BP puts $1b Kwinana Hydrogen and Clean Fuel Projects on Ice

by Peter Milne (Boiling Cold) The two projects will be "recycled" amid BP's concerns about costs and government policy. -- UK oil and gas producer BP has put on ice plans for two clean fuel projects worth about $1 billion at its disused oil refinery in Kwinana, south of Perth.

BP informed its employees in meetings on Thursday, followed by telling contractors on Friday, according to people involved who were not authorised to speak to the media. Some BP staff will be made redundant.

BP was considering building a biofuel plant, Kwinana Renewable Fuels (KRF), to make sustainable fuel from biomass and a green hydrogen plant dubbed H2Kwinana.

Some workers were told the projects were to be "recycled", which likely means BP will return to the early stages of its project assessment process to fundamentally review what, if anything, it wants to do at Kwinana.

Factors influencing BP’s decision included rising costs to build the plants, and the lack of a mandate in Australia to use the fuels, leaving BP uncertain if the products would have a ready local market, according to the sources

The KRF was to be the first of five BP plants worldwide to turn biomass, including used cooking oil, into 10,000 barrels a day of sustainable aviation fuel and renewable diesel.

Work was underway refurbishing tanks at Kwinana and an $80-million-plus hydrogen production unit had been ordered from French firm Technip.

BP's decision on renewable fuel is not a surprise after Boiling Cold revealed two weeks ago that engineering and design contractors had been stood down.

The hydrogen plant was one of six short-listed in late 2023 to compete for $2 billion of Federal Government funding under its Hydrogen Headstart Program.

BP declined to comment on H2Kwinana until the Federal Government announced its decision on the hydrogen funding.

The KRF was to be one of the customers for H2 Kwinana, and Boiling Cold understands BHP's nearby shuttered nickel refinery was also lined up as a major customer.

BP will continue to use its prime 250-hectare waterfront site in Kwinana to import and store fuel.

There was bad news for another of those projects on Monday: the Central Queensland Hydrogen project in Gladstone.

The Australian reported that the Queensland government has rejected a request for more than $1 billion in government funding from the joint venture led by state-owned power generator Stanwell Corporation. READ MORE

Shock as Queensland Government Abandons $12.5 Billion Green Hydrogen Initiative

In a significant setback for Australia’s green hydrogen ambitions, the Queensland government has rescinded its support for the Central Queensland Hydrogen Project (CQ-H2), which was slated to become the nation's largest hydrogen production facility. The project, centered in the strategic Port of Gladstone, has faced abrupt cancellation following the government's decision to deny a critical $1 billion funding request from Stanwell Corporation.

This decision came as a surprise to industry stakeholders and was part of a broader statement by the government, led by Liberal David Crisafulli, against the economic viability of large-scale renewable energy projects along the east coast. Nationals MP Colin Boyce supported the withdrawal, labeling the extensive renewable plans as "economic insanity."

The project, which had progressed to the stage of front-end engineering and design (FEED) work by Worley, was expected to reach financial close by mid-2025. It had ambitious plans to install at least 640MW of electrolysis capacity, aiming to produce 800 tonnes of green hydrogen per day by 2031. This production was intended for both local industrial use and significant export markets, underpinning Queensland's strategic positioning in the emerging global hydrogen economy.

Despite the setback at the state level, the project had secured federal support, with potential access to a slice of a AUD $4 billion federal funding program. Federal Climate Change and Energy Minister Chris Bowen expressed disappointment at the state's decision, highlighting its potential impact on national energy and climate goals.

The abrupt cancellation of the CQ-H2 project has resulted in the layoff of over 140 workers and raised significant concerns about the future of large-scale renewable projects in Australia. The move underscores the complex interplay between economic considerations and environmental commitments in transitioning to renewable energy sources. READ MORE