Provaris Energy Ltd (ASX:PV1) is making the future of green hydrogen accessible through the simplicity and efficiency of compressed hydrogen in marine transport. The development of an efficient way to load, store, and transport hydrogen by sea, and to discharge and distribute the hydrogen at the receiving port, is key to connecting low-cost supply with markets short on domestic supply.
Provaris is now executing a development program to be the market-leading provider of compressed hydrogen by sea from Australia to the high-demand hubs in Southeast Asia, and to various developers and supply sources located within mid-range shipping distance of the major ports in Europe connecting to the key industrial hubs seeking supply in order to meet their decarbonization goals.
GH2 Carrier Development and ABS Class Approvals
Provaris is now developing two capacity Gaseous Hydrogen (GH2) Carriers with a proprietary cargo containment system that allows for hydrogen to be safely managed at 250 bar pressure and ambient temperatures. The design of two GH2 Carriers, each with a different capacity of compressed hydrogen (H2Neo at 26,000 m3, and the H2Max at 120,000 m3) have received Approval in Principle (AIP) from ABS.
The H2Neo, is at an advanced design stage and under review by ABS, aiming for Design Approval for Construction by year end (2022). It is anticipated that the first H2Neo ships will be available for operations in 2026.
Provaris Energy has now completed an enhanced design package for the ship, including a Finite Element Model that has been extensively tested in various operating conditions. The process engineering and topside manifold system are also at an advanced design stage, and has been assessed through hydrogen dispersion, fire and explosion studies.
ABS is in the process of reviewing the advanced engineering package and carrying out a HAZID risk assessment; continuing the initial HAZID and risk register established during the AiP process in 2021. Given receipt of AIP from ABS, this unique ship with its compressed hydrogen tanks, attached to the ship structure can be designed to meet ABS Class requirements and proven to be as safe as other gas carriers.
Provaris Energy managing director and CEO Martin Carolan said: “Utilizing compression as a means to manage the loading, discharging and distribution of gaseous hydrogen, will limit the need for large scale port facilities at either end of the supply chain, enabling greenfield hydrogen projects to be developed at a scale that corresponds with market demand.”
In addition, C-FER Technologies has recently completed an independent analysis of the H2Neo ship’s hydrogen permeability, which supported PV1’s design assumptions and the selection of a stainless-steel inner liner. C-FER is now supporting the selection of carbon steel and welding techniques in preparation for prototype construction and testing in 2022.
Developing a portfolio of integration compressed hydrogen projects
Provaris is developing a portfolio of integrated green hydrogen projects. The business model is to develop and invest in profitable projects across the hydrogen value chain, leveraging our innovative GH2 Carriers integrated with hydrogen supply chains using compression.
A portfolio of development projects is now developing through detailed feasibility studies for its Tiwi H2 Project in Northern Australia, targeting production and distribution of green hydrogen in Asian markets, the HyEnergy Project in WA where Provaris is completing a feasibility for the export of Phase 1 volumes using compression, and assisting large renewable energy developers in Europe to move hydrogen to ports being connected to hydrogen pipeline systems under development.
Tiwi H2 Project
Located on the Tiwi Islands, Northern Territory, the Tiwi H2 project will install 2.8 Gigawatts of solar generation with the capacity to produce up to 100,000 tonnes of green hydrogen per annum. Compression will enable the development over two phases, producing approximately 50,000 tonnes of hydrogen per annum, to Asia-Pacific markets using a fleet of H2Neo Carriers.
As the demand grows, additional capacity could be installed, together with the larger H2Max design deployed to support higher volumes over longer shipping distances. Provaris is progressing environment approvals and detailed engineering through to an investment decision late 2023, with first hydrogen export to commence early 2027, subject to all commercial and regulatory approvals and customer offtake in place.
Carolan said: “The Tiwi H2 Project demonstrates the benefits of compression, given its low environmental impact, proximity to key Asian markets, strong social benefits to the indigenous landowners, and an opportunity for the Northern Territory and Australia to be an early mover in export of green H2.”
HyEnergy Project
In August 2021, Provaris entered into a non-binding Memorandum of Understanding with Province Resources - Petrel Energy Ltd (ASX:PRL) - and global renewable company Total Eren (together the HyEnergy Project partners) to support a technical and commercial feasibility study on exporting green hydrogen using compressed shipping from the 8 GW HyEnergy Project located in the Gascoyne region, WA, to nominated markets in the Asia-Pacific region.
The feasibility study is focused on the proposed phase 1 capacity of renewable energy generation and will consider the export of 200,000 tpa of hydrogen, from the total production volume of 275-300,000 tpa.
Provaris has also received funding from the Renewable Hydrogen Fund as part of the Western Australian Government’s Renewable Hydrogen Strategy.
The scope of the HyExport Study includes the integration of the HyEnergy® Project’s proposed green hydrogen production facility with an onshore compression facility and offshore mooring and loading system, as well as the operation of a fleet of Provaris’ H2Neo carriers for marine transport to nominated markets in the Asia-Pacific region.
The study is due to wrap up shortly and be integrated with ongoing feasibility studies by the HyEnergy project partners.
HyEnergy’s partners are also working closely with State Government departments as the legislature starts to firm up surrounding green hydrogen’s role as a key future industry in WA.
This includes working closely with the state government to secure Lead Agency Status, which will help facilitate progress across the project’s environmental and other permitting requirements.
At the local government level, the HyEnergy partners have secured the support of the Shire of Carnarvon, entering an MoU to investigate the use of a 12,311-hectare site north of the Carnarvon township as a suitable site for developing infrastructure as part of the HyEnergy Project.
Focus on Asia Pacific's and Europe’s green hydrogen needs
Australia is blessed with plentiful renewable energy sources (wind and solar) and relatively limited local demand given the population.
By contrast, several countries in South-East Asia have pledged to decarbonise their economies but have challenges in achieving targets given the geographies.
Provaris Energy is looking to address this imbalance by transporting surplus energy in the form of green hydrogen from northern and western Australia to areas of high demand in its novel compressed hydrogen vessels.
Up to 85% of the world’s proposed green hydrogen projects are in Europe, with a large pipeline of gigawatt-scale assets all slated to reach operation by 2030.
Green hydrogen imports will be essential for reaching targets set under the EU’s “Fit for 55” legislative package and REPowerEU by 2030, with 20 Mtpa per year total demand and 10 Mtpa required through imports.
Provaris has now opened an office in Oslo, Norway, to be closer to the Company’s technical partners and dealing with future project suppliers and off-takers. Oslo is an established hub for gas-carrier companies, with access to ship owners, engineering companies and equipment suppliers. European subsidiary opens access to new sources of government funding and a deeper pool of capital market participants.
Provaris CTO Per Road said: “To help Europe’s energy crisis and meet its 2030 decarbonisation goals, the EU has a plan for the internal production of 10 million tonnes of hydrogen and the importation of another 10 million tonnes. Norway also has hydrogen high on their agenda, and compression is widely accepted as a means for production and distribution.”
Broker recommendation
Edison Investment Research has valued GE at 18 cents per share, which implies an upside of 157% on PV1’s current share price of 7 cents.
The memorandum of understanding (MOU) recently signed between PV1 and the HyEnergy Project partners will potentially confirm the validity of PV1’s own scoping study, according to Edison.
The study highlighted the cost advantage of compressed hydrogen shipping, the technical feasibility of PV1’s compressed solution and confirmed the potential production costs of green hydrogen in Western Australia.
If HyEnergy’s own scoping study concludes with a positive outcome, it could prove to be the catalyst that genuinely kick-starts PV1’s compressed hydrogen transportation solution.