Prominence Energy enters renewables market with 20% acquisition of Patriot Hydrogen

Prominence Energy (ASX: PRM) will secure its place at the renewables table following a $3.2 million capital raising to acquire 20% equity in private Australian explorer Patriot Hydrogen.

The company received firm commitments from lead manager GTT Ventures to raise the money via a placement of 320 million shares at $0.01 each before costs.

Around $2.5 million of the proceeds will facilitate drilling of a vertical appraisal well at the highly-prospective Bowsprit oil project in Louisiana.

The remainder will fund the Patriot acquisition and provide the means for Prominence to get its foot in the door of the green hydrogen game.

Sydney-based Patriot is owned by renewables investment company Liberty Energy Capital Pty Ltd.

It is planning to construct a biomass-to-hydrogen plant at Port Anthony in Victoria where it holds a binding term sheet to lease the site and construct the plant.

The company expects all aspects of design, construction and commissioning to be completed within 12 months, leading into steady state production of 2 tonnes of hydrogen per day.

Hydrogen units

Patriot will also licence, build and develop branded “Patriot 2 Hydrogen” (P2H) units for the plant within Australia.

The units are modest in size and can be placed close to end users, thereby bypassing some of the infrastructure challenges associated with the sale and use of hydrogen.

The ability to produce low carbon onsite power generation and hydrogen could also offer long-term expansion opportunities with units at numerous locations such as bus ports for hydrogen use, as well as industrial sites that use power and have biomass waste such as sawmills, refuge centres and agriculture businesses.

Binding term sheet

Prominence has signed a binding term sheet to acquire 20% of Patriot for a consideration of 25 million shares plus $250,000 cash and 3 million options.

The cash will be used to complete planning and design of the hydrogen plant.

Patriot is currently in discussions regarding opportunities to expand capacity and to add additional sites for the P2H units.

Prominence managing director Alexander Parks said the acquisition would help the company become more carbon-friendly and stay attractive to modern investors.

“We consider [this] to be a [good] entry position into the green hydrogen sector,” he said.

“Patriot has great potential to grow by placing P2H units in numerous settings to provide locally-produced, low-carbon electricity and hydrogen, both generated from essentially carbon-neutral waste biomass materials.

“As the world transitions to a lower carbon base, Prominence will transition too.”

Clean energy source

Green hydrogen (made without fossil fuels) has been identified as the clean energy source which could help bring the world to net-zero emissions.

It is produced using renewable energy and electrolysis to split water and is distinct from grey hydrogen (which is produced from methane and releases greenhouse gases into the atmosphere) and blue hydrogen (which captures the greenhouse emissions for storage underground to prevent any impacts on climate change).

According to Goldman Sachs, green hydrogen could supply up to 25% of the world’s energy needs and become a $12.9 trillion addressable market by 2050.

Drilling at Bowsprit

Located approximately 70km southeast of New Orleans in 3m water depth, the Bowsprit leases contain an undeveloped conventional Miocene-aged oil sand at a depth of approximately 2,255m above a deeper, 2,895m gas field developed by Shell in the 1960s.

The field contains 14 vertical well penetrations and has demonstrated producible oil from an upper Miocene, 9m-thick sand which Shell flowed successfully from four wells to produce 75,000 barrels of oil.

Full field development was not practical with the well technology being used at the time.

Prominence is now planning to drill a vertical well at Bowsprit to a depth of approximately 2,438m targeting the T2 middle Miocene sand which sits under the proven field and runs up-dip 30m above the known oil to a potential fault closure.

After field appraisal is finalised, the well will be suspended at a depth of approximately 1,676m for future re-entry.

Prominence plans to use data gathered from the well to optimally plan for the drilling of the horizontal production section of the well into the previously-produced Upper Miocene T1 reservoir after hurricane season.

Upon re-entry, the horizontal section of the well will be drilled into the proven previously produced (T1) upper Miocene reservoir part of the field.

Based on current data, the horizontal well is independently estimated to have 2P reserves of 330,000 barrels.