upstream gas project underpinning a second train of 5 million mt/year at Woodside's Pluto LNG complex in Western Australia.

Coleman held that gas as a fuel that will be around for many decades, with continuing relevance as an energy source for the power sector and as a feedstock "difficult to replace" in petrochemical production.

On this basis, he argued for the focus in the ongoing debate to shift from "demonizing" to "understanding" the value gas and other non-renewable sources hold in energy transition. "Nuclear was demonized a few decades ago to the point we have not capitalized on the technology by making it safer," he said.

Coleman, who also chose to remain aligned with the oil and gas industry by taking a board seat at oilfield services giant Schlumberger, conceded however that gas will inevitably occupy a smaller share of the world's energy mix.

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Invest in renewables not carbon offsets

He suggested that "money spent on offsetting carbon" from the gas value chain "is better spent" on developing renewable technology.

In their quest to neutralize emissions from their projects, oil and gas producers have increasingly invested in the use of carbon storage and sequestration.

Coleman viewed CCS as "oversold in its ability to take carbon out of the atmosphere" and carbon neutrality in oil and gas operations as highly implausible.

"I can understand how you can be carbon neutral on scope 1 and 2 but scope 3 is really a difficult one," he said.

Scope 1 and 2 emissions relate to those directly or indirectly generated from a company's operations while Scope 3 includes greenhouse gases emitted during consumption of a company's products.

Given the vast uncertainty clouding the transition to a low emission future, Coleman held that the traditional rivalry between Australia and Qatar as top LNG producers need not carry over to the renewable space.

"Rather than be a competitive threat, the Qataris can be seen as the pioneers forging through, and there will be a great industry that comes from behind it," he said.