Australian energy firm Woodside has launched a strategic review of its recently acquired Texas ammonia plant, which is due to begin blue hydrogen-based production next year, while abandoning plans to spend $5bn on new energy projects by 2030.
CEO Elizabeth Westcott told the company’s Q2 earnings call that “significant changes in the global environment” had changed the “underlying premise” of a “developing market for lower-carbon ammonia.”
Woodside took ownership of the 1.1 million tonne per annum (mtpa) Beaumont New Ammonia plant in March this year under a $2.35bn deal with OCI Global.
Upon taking control of the site, the firm delayed plans to bring blue ammonia production online, citing construction challenges from industrial gas firm Linde, which is building the facility’s dedicated carbon capture-equipped hydrogen plant.
Both Linde and Woodside still expect the blue hydrogen plant to begin supplying Beaumont next year.
However, Westcott has been tempering investor expectations, telling a previous earnings call that uptake of lower-carbon ammonia had been “slower” than it forecast.
“Now that the asset has moved into the operating phase, it is the optimal time to review its place in our global portfolio,” Westcott told analysts during the Q2 results. “We will explore all options to determine the best value for Woodside.”
“The asset was acquired in a different global environment to the one we’re in today,” she said. “It’s important to reflect the changes we’ve had in the last 12 months.”
The review comes after the company cancelled its planned 60-tonne-per-day green hydrogen project in Oklahoma, US, in 2025 due to cost and lower-than-expected demand.
However, it comes amid a wider retrenchment in blue hydrogen across the US Gulf Cost where several flagship projects have struggled to translate abundant natural gas, carbon storage, and federal incentives into demand.
Last year, ExxonMobil paused its proposed Baytown blue hydrogen and ammonia project in Texas until market demand develops.
This summer, Air Products abandoned its planned 1,700-tonnes-per-day blue hydrogen project in Louisiana, after concluding expected returns no longer met its investment criteria.
However, some projects with stronger committed offtake are still advancing. CF Industries, Jera, and Mitsui are due to break ground on the 1.4 mtpa Blue Point blue ammonia project in Louisiana, with the Japanese firms due to import volumes thanks to government subsidies.
