The Woodside Petroleum Limited (ASX: WPL) share price is edging higher today, currently trading up around 3.5% at $24.05.
Woodside shares have started the week's trading in the green, after giving away over 8% last week as the hydrocarbons producer released its Q3 update.
Now, reports have surfaced that the company is set to invest more than $1 billion to build a hydrogen and ammonia production facility in WA.
New carbon-neutral facility announced
News of the facility surfaced from the West Australian State Government's camp, where it revealed the carbon-neutral hydrogen and ammonia production facility will be built.
According to the Western Australian Premier, Mark McGowan, the "first phase of the facility, dubbed H2Perth, will include more than $1 billion in capital expenditure".
At full capacity, Woodside claims the product could produce up to 1,500 tonnes per day of hydrogen for export, a total of 547,000 tonnes each year.
It is to be built on "approximately 130 hectares of vacant industrial land to be leased from the State in the Kwinana Strategic Industrial Area and Rockingham Industry Zone"
Construction has been pencilled in to start in 2024 but is still subject to several regulatory and commercial approvals.
It is anticipated to eventually operate 'electrolysers' with a total capacity of more than 3GW. This is a good chunk of the current entire capacity of WA's southwest interconnected system of 5.8GW.
The aims of the project are quite simple on both parties end – produce low cost, low carbon hydrogen-based energy for consumers and support renewable power generation in WA.
Hydrogen and ammonia from H2Perth would be produced with a zero-emissions focus, as hydrogen "produces zero-emissions when it is used as fuel".
Woodside also aims to "support State initiatives to stimulate local hydrogen demand, particularly in the transport sector and among local heavy industry".
Speaking on the announcement, Woodside CEO Meg O'Neill espoused the project would be a 'landmark' project for both the company and the state:
Woodside has a proud track record as an Australian oil and gas producer and our LNG exports will continue helping Asia to reliably meet its energy needs while reducing greenhouse gas emissions for decades to come. Now, we intend to use our skills and financial strength to add new energy products and lower-carbon technologies and services to our portfolio, which can be scaled to meet customer demand.
Expanding on the commercial and external growth opportunities, O'Neill added:
Building in this location is not just about hydrogen. H2Perth will also facilitate substantial growth of renewables in Western Australia by providing to the grid a flexible and stabilising load that benefits uptake of intermittent renewable electricity by households and local industry. We will also be supporting local manufacturing jobs and opportunities.
Woodside Petroleum share price snapshot
It's been a difficult year to date for the Woodside Petroleum share price, having posted a return of just 6% since January 1.
Despite this, it has gained 30% in the last 12 months, ahead of the S&P/ASX 200 index (ASX: XJO)'s return of around 21% in that time.
