Woodside shelves US low-carbon hydrogen project; posts higher 2nd quarter revenue

Australian oil/gas firm Woodside Energy, though it reported a stronger-than-expected 8% rise in second-quarter revenue on due to robust output from Senegal’s Sangomar project, took hefty write-downs on a failed hydrogen venture and aging offshore facilities.

The company, thus, said it is abandoning its US-based H2OK hydrogen project in Oklahoma, citing cost escalation and weaker-than-expected demand in the low-carbon hydrogen sector. H2OK, announced in 2021, was expected to produce up to 60 tonnes/day of liquid hydrogen through electrolysis and liquefaction primarily for the heavy transport sector and is the latest to be one of many clean energy investments scrapped after Donald Trump’s re-election.

Woodside had already completed the FEED and awarded equipment and engineering contracts to Nel and Air Liquide for the project. The exit will result in an impairment loss of about US$140 million on a pre-tax basis.

Woodside CEO, Meg O’Neill, confirmed, “We have made the decision to exit the H2OK project, demonstrating our disciplined approach to portfolio management.”

Nevertheless, Woodside is progressing with the Beaumont New Ammonia project in Texas. The company indicated a strategic shift towards blue hydrogen solutions.

Expected to produce 1.1 million tonnes/year of ammonia, the initiative was reportedly 95% complete by the end of the second quarter and is scheduled to start up in the second half of 2025.

As part of a collaboration with Saudi Aramco, Woodside is exploring opportunities for lower-carbon ammonia production from the project, alongside potential equity acquisition and LNG offtake agreements related to their Louisiana LNG partnership.

Meanwhile, Woodside also faces mounting decommissioning costs for its aging Minerva, Stybarrow and Griffin offshore facilities, with technical challenges at closed sites driving up expenses. The company expects to book US$400-$500 million in pre-tax charges related to the decommissioning work.

On the positive side, the company has sold a 40% stake in its Louisiana LNG project to Stonepeak for US$5.7 billion in June, with the buyer agreeing to fund 75% of the project’s capital expenditures in 2025 and 2026. The company said it continues to attract interest from potential partners for further stakes.

In March, it also agreed to sell offshore oil and gas assets in Trinidad and Tobago to London-based Perenco, which included production facilities and interests in shallow water fields. Woodside marginally adjusted its 2025 production forecast to between 188 million and 195 million boe, compared with its previous guidance range of 186 million to 196 million boe.