Woodside (ASX:WPL) share price rises on $5 billion new energy plan

Woodside shares are rising after the business revealed a $5 billion plan.

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The Woodside Petroleum Limited (ASX: WPL) share price is rising after the resources business revealed a plan to invest $5 billion in emerging new energy markets by 2030.

Woodside wants to invest in new energy so that it’s an “early mover” in the market and support the decarbonisation goals of its customers.

New energy

In recent months, it has announced progress on four new energy projects: H2 Perth and H2TAS in Australia and Heliogen and H2OK in the US. Those projects are designed to be phased, starting small with the potential to build scale.

H2Perth is targeting around 110,000 tpa of hydrogen production, with future capacity of up to 550,000 tpa of hydrogen for export (in the form of ammonia and liquid hydrogen).

H2TAS is targeting 200,000 tpa of ammonia and a 300 MW electrolysis component. It has the potential to support up to 1.7 GW of electrolysis.

H2OK is initially targeting around 33,000 tpa of liquid hydrogen with a future capacity of up to 65,000 tpa.

Finally, Heliogen (which is “breakthrough” solar technology) is initially targeting 5MW. The concentrated solar energy system has the potential to deliver clean energy with nearly 24/7 availability.

Each of those project locations have been chosen for specific reasons, preferably near available renewables or close to market, ensuring they are customer led.

Woodside’s roadmap

In today’s presentation at the investor day, Woodside talked about its plans for the 2020s as well as looking to 2030 and beyond.

For the mid-2020s it talked about scaling up its carbon offset projects, scaling up carbon offset projects, exporting ammonia from Australia, developing carbon capture utilisation (CCU) opportunities and progressing its carbon capture and storage (CCS) opportunities.

Woodside outlined that hydrogen for heavy vehicle transport is expected to play a key role in realising climate targets. Truck manufacturers are scaling up hydrogen fuel cell operations. The energy business said that there is “line of sight to diesel price parity”.

Ammonia for power generation is another area of focus. Woodside said ammonia is transportable and it’s a price competitive option to reduce carbon emissions. The company is exploring opportunities with existing customers.

In the 2030s, it’s targeting this new energy at scale. It will be exporting liquid hydrogen from Australia, scaling-up CCS activities and expanding production to match market scale.

Other highlights from the presentation

Woodside also highlighted its opportunities relating to its current resources and projects including Scarborough and Pluto Train 2 which have been approved and are expected to generate $26 billion of net cashflow.

It also mentioned the merger with BHP Group Ltd (ASX: BHP) which is expected to deliver at least $400 million of estimated annual savings which is expected to be realised by the end of 2023.

With the potential growth opportunities it’s going to prioritse the highest return options and with its exploration it’s going to focus on high-quality prospects.

It will continue to maintain a dividend based on a target payout ratio of between 50% to 80%.

Woodside share price snapshot

The Woodside share price is currently up around 2.5% at the time of writing.

However, over the last two months Woodside shares are still down around 11%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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