Dozens of ships arrive each week in the Milford Haven Waterway, many bearing vast cargoes of crude oil and natural gas.
In one form or another, the Welsh port is a conduit for more than a quarter of Britain’s energy supplies.
It was here that shipment after shipment of liquified natural gas (LNG) landed last winter, to be regasified and sent on to Europe by pipeline as the continent resisted Vladimir Putin’s attempt to throttle supplies.
Yet in the coming decades, its role will change as the UK moves away from oil and gas and towards renewable sources of energy.
If local business leaders get their way, Milford Haven will be invented as a powerhouse of hydrogen production, carbon capture and offshore wind power as part of the shift to net zero.
“Right now, we’re sitting on the horizon of a new epoch in the waterway’s history,” says Tom Sawyer, chief executive of the port of Milford Haven.
“It’s a really big opportunity for us - and everyone here gets that.”
The Haven is a key part of the “South Wales Industrial Cluster”, a grouping that also includes Swansea, Port Talbot and Newport. The area hosts industries as varied as steelmaking and paper production and accounts for one quarter of Wales’ total carbon emissions and about 5pc of total UK emissions – meaning that if the country is to decarbonise, so must Milford Haven.
The groundwork is already being laid for a major overhaul.
RWE operates the Pembroke Power Station on the south side of the waterway. The facility is currently one of the largest and most efficient gas power stations in Europe. But within the next two years, bosses will have to make key decisions about its future.
“If you just carried on with business-as-usual, then effectively you would have to close on December 31, 2034,” says Roland Long, site manager of Pembroke Power Station. “So you ask yourself, what are the options?”
RWE is considering turning the power station green by capturing direct emissions from its gas-fired units and storing them. The emissions would have to be converted into liquified CO2 and then transported elsewhere – probably to be piped into emptied oil and gas reservoirs underneath the North Sea.
At the same time, the German company is exploring the development of two “green” hydrogen production plants where electrolysers would convert water into hydrogen and oxygen using renewable electricity.
It is also looking at the possibility of an on-site battery storage plant. And land has been set aside for a separate, “blue” hydrogen facility where natural gas would be combined with steam to produce hydrogen.
All options are on the table.
“We’ve got engineers here working on this right now,” says Long. “What do we need if we do carbon capture? How would we actually extend the life of this plant? It’s about the absolute details, so it’s quite an exciting time for people to work in the power industry.”
Hydrogen could potentially allow neighbouring facilities such as the Valero oil refinery, capable of producing 270,000 barrels of oil per day, to decarbonise jobs that involve heating. Instead of natural gas, hydrogen could be used to power industrial processes.
However, significant parts of the investment case for projects in Milford Haven depend on other projects being developed elsewhere.
For example, the green electricity that will power RWE’s electrolysers is expected to come from new floating wind farms off the coast in the Celtic Sea. The Crown Estate estimates there is potential for 20 gigawatts of capacity out there - equivalent to roughly 1,000 skyscraper-sized turbines.
But in the Government’s latest renewable subsidies auction, no bids were received by offshore wind farm developers because the prices offered were too low. That puts a question mark over Milford Haven’s green energy supply.
There will also need to be new infrastructure built to transport the hydrogen across South Wales.
Sarah Williams, director of asset strategy at gas network operator Wales & West Utilities, says her company is currently exploring plans for an 80-mile steel pipeline called HyLine Cymru.
But the project cannot go ahead without guarantees that there will be both production of hydrogen locally and - most crucially - willing customers.
“This would be a major project to support industry,” Williams says. “But there’s clearly no point in building a pipeline if we can’t confirm the hydrogen is going to be available to go through it or if there are no customers who are going to use it.”
Some of the demand is expected to come from transport. South Wales Transport is currently trialling buses that use hydrogen fuel cells, for example.
However, a string of big industrial users must sign up for the sums to stack up.
Against that backdrop, a recent decision by Tata Steel to wind down its coal-fired blast furnaces in Port Talbot and replace them with electric arc systems has delivered a blow.
The change means the end of steel production from ore at the plant, a process which could have been done using hydrogen instead of fossil fuels. The factory is instead switching to using scrap metal to make recycled steel, a process that will be powered by electricity likely generated by nearby wind farms.
Meanwhile, the port of Milford Haven is busy upgrading its own infrastructure in preparation for what it predicts will be a wind power boom. Changes include new “laydown” areas to make it easier for companies to work on large components such as turbine towers and blades, as well as “super slipways” to help transport the parts.
While the recent government auction failed to generate any bids for offshore wind projects, Sawyer believes future rounds are bound to yield results given the potential of the Celtic Sea.
“You’ve got more than 1,000, very, very large turbines going up,” Sawyer adds. “They’ll need businesses that can make anchors, chains, cabling, so you need welders, fabricators and mechanical and electrical engineers - there’s just this enormous opportunity.”
Combined plans could inject £6bn into local economy
Even if Port Talbot won’t be using hydrogen for its electric arc furnaces, Sawyer argues the recycled steel the plant will produce should be suitable for making the wind turbines.
“I actually see the steel announcement at Port Talbot as fantastic, because that was always going to be the long pole in the tent.”
The port of Milford Haven has applied for grant funding from the Government to help finance the work. If all goes to plan, it is hoped the combined plans in the South Wales Industrial Cluster could add £6bn to the local economy.
The port is also bidding to become a freeport, which will unlock tax breaks such as business rates relief for all the new infrastructure that is planned. Speedy planning consents and upgrades to local grid capacity are also seen as vital.
“We want to win this competition,” says Sawyer. “And we see ourselves competing with Portugal and Norway and the Far East to win this business.
“It’s genuinely a once in a generation opportunity - and it finally feels like there is momentum building behind us.”