Woodside (ASX:WDS) has stepped up its investment in the US, adding a planned ammonia-producing business to what could be a huge LNG project. Both investments are in the US state of Texas and will total over $US5 billion—and more when the cost of the LNG plant is finally announced.
The latest deal will see Woodside produce 1.1 million tonnes of ammonia a year from gas in Texas with just a third of the normal carbon emissions. Australia’s largest oil and gas company announced late Monday that it would purchase the under-construction OCI clean ammonia plant for $US2.35 billion ($A3.7 billion).
Woodside’s plant will buy hydrogen made from gas and nitrogen from a nearby plant run by German/Irish industrial gas specialist Linde, and combine the two elements to make ammonia.
Woodside CEO Meg O’Neill said the market for lower-carbon ammonia was growing. “The potential applications for lower-carbon ammonia are in power generation, marine fuels, and as an industrial feedstock, as it displaces higher-emitting fuels,” she said in a statement to the ASX. “Global ammonia demand is forecast to double by 2050, with lower-carbon ammonia making up nearly two-thirds of total demand.”
Sales of regular ammonia will start in 2025, and a lower-carbon product will be shipped in 2026 when ExxonMobil starts storing underground emissions from the Linde plant.
Two weeks earlier, it revealed the planned $US900 million buy of the company behind the Driftwood LNG project in Texas. The company, Tellurian, has regulatory approvals to be far bigger than Woodside’s North West Shelf plant in WA at more than 27 million tonnes of LNG—eventually.
Both investments come after Woodside’s reorganisation, in June, into two more independent divisions: Australia, run from Perth, and international operations managed by its growing Houston team.
The latest purchase was announced on Monday, the same day as reports said Woodside was facing trouble with its Browse gas project. The Environmental Protection Authority told Woodside its preliminary view was that the $US20.5 billion Browse project was environmentally unacceptable on a number of fronts.
Woodside shares had lost nearly 5% early Tuesday afternoon, despite a rise in global oil prices and a bounce back in Asian markets, especially Tokyo.