Woodside dumps Oklahoma hydrogen project in show of ‘discipline’

Woodside has formally abandoned plans for a hydrogen facility in the United States, a move that some investors will cheer, but environmentalists will seize on as evidence of the company’s clean energy skepticism.

Woodside Energy CEO Meg O’Neill.

Woodside Energy has formally abandoned its H2OK hydrogen project in the United States to the delight of investors, inflaming environmentalists who say the oil and gas giant is trading green energy for fossil fuels.

Woodside intends to aggressively expand LNG production through new developments and a series of acquisitions that will transform the ASX producer into one of the world’s largest LNG companies.

The strategy has put Woodside in the crosshairs of climate activists who insist increased LNG production will slow global efforts to decarbonise.

Woodside rejects those allegations, insisting LNG displaces coal from the energy mix, eliminating a source of higher carbon emissions.

Chief executive Meg O’Neill said on Wednesday the company has folded the Oklahoma liquid hydrogen venture.

“We have made the decision to exit the H2OK Project, demonstrating our disciplined approach to portfolio management,” said Ms O’Neill.

First announced in 2021, H2OK aimed to build a 290 MW electrolysis facility capable of producing approximately 60 tonnes of liquid hydrogen per day.

Woodside’s Scarborough project

Repeated delays had dogged the project since late 2023, driven by uncertainty around the hydrogen production tax credit, which led Woodside to earlier this year formally suspend work on H2OK.

Shareholders cheered as Woodside raised its production forecast and cut cost estimates minimising concern about the capacity of Woodside to balance large-scale project execution with short-term operational performance, especially as major growth projects such the $US12.5bn Scarborough development and Louisiana LNG near completion.

Woodside lifted 2025 production guidance to 188–195 million barrels of oil equivalent, from a previous range of 186–196 MMboe, reflecting a strong performance from its new Senegalese asset and improved reliability for the Australian LNG operations.

The company also reduced its cost guidance to $US8–$US8.50 per barrel, down from $US8.50–$US9.20, citing what it described as robust operational performance, portfolio efficiency and tight cost control.

Bolstering its standing with investors, Woodside also trimmed its capital expenditure guidance for 2025 to $US4bn–$US4.5bn, from a prior estimate of $US4.5bn–$US5bn. The revised figure incorporates the deferral of some payments related to the Beaumont Ammonia Project in Texas, now expected to reach completion in 2026, and the impact of the $US1.9bn received from Stonepeak for a 40 per cent stake in Louisiana.

Ms O’Neill said the performance reflected the company’s disciplined approach to project delivery during a pivotal phase of growth.

“This reflects the strength of our producing assets and the benefits of disciplined execution.”

The lower capex outlook comes despite lingering inflationary pressure and growing decommissioning liabilities. Woodside is preparing to recognise a pre-tax expense of $US400m–$US500m in its half-year results, relating to the plugging and abandonment of legacy wells at Minerva, Stybarrow and Griffin.

The upbeat revisions come after Woodside delivered quarterly production of 50.1 MMboe, up 2 per cent from March and 13 per cent higher than a year earlier. The Sangomar field in Senegal achieved gross production of 101,000 barrels a day at 99.6 per cent reliability.

While production volumes were up, realised prices softened in the quarter. Woodside’s average realised price slipped to $US59 per boe, down from $US65 in the March quarter, amid weaker oil and LNG benchmarks. Brent and WTI crude prices fell 11 per cent and 10 per cent respectively, while Asian LNG spot prices also declined.

Group revenue for the quarter was $US3.28bn, down 1 per cent.

Originally published as Woodside dumps Oklahoma hydrogen project in show of ‘discipline’