The former Kwinana oil refinery will be the core of a multi-billion-dollar energy transition plan by BP in Australia.

The British oil and gas company’s commitment to the construction of a plant to make renewable diesel and aviation fuel at the site near Fremantle, Western Australia, is due to kick off in earnest next year.

That investment – worth hundreds of millions of dollars – could be the first commercial scale production of ‘Sustainable Aviation Fuel’, or SAF, which demand is expected to surge as airlines jump on board the quest to reach net zero emissions, said BP Australia’s senior manager, integrated decarbonisation solutions, Justin Nash.

It would be closely followed by a green hydrogen project on the same site, involving Macquarie Capital, that will initially supply hydrogen to the fuels plant but would later supply the fuel for domestic use and potentially export.

“That’s how we at BP globally are looking at decarbonising our refineries,” Mr Nash told The Australian Financial Review of the green hydrogen plan.

At the same time, BP is in earlier-stage development work for a “gigawatt-scale” green hydrogen project at Geraldton after concluding last year that Western Australia’s midwest was ideally positioned for large-scale production of green hydrogen and ammonia as long as huge investments were made in ports, energy and water networks.

The company, which also holds stakes in the North West Shelf LNG venture and the undeveloped Browse gas project in Western Australia, is also examining options for energy transition projects at its second former refinery site, at Bulwer Island in Brisbane.

It is also reported to be close to an investment in the proposed $53 billion Asian Renewable Energy Hub in WA’s East Pilbara region, which is working to overcome a federal environmental knockback last year.

“We see the big picture; the trend is clear,” Mr Nash said of the multi-faceted energy transition plan by BP in Australia, where it also owns a 1400-strong network of petrol stations.

“This is definitely the geography we want to play in, and be part of the energy transition in Australia.”

The renewable fuels plant will use waste oil, tallow and used cooking oil to produce 8000-10,000 barrels a day of a combination of sustainable aviation fuel and renewable diesel.

Referred to as “drop-in” fuels, the products can be directly substituted for fossil fuel-based aviation and diesel fuels currently used by planes and trucks.

Australia has major untapped potential for SAF and renewable diesel, with currently no large-scale production plants in operation, according to consultancy FACTS Global Energy. It noted that the Australian Renewable Energy Agency has outlined that with targeted investment domestic SAF production could meet nearly half of Australia’s jet fuel demand by 2050.

Last month Oceania Biofuels announced a proposal for a $500 million SAF and renewable diesel plant in Gladstone that would use tallow, used cooking oil and canola to make 280,000 tonnes a year of SAF and renewable diesel. Construction is due to start in the March quarter of 2023.

Mr Nash said that while SAF is fully technologically proven and has been around for more than 10 years, it is still two-to-three times more expensive than conventional aviation fuel. However, increased production would bring costs down and help close the gap, and demand is rising despite the high prices.

The renewable diesel plant at Kwinana, which is planned adjacent to the fuels import terminal which replaced the oil refinery, should come online in late 2025, followed by the initial hydrogen project in 2026.

Initial engineering and design work is underway for the SAF plant and is due to start later this year for the hydrogen plant.

The GERI project in Geraldton could start up around the same time, initially with pilot production for the local market using an electrolyser capacity of less than 100MW.

BP may look to join with partners for the project, including with miners and minerals processors in the region, Mr Nash said.

Scaling up to gigawatt-range capacity to support exports would take place over about 10 years.

Extracted in full form: BP’s green transformation starts with Kwinana (