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Is Hydrogen The New LNG?

The appeal of commercial hydrogen…

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Why Hydrogen Is About To Get A Lot Cheaper

The road to hydrogen commercialization…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Is This Big Oil’s Next Secret Weapon?

Reducing global carbon emissions to net zero “is the only way to go,” Shell’s chief executive Ben van Beurden said earlier this month, in yet another reminder from a top executive that Big Oil needs to produce and sell more energy with low carbon intensity.

Oil majors are investing in various alternative energy solutions in response to increased investor pressure to start thinking about reducing emissions instead of just growing profits.

Some supermajors are investing in EV charging networks, others in research and development of advanced lower-emissions technologies, and a few others are looking into hydrogen and its various possible uses as a clean fuel--not only for cars but also for heavy industries and home heating.  

Several major oil firms have included hydrogen and related research and applications in their alternative energy portfolios, but a meaningful large-scale hydrogen use with low or zero emissions in heavy industries—where emissions are the most and the hardest to cut—is years, if not decades, away.

This doesn’t discourage Equinor, Shell, and Total, for example, from looking into hydrogen as a cleaner energy source.

However, producing hydrogen from something other than fossil fuels—such as from sunlight or out of thin air—is currently cost prohibitive, and the majors are taking their research and pilot projects one step at a time.

Currently, hydrogen is already used on a large scale, but it is almost entirely produced from natural gas and coal, and its production is responsible for annual carbon dioxide (CO2) emissions equivalent to those of Indonesia and the United Kingdom combined, the International Energy Agency (IEA) said in a report last month.

“Harnessing this existing scale on the way to a clean energy future requires both the capture of CO2 from hydrogen production from fossil fuels and greater supplies of hydrogen from clean electricity,” the IEA said. Related: EU Slaps Sanctions On Turkey For Illegal Offshore Drilling

Commenting on hydrogen’s potential, Steinar Eikaas, Vice President Low Carbon Solutions at Equinor, told Houston Chronicle’s James Osborne:

“We don’t need hydrogen cars because electric cars are so superior.”

“Where we need it is heavy sectors. With small adjustments gas powered plants can burn hydrogen,” Eikaas said.

Equinor admits that hydrogen can be part of an energy transition future, but it would take supplemental technologies to make hydrogen production zero-emission.  

Equinor said in its Energy Perspectives 2019 report that “The competitiveness of hydrogen as a fuel depends on the costs of producing and transporting it safely to consumers, and on costs of modifying boilers, engines etc., to accommodate the new fuel.”

“If hydrogen is to be part of an energy transition, fossil fuel-based production must be equipped with CCUS [carbon capture use and storage] or replaced by electrolysis based production utilising zero-carbon electricity,” according to the Norwegian major, which has several ambitious projects for hydrogen use.

Equinor is evaluating the possibility, together with partners, of converting a natural gas plant in the Netherlands into a hydrogen-powered plant, potentially reducing emissions by the equivalent of emissions of more than 2 million cars annually.

Equinor is also studying how 3.7 million homes and 40,000 businesses in northern England, currently heated by natural gas, could be converted to hydrogen and made emission-free by 2034.

Yet, investment decisions on the projects are at least a few years away, Eikaas told Houston Chronicle.

Equinor is also partnering in the development of a design for a liquefied hydrogen (LH2) bunker vessel. Related: Tesla Claims Secret Project Has Fallen Into Chinese Rival’s Hands

“Equinor believes hydrogen may represent an attractive energy solution for the sectors that are hard to decarbonize and currently outside the scope of renewable solutions like batteries,” Eikaas said last January, commenting on the LH2 bunker vessel design.

Another oil major, Shell, is partnering with ITM Power in a project to build a hydrogen electrolysis plant at the Shell Rheinland refinery in Wesseling, Germany, that will produce hydrogen from electricity generated from renewables, thus reducing emissions from the refinery.

The oil majors admit that lower emissions from energy are the way forward in a world threatened by global warming. But until they find a viable large-scale zero-emission production of hydrogen, the world will need all sources of energy to meet growing demand.

“Oil, yes, the world needs it, and will need it for decades to come. But also, and increasingly, natural gas, renewable power, hydrogen, biofuels,” van Beurden said in his speech earlier this month.  

