After cutting 700 jobs and scrapping Fortescue Future Industries (FFI) in mid-July, Twiggy Forrest – the top decision maker at Fortescue Metals (ASX:FMG) – has moved to acquire 39.8% of hydrogen explorer HyTerra (ASX:HYT).
FFI was effectively FMG’s hydrogen division.
HyTerra, elsewhere, is exploring for “white hydrogen” and helium in Kansas using conventional oil and gas style drilling – along with helium, ‘native hydrogen’ deposits can occur naturally underground.
“White Hydrogen” is recently popularised nomenclature for a naturally occurring hydrogen deposit. It differs from “Green Hydrogen” which is that made from the electrolysis of water powered by wind and solar. Those green credentials don’t address the issue of water use.
FMG – or, Andrew Forrest – ultimately has its eyes on HyTerra’s Nemaha project, which it bills as being historically confirmed to contain hydrogen and helium.
“Our leases have historic wells with more than 10 hydrogen and helium occurrences within the region, some up to 92% hydrogen and 3% helium,” HyTerra writes on its website.
The move is an interesting one, given that Twiggy Forrest only recently had to concede the green hydrogen sector’s global momentum was stalling. While he didn’t use those words, re-absorbing the spin out FFI back into the main company says enough.
Before that, Twiggy had been seemingly possessed – travelling all over the world and spruiking the benefits of hydrogen along with a wave of Memorandum of Understandings (MOUs).
It appears whatever exorcism took place has failed.
Fortescue and HyTerra have entered a ‘Strategic Alliance’ to develop Nemaha. HyTerra said on Thursday a current two well drilling campaign “would be replaced by a six well campaign to commence after the finalisation of” the deal.
“The Subscription by Fortescue will fully-fund an expanded initial exploration phase of the Nemaha Project facilitating a significant increase in pre-drill acreage, resulting in increased drilling of prospects in several identified geological play areas,” the company further elaborated.
HyTerra ED Benjamin Mee was, unsurprisingly, keen to show his satisfaction with the partnership.
“An investment by Fortescue is a testimony to the hard work and delivery performance of the HyTerra team, the diverse geological plays available within our Nemaha Project leases, and our global growth opportunities in the pipeline,” Mee put it to shareholders and market watchers.
“This investment would enable HyTerra to have a strong financial position going forward … [we] would then drill six wells across multiple geological plays to choose the best areas to develop.”
One big issue still facing hydrogen development: porting the gas through pipelines made for traditional hydrocarbons causes embrittlement, posing a higher risk of cracking to operators – ultimately suggesting the world would need to build entirely new pipeline nervous systems.
HYT last traded at 3.1cps.