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UPDATE 3-Energy companies must lower carbon intensity in products -Woodside CEO

(Recasts with need for less carbon, adds quotes)

NEW YORK, June 15 (Reuters) - Energy companies need to reduce the carbon in their products and prioritize the development of hydrogen-based fuel, Woodside Energy Group Meg O’Neill said on Wednesday.

“We need to start offering our customers products that have a lower carbon intensity than where we sell them today,” O’Neill told Reuters on the sidelines of the Reuters Global Energy Transition conference in Brooklyn, New York.

Woodside is the largest independent natural gas producer in Australia, where it has two hydrogen production projects in the works. A U.S. project, in Oklahoma, is geared toward producing liquid hydrogen for use in long-haul vehicles.

She said the company is in discussions with customers in the United States, Japan and South Korea over the possible uses of hydrogen and ammonia products.

“We’re not doing our shareholders any favors if we build plants and nobody is buying the products from us,” she said.

The company recently completed its merger with BHP Group’s petroleum arm, giving it full 100% ownership in the $5.7 billion Scarborough natural gas project it is developing off the coast of Western Australia.

O’Neill said the company is still looking to divest a stake in the project. Talks on selling to Chinese national oil companies were shelved due to strained diplomatic bilateral ties.

She said the company was speaking with “non-Chinese” buyers but would not be more specific.

The Perth-based company plans to be net zero by 2050, if not sooner, O’Neill said, and invest $5 billion in new energies by 2030.

“We have very clear plans to transition from a pure oil and gas player into a company that provides a variety of energy sources,” including low and no carbon energy sources, she said.

Woodside is also investing in ammonia production. O’Neill said the company could produce ammonia in Australia and ship it to Japan and Korea for power generation, similar to the liquefied natural gas (LNG) that Woodside produces.

Some power plants can consume up to 20% ammonia as fuel, O’Neill said, and Woodside and its customers are investigating whether the plants can handle 50% or more ammonia fuel.

“We have a very clear capital allocation framework with very specific targets for oil, natural gas and new energy,” O’Neill said, noting the company expects an oil project will deliver 15% returns, a gas project 12% and a new energy project 10%. (Reporting by Stephanie Kelly and Scott DiSavino; Editing by Richard Chang and Chris Reese)

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