Equinor, for its part, includes zero-emission hydrogen in a possible future together with other low-carbon energy sources, saying in this year’s Energy Perspectives:

“Not-in-my-backyard attitudes to the deployment of wind turbines and solar panels must be set aside. Countries that have dismissed nuclear may need to reconsider. Hydrogen from electrolysis or from fossil fuels with CCUS may become indispensable.”

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Brett Blaikie on July 17 2019 said:
    Why are we still talking about this? the cheapest source of hydrogen is natural gas - Australian company does have a method to extract hydrogen using iron ore as a catalyst leaving solid carbon - but I've seen nothing about bringing it to scale. Hydrogen is the smallest, most difficult thing in the world to compress and contain - sure there are ways: the Ballard fuel cell. Expensive, heavy, great for special use. The safest way to burn Hydrogen is to attach it to a string of carbon atoms! Or four H around one C the most elegant. The only mass solution is massive electric rail with light battery-powered distribution and commuter vehicles. Probably driven by nuclear plants in safe places far away from big cities, arable land and important watersheds. By far the "plant a trillion trees" solution is the most desirable (no money in it for schemers boohoo) short term and long term let's have a peaceful, wealthy society that can keep funding research and innovation.
  • James Hilden-Minton on July 17 2019 said:
    The opportunity for electrolyzers is to absorb cheap power from the grid. For example, ERCOT the wholesale price of power is below $35/MWh about 60% of the time. Operating an electrolyzer at these times yields an average price of about $22/MWh, which is a marginal cost below $1 per kg of hydrogen. This is competitive with steam reforming natural gas.

    Moreover, it helps the grid balance surplus renewables soaking up daily and seasonal surpluses. This is generation-following load, the opposite of load-following generation. So long as there sufficient intermittent renewable in play, it can play a role comparable to gas plants that run with less than a 50% capacity factor. The cost of an electrolyzer is $300 to $600 per kW, which is also competitive with gas generators.


    Would also point out that electrolyzers are beneficial for protecting any must-run generation capacity from unprofitably low power prices. This is a particular problem for the economics of nuclear power. Balancing the grid is not exclusively about generating power when demand is high. We need also to be thinking about ways to support power demand when prices drop too low. This is a problem that batteries and electrolyzers solve quite well. Ultimately, electrolyzers will be a key tool for balancing grids and improve the financial efficiency of power markets helping them realize lower average prices and more stable pricing.
  • Daniel Williams on July 17 2019 said:
    Producing hydrogen via electrolysis is cost competitive with natural gas (actually lower cost than natural gas) using electricity at about €20/MWh, with low cost electrolysers (already starting to appear commercially). This electricity price can be achieved using variable pricing as mentioned, where both hydrogen and electricity are co-produced using an input value of €40/MWh electricity and converting the non-intermittent portion of this output to €60/MWh electricity, thus efficiently using grid infrastructure and not requiring backup gas - the perfect answer to intermittency inherent to RES output.

    However, in order to decarbonise, even a vast amount of renewable capacity will not be enough, before 2050 (the planet's cut-off date for continuing residence here).

    Europe will need approximately 10,000 TWh of energy - less than the 12,000 TWh that we use now because fuel cells are three times more efficient than IC engines. There is no way any other energy carrier can replace fossil fuels - biomethane, solar thermal etc do not have the capacity to meet this demand.

    So; Europe is likely to double its electricity generation from about 2,700 TWh to about 5,000 Twh, and the rest will be hydrogen. 600 GW of (floating) offshore wind can co-produce 300 GW of power (50% capacity factor), with 150 GW going to electrolysis producing about 1,350 TWh of H2. Solar PV will produce about 1,000 TWh of H2 with (green H2) imports and biomethane producing around 650 TWh.

    The final 2,000 TWh of hydrogen will have to come from decarbonised fossil gas using ATR/GHR or pyrolysis. There is no real option to scale renewables up to reach this capacity for hydrogen, and we need this hydrogen as there is no other possible answer. So we have 5,000 TWh of hydrogen, up from the 2,700 TWh of natural gas consumed in the EU in 2017.

    There is no real choice - we cannot scale the electricity grid by a factor of four, and transport, industry, dispatchable power (gas turbines) and heating all need fuel that has the specific qualities hydrogen can provide.

    Time to start refitting the infrastructure for hydrogen!

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