Hexagon completes pre-feasibility study for West Aussies ammonia project
Sydney-listed Hexagon Energy Materials has completed the pre-feasibility study (PFS) for the WAH2 low-emissions ammonia project in Western Australia, it said on July 3.
The study was completed on time and budget, with Class 4 engineering and cost estimation conducted by Petrofac, an energy services company. The positive outcomes of the PFS support Hexagon's commitment to pre-front end engineering design (pre-FEED), which is set to begin in mid-2023, the company said.
The PFS indicates that the WAH2 project has a significant scale, with Phase 1 based on a production capacity of 600 kilotons/year and doubling to 1,200 kT/yr in Phase 2. The cost of supply for Phase 1 is considered competitive at US$552/metric ton (mt) of ammonia, with a target to reduce it to less than US$500/mt before entering FEED.
The project leverages proven technology and existing infrastructure, reducing the expected schedule and lowering project risk and costs. Hexagon plans to advance its project financing plan, which will involve a mix of debt, equity, and government incentives, alongside the technical workstream and ongoing commercial discussions.
Moving forward, Hexagon will initiate the pre-FEED stage, focusing on progressing commercial discussions for ammonia offtake, gas supply, and carbon capture and storage (CCS) services. The company will also explore opportunities for shared infrastructure, third-party power supply, optimisation of plant design, and government funding and incentives. The target is to achieve final investment decision (FID) by the end of 2024, leading to first production in 2027.
Hexagon expects financing to be facilitated by long-term, take-or-pay ammonia offtake contracts, gas supply and CO2 sequestration agreements, and equity participation from strategic partners. The Australian government's funding initiatives and the Japanese government's goals and funding allocations for low-emissions energy projects provide regulatory support for the WAH2 project.
Hexagon chairman Charles Whitfield said the company aims to announce progress with strategic partnerships in the near future.