Australia’s Strike Energy and engineering giant TechnipFMC have completed a feasibility study for a urea facility in Western Australia that will use a blended input of both "blue" and green hydrogen.
Strike revealed on Monday that it had been awarded an option for a long-term lease over a 60-hectare site in Development WA’s Narngulu Industrial Estate, where the proposed 1.4 million tonnes per annum Project Haber urea production facility would be located.
The site lies adjacent to the Geraldton Port and the proposed US$1.8 billion Project Haber development will include a 800,000-tonne ammonia production train, 300,000 tonnes of onsite urea storage, power and utilities, steam generation, rail sidings for transport and a 120-kilometre raw gas pipeline from the Perth basin.
The plant will utilise the Haber-Bosh process that fixes nitrogen with hydrogen to produce ammonia. The pure carbon dioxide waste from steam-methane reforming is then added back and used in the production of urea, an ammonia-based product.
According to Strike, this will offset a portion of its associated carbon footprint from the Greater Erregulla project, describing the process as a form of chemical sequestration.
The "blue hydrogen" associated with Project Haber will be different from the standard definition of blue hydrogen, which generally involves using carbon capture and storage equipment to contain some 95% to 99% of the CO2 emitted by the steam-methane or autothermal reforming processes used to make the hydrogen.
However, the CO2 captured in urea is then released as soon as the urea is spread on the field, according to fertiliser company Yara.
A Strike spokesperson confirmed to Upstream that additional options for carbon management and abatement, including CCS and offsets, would be evaluated and considered during the front-end engineering and design phase.
It is also envisaged that, over time, green hydrogen could supplant the raw gas input, with the planned development also including the construction of a 10-megawatt hydrogen electrolyser.
Strike said this would allow it to take advantage of the “abundant” wind energy generated in Australia’s Mid-West region to form a green hydrogen input stream, which would represent roughly 2% of the initial hydrogen consumed.
It then intends to scale up the green hydrogen capacity over time as technology matures and renewable capacity builds.
Strike estimates fertiliser revenues generated from Project Haber will be between A$540 million and A$700 million per annum (US$416.4 million and US$539.8 million) and the company has already entered discussions with several parties over offtake and/or equity in the project.
It plans to start a formal offtake tender in the second quarter of 2021 and intends to secure offtake agreements for up to 80% of the product prior to entering into front-end engineering and design.
It will also look to market equity in the project towards the end of the year and expects to retain a 30% carried interest in the development.
'Commercial backbone' for Greater Erregulla gas
Strike claims Project Haber could “form the backbone of the commercial viability” for its planned Greater Erregulla project in the Perth basin.
Project Haber is forecast to consume 86 terajoules of natural gas per day, and up to 628 petajoules over a 20-year lifetime.
Strike said that, between the fertiliser and gas sales revenues, it expects to generate superior returns and ultimately a higher realised price for its future predicted gas supply than the current long-term domestic gas price expectations in Western Australia.
“The launch of Project Haber concludes more than a year of feasibility work by the company aimed at identifying the best way to monetise Strike’s world class gas resources in the Perth basin,” Strike managing director Stuart Nicholls said.
“That work has resulted in this compelling development opportunity, which can kick start Australia’s gas-led recovery, and manufacture Western Australia’s natural resources into a product stream the country now relies on global imports for.”
Strike highlighted that much of Australia’s domestic urea manufacturing has been pushed offshore due to rising gas prices and scarcity of long-term competitive gas supplies.
This has led to Australia becoming more dependent on international urea supplies from the Middle East and China to feed the needs of the country’s giant agricultural sector, with Strike noting Australian nitrogen fertiliser consumption has increased 67% over the past decade.
“Once in production, Project Haber can support the ongoing competitiveness of Australia’s agricultural industries by lowering one of the main cost inputs into Australian farms, all whilst employing regional West Australians and consuming local natural gas,” Nicholls said.
“Project Haber is a carbon-conscious development where the natural advantage of converting gas to urea is that a portion of the project’s carbon is returned to the soil. Also, with the application of emerging technologies, the development will integrate as much renewable energy into its hydrogen input stream as it can over time.”
The company intends to make production from Project Haber available primarily to meet the needs of Australian farmers, with surplus product to be made available to international markets.
Strike anticipates Project Haber will create more than 1000 jobs during construction and hundreds of direct and indirect long term operational roles.
It is currently targeting a final investment decision at the end of 2022, with construction anticipated to take 36 months to complete.