News
18/02/25
Omani H2 resources ‘phenomenal’: InterContinental
Abu Dhabi, 18 February (Argus) — Perth-headquartered InterContinental Energy is
planning three large projects for producing renewable hydrogen and derivatives —
Australian Renewable Energy Hub (AREH), Western Green Energy Hub (WGEH), also in
Australia, and Green Energy Oman (GEO). InterContinental Energy is developing
all three alongside major partners and plans to build them in several stages.
The projects could together produce nearly 7mn t/yr when fully developed —
although this is expected to take several decades. Argus spoke to
InterContinental chief executive Alexander Tancock about the firm's approach to
scaling up, the need for government support, and why Oman is a prime location
for major projects. Edited highlights follow: How are your projects progressing?
We have the AREH project in Australia, with BP as the operator. That is in an
area called the Pilbara, which is the world's largest iron ore exporter. So it
just made so much sense to make that project about green steel. A domestic green
steel project means you don't have to worry about exporting losses, conversions…
you use the hydrogen right there to make green steel. At our second Australian
project, WGEH, with support from the government we can now achieve somewhere
around $3/kg of hydrogen, which is really cost effective. That project will
probably be focused on methanol and ammonia exports. Then in the Middle East, we
are in Oman, where the government is really strongly behind hydrogen. It is
probably one of the most — if not the most — forward-looking hydrogen
governments on the planet. And the resources that we have in Oman are
phenomenal. The only issue now in Oman is that the domestic play is a bit
harder. The resources are there, but there are not many people. What we need to
figure out is where that cheap green hydrogen goes — to find a domestic market
or work with points overseas in a strategic manner. The Omani government is
taking a huge role there, and we are fortunate with our project in Oman as Shell
and OQ are co-investors. With OQ being the domestic energy company and Shell
being the largest foreign investor — if anybody can figure this out, it would be
them. When it comes to Oman — are things on track? We're on track, broadly
speaking. With these large projects, time will tell if there will be slippage.
But if I look at the discussions we're having with our partners and offtakers,
I'd still see these projects reaching a final investment decision (FID) towards
the end of this decade. What time lag do you expect between FID and construction
or start-up? With our projects, the timelines are going to be a few years from
FID to product, because of their scale. And then full construction will take
decades. If you take our largest project, WGEH — that's 30 nodes. A node a year
would be a good run rate. So WGEH will grow with the offtake market to 2050 and
beyond. What exactly do you mean by ‘nodes'? The onus has to be on government to
help the sector along. But the onus also has to be on us as an industry to drive
our costs down, as the government is not there to just shell out money. There
are a few ways of achieving that. One is to make the equipment better and
cheaper, and there are good companies doing that. Then on the project side, you
have to go to scale and develop architecture that allows you to make the entire
project more efficient — i.e. less capital expenditure (capex) and less
equipment, but the same or higher output. If you have these huge projects that
are the size of small European countries, you can't build them in one go. They
are just too big and no one will finance them. So you have to build them in
stages. So what our team did, a couple of years ago, is to say that if we
eliminate all of the high-voltage equipment, we save a lot of money and time.
But that means that you have to put all your wind and solar within a certain
distance of the hydrogen production. So the team optimised that, and what you
end up with is this nodal unit, where you have 1-2GW of electrolysers surrounded
by twice as much upstream generation capacity. And all of that wind and solar
connects to this hub in the middle, where you have your electrolysers, and so
all of that electricity stays at distribution voltage. With this, you save a lot
of capex. Hydrogen generation takes place there and connects by pipeline to your
downstream use — methanol, ammonia, green steel. Then you build a second node
that has its own pipeline, and so on, like building blocks. And just like in a
natural gas network, that pipeline network becomes a battery. So rather than
having to pay for additional batteries, your battery comes with the pipelines
you're building anyway. So for us, we think in units of nodes. That's how we
develop our projects. And each node can be a standalone phase. We're working
with our project partners and others, using this as the baseline. If you look at
Oman's entire process, it has adopted the node as the base unit. Are you
interested in participating in Oman's upcoming bid round for land? We don't need
to because our first-round project is a legacy project. It is the only project
that was given expansion rights, because we were a legacy player. The GEO
project can go up to 25GW. Beyond Oman, I think Saudi Arabia was on your radar
at some point? We had been looking over the past few years at different markets
beyond our three projects, and we continue to look at other projects. But we
have three incredible projects that are very, very large. So the need to deliver
and focus is more where we are today, rather than expansion. Having said that,
if the right project and the right partners were to come along, we would be
open-minded. But we have a lot to deliver, so our focus is on that. Oman's model
of auctioning off land through bidding rounds is somewhat unique. What makes the
approach suitable for Oman, but not others? The Oman approach is better suited
to markets where the government has more control over land. It would be
difficult to implement that model in places that are full of freehold land. The
Middle Eastern approach in general is one of looking for master planning and
delivery, and that is something the region has done so well. You look at the
infrastructure projects they've delivered across this region. Does anybody do it
better? No. So that model is really well suited to environments like this. In
terms of infrastructure, what do you think is most needed today? Pipelines?
Import-export facilities? Storage? None of the above. The most important factor
is government policy and support, because the market will not solve everything.
If you can help bridge the gap between where we are now and what people are
wiling to pay, the solutions are all there already. None of this really requires
new technology. It just requires architecture that is optimised. So that's all
solvable. Government legislation and support — that's the critical piece of the
puzzle I think we're missing in most markets at this point in the industry's
development cycle. InterContinental Energy H2 projects Project AREH WEGH GEO
Location Pilbara, Australia Goldfields, Australia Al Wusta, Oman
InterContinental Energy share % 26.39 46 21.16 Other partners (shares %) BP
(63.57), CWP Global (10.04) CWP Global (44), Mirning Green Energy (10) Shell
(35), OQ (25), EnerTech (18.84) Planned H2 output mn t/yr* 1.6 3.5 1.8 Planned
renewables capacity GW* 26 50 25 *at final development stage - InterContinental
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