An abandoned Gunns pulp mill project deep in the state's north could become a cornerstone of Tasmania's emerging hydrogen industry.

West coast energy giant Woodside has optioned a long-term lease on a northern section of the site under an agreement with Austrak. The land parcel in Bell Bay would become the site of Woodside's proposed H2TAS hydrogen plant.

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Back in the early 2000s, former logging giant Gunns established the site for a controversial pulp mill. Despite beginning work ahead of the mill's construction, the project was ultimately abandoned when Gunns entered administration in 2012.

The relevant permits for the project lapsed in 2017 and two years later Gunns' receivers KordaMentha put the site up for sale.

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The land has proved a valuable find for Woodside, with a spokesperson for the company saying that a large portion of the site is already cleared and levelled and noting the site's proximity to established infrastructure and services.

If built, the plant's initial phase is forecast to have a 300-megawatt capacity and produce 200,000 tonnes of ammonia each year.

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To generate the resource, the plant would use a combination of hydropower and wind power to create ammonia for export as well as renewable hydrogen for domestic use.

Woodside isn't the only big energy player looking to the Bell Bay area, with Fortescue Future Industries and Origin Energy also eyeing major hydrogen projects nearby.

According to Dr Hossien Enshaei, senior lecturer at the Australian Maritime College, Bell Bay's location is the key draw for hydrogen project's like H2TAS.

"All the facilities are there and are very close to the port to eventually export hydrogen, ammonia and its derivatives," he said,

But with all that interest comes a growing need for infrastructure, according to Susie Bower, CEO of The Bell Bay Advanced Manufacturing Zone.

"We could quite easily have one project, but if we're going to have multiple projects like this, we need to be planning for this really carefully. We need port infrastructure upgrades, transmission line upgrades and water infrastructure upgrades," she added.

With that in mind, BBAMZ and the state government have been developing an application to the federal government to help fund a Hydrogen Hub at Bell Bay to support the emerging industry. The application is expected to be submitted before the end of the month and will be up against seven other proposed sites around the nation.

Woodside plans to make a final investment decision on H2TAS in 2023. The project is expected to take two years to build and commission.

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