BP puts $1b Kwinana hydrogen and clean fuel projects on ice
UK oil and gas producer BP has put on ice plans for two clean fuel projects worth about $1 billion at its disused oil refinery in Kwinana, south of Perth.
BP informed its employees in meetings on Thursday, followed by telling contractors on Friday, according to people involved who were not authorised to speak to the media. Some BP staff will be made redundant.
BP was considering building a biofuel plant, Kwinana Renewable Fuels (KRF), to make sustainable fuel from biomass and a green hydrogen plant dubbed H2Kwinana.
Some workers were told the projects were to be “recycled”, which likely means BP will return to the early stages of its project assessment process to fundamentally review what, if anything, it wants to do at Kwinana.
Factors influencing BP’s decision included rising costs to build the plants, and the lack of a mandate in Australia to use the fuels, leaving BP uncertain if the products would have a ready local market, according to the sources.
The cost of the KRF had been reported to be $580 million while a public conceptual study estimated the first stage of H2Kwinana to cost $399 million.
A BP spokesman said it had made significant progress in developing the renewable fuels and hydrogen projects at Kwinana over the past three years.
He said,
While bioenergy remains a core part of BP’s strategy, BP has decided to rephase the Kwinana Renewable Fuels project,
“This involves adjusting the pace of delivery with a focus on improving capital efficiency and better alignment with government policies.”
The KRF was to be the first of five BP plants worldwide to turn biomass, including used cooking oil, into 10,000 barrels a day of sustainable aviation fuel and renewable diesel.
Work was underway refurbishing tanks at Kwinana and an $80-million-plus hydrogen production unit had been ordered from French firm Technip.
BP’s decision on renewable fuel is not a surprise after Boiling Cold revealed two weeks ago that engineering and design contractors had been stood down.
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BP puts $1b Kwinana hydrogen and clean fuel projects on ice, source