Fortescue has agreed to purchase a 39.8% stake in natural hydrogen company HyTerra for AUD$ 21.9 m ($14.9m), making the mining firm the largest shareholder of the company.
H2 View understands HyTerra will use the investment to support its plans to drill six wells in Kansas, the US, for natural hydrogen exploration, for which a permit was secured last month (July).
Read more:Aussie firm granted Permit to Drill for natural hydrogen in Kansas
The 40% stake will be subject to shareholder approval, which is expected to be used to fund an expanded initial exploration phase of the Nemaha Project. This will see its pre-drill acreage expanded and open new drilling opportunities that are identified.
The Nemaha Project site is located around 200m north of a well drilled in 2009 which reported up to 92% hydrogen and up to 3% helium.
“This investment would enable HyTerra to have a strong financial position going forward, but it’s the possibility to propel the global decarbonisation journey with such a visionary company that is truly exciting,” explained Benjamin Mee, HyTerra’s Executive Director.
“HyTerra would then drill six wells across multiple geological plays to choose the best areas to develop and through the strategic alliance with Fortescue use this knowledge and data to pursue other global opportunities,” Mee added.
The deal is anticipated to be fully completed by November 2024.
This announcement comes shortly after Fortescue cut 700 jobs and pushed its 15 million tonne green hydrogen production target further down the road due to high power prices.
Read more: Fortescue cuts jobs and kicks green hydrogen targets down the road
Fortescue stressed that it remains “resolute in its commitment to be the world’s leading green technology, energy and metals company with a laser focus on achieving Real Zero by 2030.”
Analysis: Is natural hydrogen the next breakthrough or bust?
The next gold rush, a game-changer for decarbonisation and an underestimated resource: all terms used to describe natural hydrogen, which has grabbed an ever increasing number of headlines in recent months.
Formed by natural processes inside the Earth’s crust through processes such as serpentinisation and iron oxidation, natural hydrogen can accumulate in underground reservoirs. It has been coined as the climate solution under our feet and is capturing the minds of investors, entrepreneurs and policymakers alike, often touted as a low-cost, low-impact energy source.
While fossil fuel-based grey hydrogen costs less than $2/kg on average, many anticipate natural hydrogen costs, depending on deposit purity and depth, to be around $1/kg1.
Since 2021 a growing number of new natural hydrogen exploration ventures have been set up, but it has only been in recent months the natural energy carrier has received serious attention. Current exploration efforts are being undertaken in Australia, US, Spain, France, Albania, Colombia, South Korea and Canada.
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