Woodside Energy faces significant financial setbacks from a scrapped US hydrogen project and inflated decommissioning costs, totaling nearly $1 billion.
Woodside Energy is set to absorb a substantial $US140 million ($213.5 million) pre-tax write-down following its decision to abandon a major liquid hydrogen project in Ardmore, Oklahoma, a move attributed to the shifting clean energy landscape in the United States and evolving market conditions. This financial hit comes alongside a significant increase in the estimated costs for decommissioning old oil and gas fields, with expenses now projected to reach as high as $US500 million, bringing the combined charges to almost $1 billion that will impact the company's first-half earnings.
The decision to exit the H2OK hydrogen project, initially announced last year, was reaffirmed in Woodside's latest quarterly update. The company cited "ongoing challenges facing the lower-carbon hydrogen industry, including cost escalation and lower-than-anticipated hydrogen demand" as primary drivers for the withdrawal. This aligns with broader market observations, particularly in the wake of policy changes under the second Trump administration, which has reportedly de-emphasized emissions reduction and curtailed federal funding for clean energy initiatives. Woodside had also previously scrapped a concentrated solar project in California for similar reasons, emphasizing a focus on shareholder value in its clean energy investments.
While scaling back on some clean energy ventures, Woodside remains committed to its largest clean energy investment, the Beaumont low-carbon ammonia project in Texas, which is 95% complete and slated for regular ammonia production later this year, followed by the low-carbon version in 2026. The company is also progressing with the H2Perth hydrogen refuelling project in Western Australia, with hydrogen production anticipated in the second half of 2026.
In other significant developments, the June quarter saw the final investment decision for the Louisiana LNG export terminal in the US, with Woodside offloading a 40% stake to private investor Stonepeak for $US5.7 billion. Discussions are ongoing with other potential partners, with CEO Meg O’Neill confirming "strong interest" from third parties. A recent collaboration agreement with Saudi Aramco in May could see the Saudi national oil company acquiring a stake in the LNG project and purchasing LNG, potentially extending to collaboration on the Beaumont ammonia project.
Woodside also reported the permanent shutdown of one of the five LNG production trains at the North West Shelf project, reducing its annual capacity to 14.3 million tonnes. Finally, the Scarborough and Pluto expansion project, a large gas development facing ongoing legal challenges, remains on track, with construction 86 per cent complete and an initial cargo expected in the second half of 2026.
