Remember hydrogen? Hexagon has kicked off the next key study for its WA H2 vision

Tue 17 Jan 23, 3:54pm (AEST)
Cityscape image of Perth downtown skyline, Australia during sunset
Source: iStock

Key Points

  • Despite setbacks from ASX compliance and a shocking 2022 for the hydrogen thematic, Hexagon moving ahead with WAH2 project
  • The project seeks to create hydrogen from gas feedstock on the North West Shelf of WA
  • Company expects Pre-Feasibility Study to be complete in 2Q 2023 with Final Investment Decision to be made before CY 2024

ASX-listed microcap Hexagon Energy Materials (ASX:HXG) on Tuesday reported the Pre-Feasibility Study (PFS) for its WA-based Blue Hydrogen project, WAH2, will be completed in the second quarter of the calendar year (2Q 2023). 

Blue Hydrogen refers to hydrogen made from natural gas feedstock. It is typically achieved via the steam reformation of methane. 

The product is different from Green Hydrogen, which is made using water and electricity produced from renewable energy sources. For this reason, Green Hydrogen is the gold standard for ESG-conscious hydrogen manufacture. 

For a run-down on Green Hydrogen, you can read Market Index’s explainer here

Project overview 

Hexagon earlier this month published its Scoping Study for WAH2 (ASX compliance later asked the company to retract target statements).

Hexagon notes on its website it has entered a “mandate” with private company Equity Lifting Solutions for a potential supply of gas to turn into hydrogen.

Hexagon envisions stage one of the project requiring up to 21TJ/d—a considerable volume of carbon-emitting natural gas. It has applied for landholdings on the North West Shelf (NWS) with the WA government. 

The company describes its ambitions to incorporate more renewable sources into its manufacturing process, should the project go live, to maximise ESG credentials and minimise the volume of carbon capture technology required—still a nascent technology

Hydrogen refresher 

For those playing at home, Hydrogen was a key theme through energy markets in 2021. This is perhaps best demonstrated by the fact Global X launched a hydrogen ETF in late 2021 (ASX:HGEN)

Hydrogen was also a major theme at COP27 in late 2021. Then, 2022 happened, and world markets had one of their worst years since 2008.

Hydrogen projects fell from darling status, but the gas still plays into the decarbonisation thematic (which suffered in 2022 as energy security superseded ESG concerns).

Why is hydrogen ESG friendly?

The combustion of hydrogen gas produces less carbon emissions than that of traditional hydrocarbon products, emitting water and small amounts of nitrous oxides. 

A number of companies are developing hybrid Electric Vehicles (EVs) which incorporate both EV batteries and hydrogen fuel cells to boost range. 

Among them are the USA’s Hyzon Motors and the closer-to-home company H2X Global, managed by an Australian living in Malaysia. Both companies are actively working to penetrate the Australian market. 

Hydrogen is the preferred decarbonisation option of oil and gas majors, given that decarbonised world with a heavy focus on hydrogen ultimately provides exposure to profit for those majors—so long as the hydrogen is made from gas feedstocks, becoming “Blue Hydrogen.” 

Next steps 

Over the coming months, Hexagon’s team will finish the PFS. Areas of focus include: 

  • Site location and land availability 

  • Logistics and production 

  • Gas supply agreements 

  • Viability of carbon capture and storage 

  • Cost mitigation 

The company expects to reach its final investment decision in 4Q 2023 after publishing a Front End Engineering Design (FEED) for its proposed plant in the same quarter. 

Want to know more? 

A number of considerations about Hexagon Energy Materials can be learned by viewing Market Index’s free company data. 

  • Company’s share price 1.9c*

  • Shares are up 5.5% mid-late afternoon Tuesday*

  • Market cap of $9.74m* 

  • One year returns down -75% 

  • Year to date performance up 11.7% 

  • Ranked 703 of 942 constituents in the materials sector 

  • Company had $2.03m in cash at end of September quarter 

  • It spent $330,000 over the same period in opex 

  • The company has not conducted a capital raise since 

*As at 1445 AEST Tuesday 17 January 2023 

For context: a look at HXG's one year charts
For context: a look at HXG's one year charts


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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