Frontier Energy signs key agreement to accelerate green hydrogen supply into national pipeline

Frontier Energy (ASX: FHE) has signed a Collaboration Agreement with the Australian Gas Infrastructure Group (AGIG) to accelerate the addition of green hydrogen into the Dampier to Bunbury Natural Gas Pipeline (DBNGP). The DBNGP is a major gas pipeline which connects the North West Shelf gas fields with markets located in the South West of WA.

“Formalising our relationship is an important step in the process of developing the hydrogen economy in WA,” said Managing Director Sam Lee Mohan.

“Given our proximity to DBNGP, it is a win-win for all stakeholders and ensures we are a step closer to contributing to the State’s goal of delivering up to 10% hydrogen in the gas networks by 2030.” 

Understanding Hydrogen Blending

AGIG is a market leader in blending hydrogen with natural gas – operating out of the Hydrogen Park South Australia and representing an Australian first project that produces renewable hydrogen gas. 

The Hydrogen Park delivers a 5% renewable gas blend to more than 700 gas customers to the nearby Mitchell Park. It also supplies to various industries through tube trailers and aims to supply the transport sector in the future. 

The Current State of Play

In October 2022, Energy Ministers agreed to make amendments to bring hydrogen blends, biomethane and other renewable gases under the national gas regulatory framework.

Previously, the National Gas Law and the National Energy Retail Law referred only to ‘natural gas’. 

“Following receipt of the necessary approvals and licences, AGIG and Frontier propose to enter discussions as to the type of arrangements that may be put in place to allow injection of an agreed percentage of hydrogen into the DBNGP,” the company said in a statement. 

Both parties plan to undertake a Front End Engineering Design study for the development of an injection and hydrogen blending station. 

Frontier’s Bristol Springs Project

A Definitive Feasibility Study assessing the Stage One expansion of the Bristol Springs Project confirmed its “potential to be a low-cost, early mover in the development of Australia’s green hydrogen industry.” 

Some of the key stats from the study include:

Bristol Springs is forecast to produce green hydrogen at $2.77/kg, which is considered to be “one of the lowest reported costs for a green hydrogen project of this scale in Australia.”

To add some perspective, the International Energy Agency estimates the cost of green hydrogen production to range from US$3 to US$7 a kilo in 2021.

What’s next

Frontier said offtake discussions are currently underway for foundation customers and offtake, which then leads into project financing. The project is targeting production in late 2025.