Low cost coals are central to the economics of AFE’s blue ammonia project

Availability of lower quality coals and low cost of the same coals are two key advantages that the GTI gasification technology brings to Australian Future Energy’s hydrogen ambitions.

Speaking to Stockhead, AFE chief executive officer Kerry Parker noted that while there were other well-established coal gasification technologies developed by Shell and others, the ability to use lower quality feedstock was its biggest advantage.

“When we’re not reliant on export quality coal as our feedstock, we get two distinct advantages,” he explained.

“The first is availability as most coal mines in Australia have low quality coal sitting around as waste that they need to find a home for. The second is the low cost of these coals, which give us a distinct cost of production advantage.”

Along with the large scale of its planned Gladstone Energy and Ammonia Project (GEAP), this is key to how the company plans to produce hydrogen (contained in ammonia) at just US$1.50 per kilogram, which is below the long-term goal of US$2/kg for green hydrogen and well below the US$6 to US$8 a kilogram that they currently achieve.

The GTI technology also benefits from being well-established and already operating at commercial scale at five sites in Asia.

“The largest of those is at Yima in Henan province in China and it’s currently producing about 300,000 tonnes per annum of methanol quite successfully, and being progressively scaled up to about 1,000,000tpa,” Parker noted.

Adding interest, another advantage of the process is that the carbon dioxide emissions are captured as part of the design on a pre-combustion basis.

This has the enviable benefit of producing a food-grade product that has little difficulty finding ready buyers while putting net emissions at just a tenth of a tonne for every tonne of ammonia produced.

Why ammonia?

AFE’s decision to produce ammonia is based on several reasons; the first being that ammonia is one of the most efficient and effective ways to transport hydrogen.

“Ammonia is NH3, so one part nitrogen, three parts hydrogen. It has got more hydrogen in it than hydrogen itself, so it’s being used in Asia, particularly Japan and Korea, as the most efficient and effective way to transport hydrogen around,” Parker noted.

“It’s easily liquefied and because it has been transported around the world by ship for a long time, you’ve got a well-established shipping fleet and storage facilities.”

And there are two ways the ammonia can be used. While the first is to take the nitrogen out to get hydrogen, the direct use of ammonia as fuel is gaining traction in Japan and Korea.

“We’re seeing vehicles and equipment being fuelled directly on ammonia, and there’s a lot of work being done on using ammonia as a transportation fuel for ships,” Parker added.

“Ammonia is also being used in their coal-fired power stations with an 80% coal and 20% ammonia blend to reduce their emissions.”

Green hydrogen aggregator

GEAP has also been designed with 10% to 20% excess capacity for ammonia production and for good reason.

AFE wants to be a good neighbour for the (small) green hydrogen projects being proposed in and around the Gladstone region.

“If you’re producing 10t to 50t of hydrogen in a week, it’s going to be hard to store and you’re going to find it hard to find an offtaker at those volumes,” Parker explained.

“The benefit we see, and this is what our pitch to government is, that the green hydrogen industry really needs this blue ammonia project to be developed to provide it with a natural offtake for the hydrogen that they produce.

“We feed it directly into our ammonia loop, providing them with a natural offtaker, aggregate the hydrogen into our plant and really enable the development of the green hydrogen industry in Australia.”

Looking further afield, Parker also foresees a future where expansions of the company’s ammonia plant are driven by green hydrogen projects as their technologies scale up and mature.

Nor is AFE restricting its ambitions to the GEAP, with the company already looking at establishing projects elsewhere in Queensland as well as in the US, which has strong demand for CO2 for enhanced oil recovery uses.

This article was developed in collaboration with Australian Future Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.