Whitebark plots path to green hydrogen, geothermal energy

Headshot of Michael Philipps
Whitebark Energy is shifting from oil and gas exploration to geothermal energy and green hydrogen production.
Camera IconWhitebark Energy is shifting from oil and gas exploration to geothermal energy and green hydrogen production. Credit: File

ASX-listed Whitebark Energy is embarking on a strategic change of course from its traditional oil and gas activities to focus on commercial opportunities in the green hydrogen and renewable energy sector.

The company today confirmed it has signed a binding purchase and sale agreement with Conflux Energy Corp that will see the latter take a 90 per cent interest in Whitebark’s Wizard Lake oil and gas assets in the Canadian province of Alberta.

Management believes that hydrogen, produced through an electrolysis process powered by renewable sources, stands out as a versatile and sustainable fuel with the potential to revolutionise developments in transportation, industry and energy storage.

However, it plans to retain a financial investment in Wizard Lake, with its wholly-owned Canadian subsidiary Rex Energy holding a 10 per cent working interest in the Alberta operations. Conflux will also free-carry Rex’s share for the initial capital required to bring the site back into production.

Management expects that once the field returns to full production, as it has been offline since January due to extreme weather conditions, the 10 per cent interest will see a positive cash return to Whitebark.

Wizard Lake is a 26-square-kilometre tenement package in the Western Canada Sedimentary Basin. Previously, Whitebark operated four production wells and identified an additional four proven undeveloped locations for future exploration at the site. Last financial year, the Wizard Lake oilfield produced 53,336 barrels of oil equivalent.

As part of the agreement, Conflux will assume all outstanding contingency liabilities in Rex of CA$1.44 million (AU$1.58 million).

The partial divestment of the Canadian operation coincides with a capital raise that is aiming to boost the company’s coffers to the tune of $1.5 million. It has already received commitments for $500,000 through an institutional placement at 1.2c per share and will offer eligible shareholders a chance to apply for fully-paid ordinary shares at the same price as the placement for an additional $1 million.

Whitebark says it will target the early production of green hydrogen at its tenements in Queensland using geothermal energy and is aiming to be the first enterprise in Australia to commission a commercial geothermal project.

The company’s initial focus is its 100 per cent-owned geothermal and hydrogen holdings – registered as “EPG2049” – in Queensland’s Cooper Basin. It is an area that, according to Geoscience Australia, has high renewable hydrogen potential.

EPG2049 consists of 1250 sub-blocks in south-west Queensland about 360km from the town of Longreach and covers an area of 3875 sq km. Management says its geophysical studies within the holdings indicate elevated geothermal gradients that are validated by operating oil and gas assets in the area.

The Wizard Lake transaction is consistent with our refreshed Renewable Energy strategy and will allow a focus towards Whitebark’s geothermal and green hydrogen developments. The reallocation of capital and effort towards domestic renewable energy development will be crucial in capitalising on the forecasted demand and position the company for its stated goal of becoming the first commercial geothermal producer in Australia.

Whitebark Energy chairman Mark Lindh

The Australian Renewable Energy Agency (ARENA) simply describes geothermal energy as heat from the Earth that is renewable and which can be harnessed for a variety of uses including electricity generation. Geothermal systems extract the Earth’s heat in the form of steam or water, with the temperatures achieved determining the best possible use of the energy.

Whitebark believes the temperatures support the production of electricity at shallow depths, reducing the development risks involved with extracting the resource. Plans are in place to kick off comprehensive geological surveys and exploration activities to verify the geothermal potential of EPG2049.

Utilising the wealth of geothermal energy sources and existing oil and gas wells that are at the end of their commercial life, the company suggests that inland Australia presents a unique opportunity to establish a “Hydrogen Highway” fuelled by hydrogen manufactured from geothermal power.

Just last month, Whitebark secured an additional Cooper Basin permit application for geothermal exploration that adds a further 1776sq km and 573 sub-blocks, taking its total Queensland portfolio to about 6240sq km. Management says the existing well data supports high levels of geothermal activity and the potential to produce long-term dispatchable renewable energy.

Australia’s Great Artesian Basin was a site of modest geothermal plants that operated during the 1980s and 1990s, which suggests feasibility for generating electricity from sedimentary heat for the potential manufacture of green hydrogen.

In addition to incoming funding from its capital raise, the company has also kicked off official talks with Federal Government sources to leverage funding support from the plethora of initiatives revealed in the recent Budget. It includes about $11.2 billion towards renewable hydrogen asset and technology development and a hydrogen production tax incentive totalling $6.7 billion based on $2 per kilogram of renewable hydrogen produced.

A further $1.7 billion has been allocated for the Future Made in Australia Innovation Fund that will support early-stage development in several priority sectors, including the renewable hydrogen industry, while $1.5 billion has been allocated for ARENA core investments in renewable energy and related technologies.

The Australian Government also recently announced the establishment of the $2 billion Hydrogen Headstart initiative to underwrite the biggest-ever green hydrogen projects to be built in the nation. The funding will provide revenue support for investment in renewable hydrogen production through competitive production contracts and will also cover the commercial gap between the cost of hydrogen production from renewables and its current market price.

ARENA has been allocated $4.2 million this year to support the development and operation of the program in consultation with the Department of Climate Change Energy Environment and Water (DCCEEW).

According to modelling by DCCEEW, Australia’s hydrogen industry could generate $50 billion in additional gross domestic product and create more than 13,000 regional jobs and a further 13,000 jobs for the construction of new renewable energy infrastructure by 2050. The 2024 National Hydrogen Strategy has also allocated $17.1 million in four years to deliver infrastructure planning that includes the potential “Hydrogen Highway”.

While Whitebark’s shift from traditional oil and gas into geothermal energy and green hydrogen production may seem like a leap of faith, it already holds several important assets in an area known to be highly-prospective for the gas. If it can secure the additional support of the Federal Government through its long list of technology incentives, the company may well be at the forefront of a bullish new industry that could benefit Australia into the future.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au

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