Article by Jack McGinn, courtesy of Business News
11.08.2025
The scrapping of four major hydrogen projects with links to WA late last month sent shockwaves through a flailing sector, but work is ongoing.
AMONG the first acts Amber-Jade Sanderson undertook in her new portfolio as Western Australia’s energy minister was to attend the World Hydrogen Summit in the Dutch city of Rotterdam. From half a world away in a notably progressive jurisdiction, Ms Sanderson issued a call to WA’s hydrogen industry to ignore the drop-off in hype and press ahead with action.
“Less hydrogen hype isn’t a problem; it’s just the next phase,” Ms Sanderson said at the summit in May. “Our ambition to develop a worldclass hydrogen industry remains stronger than ever.”
According to the government’s media release, Ms Sanderson’s speech served not only as a pitch for why WA deserved the attention of green capital and offtakers, but also a call to action for industry to work alongside government and investors to “cast aside incrementalism”.
Two months later came a series of blows to four high-profile projects with WA connections, highlighting the enduring challenges facing the fledgling industry in terms of project economics and responsible allocation of shareholder money.
What happened?
Only one of those projects is in WA, but all have business ramifications for the state.
In the case of Perth-headquartered Woodside it was the H2OK project in Oklahoma that was scrapped, on July 23, with a pre-tax impairment of $213 million.
The next day came a double blow from Andrew Forrest’s Fortescue, which walked away from both its PEM50 hydrogen project in Gladstone, Queensland, and its Arizona hydrogen project in the US, at a combined pre-tax cost of $227 million.
It was the third announcement that would likely have triggered alarms in the minister’s office.
While the decisions of Woodside and Fortescue were not glowing endorsements of hydrogen’s global prospects in the immediate term, they did not hit immediately, or locally.
But on Friday July 25, BP – having flagged a global strategic shift away from renewables months earlier – revealed it would exit the $55 billion Australian Renewable Energy Hub.
AREH is slated to supply much of the energy required to decarbonise the Pilbara, with a target of 1.6 million tonnes of green hydrogen production in full flight.
The JV has also been engaged to build the Great Sandy Desert Corridor as part of the Pilbara Green Link transmission network, connecting its planned wind turbines and solar arrays slated for development by 2029 to industrial users in the Boodarie precinct at Port Hedland.
As project operator and 64 per cent stakeholder in AREH, BP’s exit has major ramifications for the state’s ability to deliver on its decarbonisation agenda.
In its statement, BP confirmed the withdrawal was the result of its strategic reset towards oil and gas but said it would work with its JV partners to transfer ownership.
“While AREH no longer aligns with BP’s strategy, it continues to present an important opportunity for WA to decarbonise the Pilbara,” a spokesperson said.
“Our ambition to develop a world-class hydrogen industry remains stronger than ever
– Amber-Jade Sanderson
“BP will work with its AREH partners to ensure a safe and efficient transition of operatorship.” The JV’s other partners are private firm InterContinental Energy (26.4 per cent) and CWP Global (10.04 per cent).
InterContinental chief executive Alex Tancock said the company remained committed to getting the project off the ground.
“As the AREH project company assumes operatorship with the leadership and guidance of InterContinental Energy, we remain committed to working closely with the government of WA and all stakeholders to drive the next phase of development,” he said.
“We believe strongly in the project’s potential to decarbonise the Pilbara and diversify the state’s economy, and we look forward to delivering on this shared vision.”
The government is similarly confident and is working with the remaining JV partners to find ways to facilitate project development.
“The AREH project is expected to significantly support decarbonisation of the Pilbara, and we look forward to further collaboration with InterContinental Energy on this next phase,” a government spokesperson told Business News.
“Hydrogen remains an emerging export opportunity for WA.
“By playing a role in decarbonising WA’s major trading partners through LNG exports now, then green hydrogen exports later, the state government will continue to build on its strong record of creating jobs and supporting new business opportunities.”
Business News understands Horizon Power has been engaged to carry out environmental, geotechnical, engineering and heritage studies on AREH’s behalf. According to BP, its $1 billion H2Kwinana project – shortlisted for a share of the federal government’s $2 billion Hydrogen Headstart incentive program – on the site of BP’s former oil refinery in the southern industrial hub, remains in progress.
The future for the proposed Geraldton Export-Scale Renewable Investment project in the Mid West – where BP bought land and planned to support the Oakajee strategic industrial area with new hydrogen from the mid-2030s – is unclear. Meanwhile, InterContinental also holds a majority stake in the early stage Western Green Energy Hub east of Kalgoorlie, alongside CWP and Mirning Green Energy. A final investment decision there is slated for 2029.
Policy pullback
The other hydrogen projects to be scrapped faced a battle of perception against reality.
In 2023, Woodside chief executive Meg O’Neill held H2OK up as an example of stimulus policy done right, as she praised the US’s Inflation Reduction Act for offering attractive tax credits to green energy producers.
“Put simply, it has catapulted the US to the forefront of the global energy transition,” Ms O’Neill told the American Chamber of Commerce in Australia in Perth in May 2023.
“Why? Because it uses carrots, not sticks, to encourage decarbonisation.”
However, challenges emerged as customers showed a lukewarm appetite for potential offtake, while the draft criteria for the enticing tax credits cast doubt over Woodside’s eligibility in early 2024.
