Former Woodside Petroleum chief executive Peter Coleman has emerged as a “significant” backer of natural hydrogen explorer H2EX and will also chair the start-up that is targeting pilot production from deposits of the gas in South Australia within five years.
The appointment of Mr Coleman, who retired from Woodside last year, comes as H2EX has completed an initial seed funding round through Perth-based CPS Capital and should assist with securing some $20 million of funding expected to be needed over the next three to five years.
H2EX is one of a handful of companies rushing to secure exploration permits in South Australia with a view to targeting so-called “gold” hydrogen – gas that is naturally occurring rather than “green” hydrogen, which is made using electrolysis powered by renewable energy, or “blue”, made from natural gas or coal with carbon capture.
Awareness of the potential for natural hydrogen in Australia was raised by a paper by Geoscience Australia and CSIRO at the APPEA oil and gas industry conference in Perth, helping fuel a scramble for permits in South Australia which quickly adapted its petroleum legislation to allow for hydrogen exploration.
Almost a third of South Australia is now covered by exploration licences or licence applications by companies seeking natural hydrogen deposits, according to consultancy EnergyQuest.
Extracting natural hydrogen has the potential to easily undercut the cost of manufacturing the fuel above ground, and avoids the environmental impact of renewables-based electrolysis projects which may involve covering swathes of land with wind turbines and/or solar panels. H2EX also has the advantage of its permits being close to infrastructure and demand centres in South Australia’s south.
“If this works and works at scale then it’s going to be very, very competitive with any other form of hydrogen,” Mr Coleman said, pointing to work also being carried out overseas in Russia, Africa and Europe.
“They’re [H2EX] in the right place, and the science is backed by Geoscience Australia and CSIRO. It’s early days though, it’s very early days.”
Rich network of contacts
He compared the work to a “rank exploration” play such as drilling to open up a new frontier oil and gas or minerals province.
H2EX co-founder and CEO Mark Hanna said Mr Coleman would bring a wealth of knowledge, and a rich network of national and international contacts that would help propel the junior’s exploration program. He would also add to the firm’s credibility as it progressed to secure additional funding down the track to develop its plans.
“Peter is… well versed in governance and stakeholder management, and looking after billions of dollars of investors funds,” Mr Hanna told The Australian Financial Review.
“That’s something that we’ll need to, in the next years and months, actually start thinking about and then also… sources of funding as well,” he said, pointing to the potential to secure government grants and backing from hydrogen and renewable energy funds.
A teaser for potential investors in H2EX refers to a possible “annual revenue opportunity” or up to $500 million with a low-cost business model.
Mr Coleman’s appointment as chairman-elect increases the weighting of ex-Woodsiders in H2EX, which was founded by Mr Hanna and his business and personal partner Greschen Brecker, who is CFO. Ms Brecker and H2EX geoscience manager Alex Kaiko also worked at the Perth-based LNG producer.
It is the second chairman role for Mr Coleman in the hydrogen space, on top of his board leadership position at aspiring liquid hydrogen exporter Infinite Blue Energy. He also sits on the board of giant oil services company Schlumberger.
Mr Coleman said one of the attractions of the natural hydrogen space was its similarity to oil and gas exploration and development.
“You look for seeps at the surface – that’s how oil and gas was originally discovered and it’s how it’s found in many parts of the world still today,” he said.
“You looked for generation of the hydrogen you look for migration pathways and then you look for traps that you can find a hydrogen in. So all of those elements were very familiar to me.”
With Mr Hanna and Ms Brecker being former colleagues at Woodside and picking up permits early, “it was just natural for us to get together, given my interest,” Mr Coleman said.
H2EX expects to secure its first petroleum exploration permit “imminently”, Ms Brecker said, noting that three other permit applications it has under way will need to go through native title negotiations potentially lasting 6-12 months before they can be finalised. In all, its four applications cover 32,000 square kilometres of land adjacent to natural hydrogen discoveries in South Australia.
The funding raised so far – the amount of which H2EX has not disclosed – will help support work this year including desktop surveys ahead of on-land surveys and soil sampling expected to get under way in the initial permit on the Eyre Peninsula towards the year end.
The sampling will test for elevated levels of saturation of hydrogen in the soil, which would give some indication of hydrogen seeps or systems underground.
Natural hydrogen is created underground through an ongoing, self-replenishing chemical reaction, with the most well-known process being the oxidation between water and iron sediments.
Source: afr
