CERAWEEK: Energy Firms, Gov'ts Bet on Hydrogen Boom. Payday Far Away

Ron Bousso and Stephanie Kelly
Wednesday, March 3, 2021

Governments and energy companies are placing large bets on clean hydrogen playing a leading role in efforts to lower greenhouse gas emissions, but its future uses and costs are highly uncertain.

"Without hydrogen by 2050 we cannot aim to be a net zero (carbon) economy," Royal Dutch Shell CEO Ben van Beurden told the CERAWeek online conference this week.

The universe's most abundant element, hydrogen has been touted for decades as an alternative to fossil fuels, but attempts to commercialize it for use in vehicles and industry have largely failed.

So far, commercial-scale production has been from natural gas or coal and it is a niche market used mainly in oil refining and heavy industry.

But so-called blue hydrogen, where carbon emissions from its production are not released into the atmosphere, and green hydrogen, which is made with renewable power, are attracting huge interest as a clean alternative to natural gas that can be used for heating homes, heavy industry and transportation.

The European Union, Britain, Japan and South Korea, as well as leading oil and gas companies, such as Royal Dutch Shell , BP and Total, have set out plans to invest heavily in hydrogen.

In the Canadian province of Quebec, where hydropower is abundant, green hydrogen is going to be a reality, Canadian Natural Resources Minister Seamus O'Regan said. Canada last year unveiled a hydrogen strategy that could be worth $40 billion.

But converting natural gas storage, pipelines, furnaces and boilers to hydrogen will be a costly and long process.

"Hydrogen will not be the solution to each and everything... it's not the silver bullet that solves all problems," Siemens Energy CEO Christian Bruch told the conference.

"I don't see really a large-scale commercial viability any time before 2025 or even the end of the decade," Bruch added. "There is still some way to go to prove we have resilient and reliable systems."

One challenge is the cost of producing green hydrogen, which cannot compete with natural gas or with hydrogen produced from natural gas.

Known as grey hydrogen, hydrogen produced from natural gas or coal in a process that emits high levels of carbon dioxide, is the most common form of the fuel produced today and costs around $1 per kilogram.

Cleaner blue hydrogen, which captures and stores the carbon dioxide, costs $2 to $3 per kg to produce while green hydrogen - based on the use of clean energy and electrolysis to extract hydrogen from water - costs around $5 per kg, BP's head of innovation & engineering David Eyton said.

He said transporting hydrogen was also expensive even if it is converted to liquid in the form of ammonia, which Saudi Arabia's national oil company Aramco has begun offering customers.

"Hydrogen is expensive to transport. So if you can use it locally, that's a much more sensible thing to do than sending it a long distance," Eyton said.

Shell's van Beurden also said that hydrogen was for now a very small business.

"It will scale up, and it will take a long time before it is a business that is large enough to start making a real difference on sort of planetary scale," he said.

(Additional reporting by Isla Binnie and Nia Williams; editing by Barbara Lewis)

Categories: Energy Industry News Emissions Activity Hydrogen Decarbonization

Related Stories

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

MODEC and Terra Drone Renew FPSO Drone Inspection Partnership

Wood JV Gets EPC Job for Shell off Brunei

UK Firm Secures Exploration Extension for Two Blocks off Vietnam

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

Azeri SOCAR Plans New Agreements with Oil and Gas Majors

TPAO, SOCAR and BP to Ink Caspian Sea Oil and Gas Production Deal

Woodside to Shed Some Trinidad and Tobago Assets for $206M

Current News

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

Woodside Agrees Long-Term LNG Supply with Petronas Unit

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com