IPL announced today the Gibson Island plant would close in December 2022 after 50 years because it had been unable to find a gas deal at a suitable price.

The decision follows years of threats from IPL about the site but last year IPL and Central Petroleum were negotiating to deliver gas to Gibson Island from the Range project in central Queensland and a decision was expected next month.

Only last month IPL and billionaire Andrew “Twiggy” Forrest announced a potential $400 million investment at Gibson Island to switch to hydrogen, a plan that was now being investigated in a feasibility study.

IPL said that study would continue.

However hydrogen is currently much more expensive than other gases.

IPL managing director Jeanne Johns said it was disappointing that a gas deal could not be reached “however, we look to create new opportunities aligned to the company’s forward strategy”.

Under the deal with Forrest’s Fortescue Future Industries the hydrogen project at Gibson Island would have the potential produce around 50,000 tonnes of renewable hydrogen a year, which would then be converted into green ammonia for Australian and export markets.

As well as being a pollution-free fertiliser, ammonia also stores the highly flammable hydrogen which can be extracted from the ammonia at its destination. It can also be used as a zero carbon fuel in industries like shipping.

Forrest expected the feasibility study would take about three to four months.

IPL said the closure of Gibson Island would have an $83.5 million impact in costs through redundancies and plant decommissioning. There would be a non-cash write down of $102 million but a sale of the land would provide about $45 million.