Hydrogen, what a buzz – News for the Oil and Gas Sector

Hydrogen comes in a rainbow selection of colours, but will there also be a pot of gold waiting at the end?

Given the resource’s endless flexibility, it sometimes seems hydrogen could be the answer to any energy transition question.

Should it be used for heating? For driving cars and aeroplanes? For storing electricity? For manufacturing coal? As the next step for oil and gas producers?

The appeal is clear. Using hydrogen emits no carbon, industry is familiar with it – and perhaps most importantly investors cannot seem to get enough of it.

Hydrogen hits all the right notes for the energy transition, offering a chance to cut emissions and create jobs, while companies that have experience in industrial liquids are familiar with the processes.

Colour blind

There are a range of colours of hydrogen. Historically, this sector has been dominated by grey hydrogen, which emits a substantial share of the world’s carbon emissions.

Instead, blue and green hydrogen are on the rise. The first involves a steam reforming process with natural gas converted into hydrogen, with most of the resulting carbon emissions captured and stored.

Green hydrogen is the next step. Renewable energy powers electrolysers, which splits water into hydrogen and oxygen. Producing power from wind and solar has been criticised in the past for its intermittency problem, converting this electricity into hydrogen would allow projects to spread their provision out around the clock.

Pivoting from oil, gas and coal to hydrogen does throw up challenges. Moving hydrogen on a ship will probably require its storage inside another substance, such as methanol or ammonia, and incur significant infrastructure costs. New safety codes would be needed for pipeline transmission, with some concerns around embrittlement of steel.

High level

Governments have come out in support of hydrogen.

In the UK, Prime Minister Boris Johnson put hydrogen at number two in the Government’s 10 Point Plan for a Green Industrial Revolution. The aim is to build 5 GW of low carbon production capacity by 2030.

There is a recognition that there must be demand to match this new supply. As such, by the end of the decade, there is the aim to have an entire town heated by hydrogen.

The UK currently includes blue and green hydrogen in its 2030 targets. However, looking further ahead, if the country is to follow through on its net zero by 2050 pledge the balance must shift in favour of green – or offset emissions from blue.

The government hopes to stimulate more than £4 billion of private investment in the hydrogen sector.

Germany has a similar 2030 target but the government is stumping up 9 billion euros ($10.7bn) in this pursuit. The country has opted to shutter its nuclear fleet, increasing the pressure on finding zero carbon power options.

Japan and South Korea have also set out plans to shift their reliance from imported LNG to hydrogen.

Producing this hydrogen domestically will have an impact on countries’ energy security and trade flows. Traditional energy exporters, such as Saudi Arabia and the United Arab Emirates, are aware of this. These Middle Eastern countries are taking steps to try to convert current hydrocarbon exports into hydrogen.

Hydrogen, green hydrogen in particular, has sometimes been called the champagne of energy sources. It certainly packs a punch, but as costs come down, it is becoming more workaday.

Energy Voice, in association with Deloitte, Fasken and Costain, is launching a virtual event series that digs deeper into the prospects for hydrogen, in order to separate the bubbles from the buzz, and the hard facts from the hype.

The first in this series of events, “Making the market”, will be held on April 29, with Orsted and BNP Paribas confirmed as speakers. This will be the scene setter for the series and look at the building blocks necessary for the emerging hydrogen market.

The second session on “Projects, infrastructure and finance” will be held on June 17 and looks at where the money is flowing, which projects are the game changers and how infrastructure – existing or new – will support them.

The theme for session three is “Policy focus & COP26 reflection”. It will be held on November 25 and will examine the policy requirements for a sustainable hydrogen economy. It will also look back at COP26 to analyse relevant outcomes
for hydrogen discussed there.

Finally the “Where next?” session on February 24 2022 will take stock of the insight that has gone before and set the scene for the next stage in the evolution of hydrogen.

All four virtual events are free to attend and you can register at http://www.trackinghydrogen.com.