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15 Aug 2023, by Amy Sarcevic
An informal association of Australian and Korean companies led by LATTICE Technology (Korea) are progressing a Liquid Hydrogen (LH2) shipping project in Darwin, with barge export/import terminals and a large-scale LH2 tanker, to export Australian Renewable H2 to Korea.
The LH2 project is a commercial-size demonstration to “prove-up” the key technologies for safe and efficient intercontinental shipping of LH2. Phase 1 of the project aims to export 42,000 tonnes/year of Green LH2 to the Korean transport sector by 2030.
The “All-Seaborne Solution” for transporting renewable H2 includes an export barge terminal in Darwin, with electrolysis and liquefaction facilities on the topsides and LH2 product stored in the hull. A large-scale 50,000m3 LH2 tanker and a barge import terminal in Korea, complete the Liquid H2 ‘whole supply chain’ configuration.
Project Director Costa Tsesmelis says a site survey for the LH2 export project has identified a suitable mooring site for the export barge terminal at Channel Island, close to the Middle Arm development precinct.
“The project is now progressing in a step-by-step manner to build the International Joint Development that will be essential to successfully execute the project,” he said, ahead of NT Resources Week.
The project has the backing of the Northern Territory Government. The Korean Government has also shown support for the LH2 shipping project, with the KETEP funded design of transportable barge export/import terminals for Green LH2. The Darwin Project operation now seeks assistance from the Commonwealth and Australian government agencies to ‘mobilise’ its Basic Design/FEED stage.
“We anticipate Guarantee of Origin proposals for Australia and fiscal measures in Korea will be adopted in the future to facilitate Green LH2 imports to Korea. This will then make it easier for domestic Korean investment in LH2 distribution infrastructure,” he added.
Mr Tsesmelis expects the level of interest in the Darwin LH2 shipping project from international private investors and public corporations to increase significantly in coming months, as awareness of its value proposition grows.
The “Darwin Green LH2 Export Project” also includes the development of a “Domestic H2 Hub” facilitated by long-term secure supplies of Green LH2 from the export project at fair pricing. This solves the Chicken & Egg supply-demand dilemma for investors looking to invest in domestic H2 infrastructure and projects. The Hub will include construction of a multi-user Fuel Cell Vehicle refuelling terminal, and remote micro-grid and small H2 gas turbine developments to help ‘kick-start’ the domestic H2 market in the NT.”
Mr Tsesmelis believes that Green LH2, in addition to its premium value as a clean fuel, will also be in strong demand for high-value downstream markets in Europe and Asia, such as green refining and chemicals. Large-scale LH2 shipping doesn’t exist today, however Mr. Tsesmelis sees Green LH2 in the future being preferred to Green Ammonia for transporting Renewable H2 from Australia.
“LH2 is a premium product that consumers will prefer come 2030. Unlike the use of Green Ammonia for transporting renewable hydrogen, LH2 needs no further processing at the importer’s location. Processing at import terminals raises inevitable concerns about the final H2 product quality. In contrast, LH2 product quality is guaranteed through its manufacturing process which produces H2 meeting the stringent ISO 14687 H2 fuel quality standard for Fuel Cell Vehicles”.
“The Fuel Cell Vehicles roll-out in Korea and Japan we believe will drive much of the demand for importing Green LH2 to those countries, where growing the market for Fuel Cell Vehicles is an integral part of those countries’ National H2 Economy plans.”
Mr Tsesmelis said the business model for the project is similar to that developed by the Australian LNG industry in the 1980ies. But unlike this sector’s foray into exports, he expects the path ahead for LH2 exports to be more straightforward.
“The early LNG export industry developments in Australia were complicated with complex take-or-pay agreements typically between a number of major companies, along with multiple contracts. On top of that, different valuation approaches for the commodity as a Fuel Oil substitute added further difficulties for securing funding. We do not anticipate these problems with the Darwin LH2 ‘commercial-demonstration’ project which addresses an established “niche” market.”
The project is further advantaged in that Green LH2 imports to Korea will serve as a direct replacement for domestic Gasoline consumption, with the accompanying reduction in CO2 emissions. Pricing / valuation for Green LH2 will be straightforward based on the well-accepted Gasoline-Gallon-Equivalent (GGE) industry pricing metric.
“LH2 for transport will be treated in exactly the same way as Gasoline is today on an import/export parity basis. In our region, offtaker pricing will be based on Platts FOB Singapore, Premium Gasoline daily quotations. Our valuation method for LH2 as a commodity of course contrasts markedly with the use of ‘production cost’ plus margin methodologies, often used for pricing H2 product.”
Looking ahead, Mr Tsesmelis said he is focussed on building win-win collaboration arrangements and working together with partners to achieve common goals. To ensure a safe and efficient supply chain, close collaboration with government agencies and international bodies such as the IMO, and ship classification societies will be essential, he said.
“We need equity investors, offtakers, specialist vendors, government agencies, R&D groups, universities and infrastructure suppliers, to all be on the same page together and working in harmony. Everyone’s opinion in the International Joint Development, across the supply chain, will be listened to and considered.”
Talking more about the project, including its underlying technology and costings, Costa Tsesmelis will present at the Environmental Management & Decarbonisation Conference as part of NT Resources Week on 13-14 September.
This year’s event will be headlined by The Hon Madeleine King MP, Minister for Resources; Minister for Northern Australia, Federal Member for Brand; and The Hon Nicole Manison MLA, Deputy Chief Minister, Minister for Mining and Industry; Northern Australia and Trade; Advanced Manufacturing; Tourism and Hospitality; Parks and Rangers, Northern Territory Government of Australia.
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