New Fortress sets up hydrogen, new fuels unit

New Fortress Energy has set up a new subsidiary, Zero Parks, to develop renewable diesel and hydrogen-based fuels, such as blue ammonia.

Zero Parks plans a joint venture with Fortress Transport and Infrastructure (FTAI), which has pipeline, rail and ship transport infrastructure at a terminal in Beaumont, Texas.

The company plans to make final investment decisions on two projects in the third quarter. The first project will produce renewable diesel and jet fuel and a second that will produce carbon-free hydrogen and ammonia.

New Fortress, better known for LNG projects in Latin America and the Caribbean, invested in a green hydrogen unit in Israel last year, but the company sees that as a longer-term proposition. "Green hydrogen businesses today, in my opinion, are not commercially viable," New Fortress chief executive Wes Edens said in an earnings call last week. He added that thanks to government support, the outlook for green hydrogen is positive, but sees more short-term opportunities in renewable fuels.

Blue hydrogen and ammonia is produced by splitting natural gas into hydrogen and CO2, which is captured and stored, unlike green hydrogen which is produced from using renewable energy to electrolyze water.

The technology and feedstocks for both projects is already available, according to Zero Parks chief executive Ken Nicholson. The company is currently focused on securing the offtake for the project. Each project will require $200mn-$300mn and have a 24-month development timeline. Nicolson sees strong demand for blue ammonia from the shipping industry, which is transitioning to more renewable fuels.

The company plans to maintain its green hydrogen initiatives, but is also evaluating other renewable fuel projects.