According to Peter Coleman, former CEO of Australia’s biggest oil and gas independent firm Woodside Petroleum, Qatar may use its planned economy to obtain a first-mover advantage over Australia in the growing market for hydrogen and hydrogen-derived energy products.
During his scheduled APPEC 2021 CEO conversation with S&P Global Platts Global Director of News Beth Evans, Coleman said, “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, who retired as CEO of Woodside in August and was named chairman of Australia’s hydrogen-focused start-up Infinite Blue Energy, stated, “It gets tougher for an individual business to create a new sector from the grass roots like in Australia.”
IBE, located in Perth, is constructing one of Australia’s first facilities to use solar and wind energy to create green hydrogen, with daily production ranging from 25 mt when it opens in 2022 to 120 mt in later phases aimed at exporting to other countries.
Coleman has been a long-time champion for Australia to embrace hydrogen as a future development option, having pioneered a green hydrogen project in Tasmania while serving as CEO of Woodside.
In 2018, he argued that Woodside could use its large natural gas reserves to create blue ammonia, a hydrogen transporter extensively discussed, for export to Japan.
Three years later, at APPEC 2021, Coleman admitted that Australia’s larger energy transformation, including the development of a hydrogen sector from scratch, has been hampered by the lack of a cohesive energy strategy.
“The fact is that this is a fundamental shift… that needs to be government-led,” Coleman added, implying that Australia lacks the same clout as Qatar in this regard.
He did observe, however, that the situation varied to some degree among Australia’s states. The eastern states’ privatized utilities “respond to market signals” and “cannot invest in something they don’t receive returns for,” but Western Australia’s power production capacity is mostly controlled by the state government.
The capitalist economy of Australia has influenced the policies of both state and federal governments when it comes to reducing carbon emissions. Coleman pointed to a perceived reluctance among many legislators to implement rules that would disadvantage export companies competing against competitors in nations that do not have emission restrictions.
“It’s not obvious to me that Australia will have a carbon price — there are limitations on large polluters, based on historical averages rather than best practices, especially for export industries,” he added.
Oil and gas producers, such as Woodside Petroleum, are faced with difficult decisions on how to develop in order to stay relevant.
Woodside’s acquisition of BHP’s oil and gas division, according to Coleman, was the “most obvious” option, giving the amalgamated company a five- to ten-year income stream and more time to “think through” its future actions on renewables or decarbonization.
When completed in the second quarter of 2022, the merger would establish Australia’s largest energy business, with a global top 10 position in LNG production.
It will also help Woodside’s Pluto LNG complex in Western Australia reach a final investment decision on the Scarborough upstream gas project, which will underpin a second train of 5 million mt/year.
Gas, according to Coleman, will remain there for many decades, with continued significance as a source of energy for the power industry and as a “difficult to replace” feedstock in petrochemical manufacturing.
On this premise, he proposed that the debate should move from “demonizing” to “understanding” the importance of gas and other non-renewable sources in the energy transition. “Nuclear power was vilified a few decades ago to the extent that we haven’t taken use of the technology by making it safer,” he added.
Coleman, who opted to stay in the oil and gas business by joining the board of Schlumberger, an oilfield services company, acknowledged that gas will eventually play a lesser role in the global energy mix.
He claimed that “money spent on carbon offsets” from the gas value chain would be better spent researching renewable technology.
Oil and gas firms have increasingly engaged in carbon storage and sequestration in their attempt to offset emissions from their operations.
CCS is “oversold in its capacity to remove carbon from the atmosphere,” according to Coleman, and carbon neutrality in oil and gas operations is very improbable.
“I see how you may be carbon neutral on scope 1 and 2,” he added, “but scope 3 is a big challenge.”
Scopes 1 and 2 refer to greenhouse gases emitted directly or indirectly as a result of a company’s activities, whereas Scope 3 refers to greenhouse gases emitted as a result of a company’s products being consumed.
Given the great uncertainties surrounding the transition to a low-emission future, Coleman believes that the historic rivalry between Australia and Qatar as top LNG producers does not need to be carried over to the renewable energy sector.
“Rather than being a competitor, the Qataris may be regarded as trailblazers moving ahead, and a tremendous industry will emerge from behind them,” he added.