A final investment decision was deferred twice, while Woodside’s attention turned to the Beaumont new ammonia project in Texas – acquired for $US2.35 billion in September 2024 – and the Louisiana LNG project.
The exit was confirmed in July.
“Woodside made the decision to exit the proposed H2OK project in Oklahoma due to ongoing challenges facing the lower-carbon hydrogen industry, including cost escalation and lower-than-anticipated hydrogen demand,” it wrote.
A hydrogen refueller being built by Woodside south of Perth is still slated for startup in the fourth quarter of this year.
Over the terrace, Fortescue took positive final investment decisions on its Arizona hydrogen project and PEM50 in Queensland in November 2023.
Its appetite for the US market was similarly encouraged by the Inflation Reduction Act, but its eligibility was also in doubt once the draft criteria were made public.
Despite that, first sod was turned in Arizona in May 2024. Two months later, Fortescue stepped back from its 2030 global hydrogen production targets.
Announcing the project would be scrapped in July, the company’s new chief executive of growth and energy, Gus Pichot, told an investor call that the Trump administration had taken the wind out of the sales of the US green energy push.
“As you know, a shift in policy priorities away from green energy has changed the situation in the US,” Mr Pichot said.
“The lack of certainty and a step back in green ambition has stopped the emerging green energy markets, making it hard for previously feasible projects to proceed.”
The Inflation Reduction Act is still in effect, and although congressional approval is needed to repeal the legislation, the Trump administration is doing its best to withhold funding, sack staff from climate and related agencies, and encourage oil and gas projects instead.
In Australia, the move away from Queensland was badged as a local refocus on green iron in the Pilbara, and Fortescue was made to repay the federal and Queensland governments around $60 million worth of incentives it received in support of PEM50.
Fortescue’s exit was foreshadowed and not unexpected.
Previously, the company had strategically pulled away from hydrogen and the renewed focus on clean energy, noting that electricity pricing in Australia made it a difficult jurisdiction in which to build an economically viable hydrogen project.
With an emphasis on shareholder returns, Mr Pichot said Fortescue was not giving up on hydrogen; words that may give some comfort to policymakers.
“Green energy and green hydrogen is key to our future, including our green metal strategy,” he said.
“Technology is improving at rapid speed.
“The cost will come down and the market will come, but we must also be realistic and disciplined.”
Green shoots
As the energy minister alluded to in Rotterdam in May, the hype has come out of the hydrogen sector in WA. But there are signs of life, even as the majors scale back.
Fortescue’s progress on hydrogen is seen at its Christmas Creek mine, where it built a hydrogen refuelling plant in 2024 to power some equipment currently operating at the site.
Arrowsmith project proponent Infinite Green Energy entered administration in April, and a bid by former Woodside boss Peter Coleman to rescue the company was endorsed by creditors in July.
IGE runs a solar farm at Northam and previously stated a hope to deliver Arrowsmith – a multi-billiondollar hydrogen project south of Dongara – in late 2027-28.
That milestone appears unlikely considering recent events, but the move by Mr Coleman came with an endorsement of hydrogen’s prospects in the longer term.
The Aboriginal Clean Energy Partnership’s proposed $3 billion East Kimberley Clean Energy project is tracking towards a final investment decision in 2026 and a target of hydrogen production in 2029.
Another Pilbara project, Engie and Mitsui’s Yuri project, has been slowly pieced together since a final investment decision was taken in 2022, and construction is expected to wrap up by the end of the year.
Yuri will supply Yara Pilbara’s ammonia operations near Karratha, with the bulk of its hydrogen initially produced from natural gas.
ASX-listed NH3 expects to kick off front-end engineering and design studies this quarter on its WAH2 project near Maitland, 20 kilometres west of Karratha, from which it hopes to supply low-carbon ammonia into Asia using renewables for production “to the greatest extent practicable”.
The proposed development of Woodside’s depleted Angel gas field off the WA coast into a carbon capture and storage project could facilitate both Yara and NH3’s low-emission ambitions as an interim measure.
In the Mid West, the proposed Murchison Green Hydrogen project being developed by Copenhagen Infrastructure Partners around 15km from Kalbarri has been shortlisted under Hydrogen Headstart for up to $814 million worth of production support.
Subject to a 2026 final investment decision, CIP hopes to have the project in production late in 2029 and ramped up to full output in 2031.
Hydrogen has also been at the heart of a haulage trial to be undertaken by iron ore miner Fenix Resources, alongside aspiring producer Warradarge Energy in the Mid West.
The trial will begin in September, with New Zealand transport firm HW Richardson engaged to convert a fleet of prime movers owned by Fenix subsidiary Newhaul to power trucks carrying ore between Fenix’s mines and the port of Geraldton.
Another Mid West hydrogen aspirant, Warradarge plans to draw energy from a behind-the-meter connection to the Warradarge wind farm operated by Synergy and Potentia Energy joint venture, Bright Energy Investments.
That supply will be used to generate an initial 3.6 kilotonnes of hydrogen per annum for fuel supply.
Fenix, Warradarge Energy and Athena Resources later signed a memorandum of understanding to work together on a green iron project, which would use green hydrogen to produce green iron products down the track.
Proponents that do weather the storm may stand to benefit from a range of state and federal government incentives devised when hydrogen was in vogue.
But scaling back of WA’s industrial titans from major projects in the space could make for slower progress than was projected in the early stages of the decade.