Could offshore operations become a ‘hydrogen hub’?
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Many offshore oil and gas companies in the UK now seek to create hydrogen within their operations. Can this help the nation reach net-zero targets?
In the 1970s, Aberdeen transformed from a fishing port to an outpost of Texan oil men tapping black gold from beneath the North Sea. Today, its streets are home to hydrogen buses. While it’s the city council that has invested in the buses, oil and gas companies are following, driven by investors, governments and the public and net-zero commitments.
In a net-zero world, hydrogen offers a ‘clean’ route to market for natural gas, using it to produce ‘blue’ hydrogen alongside carbon capture and storage, as well as to enter new markets (for ‘green’ hydrogen produced by electrolysis of water) and remain “relevant and investible,” Swedish oil firm Lundin Energy’s CEO told an industry event in February.
It’s a form of energy – in molecules – the oil and gas companies are familiar with. It’s already used in the refinery process, it fits their business models, from production through to transport, and they even understand how to store it in geological formations (in principle).
According to a US consortium including Chevron and Shell, the hydrogen economy has the potential to generate 700,000 US jobs and $140bn (£100bn) a year in revenues by 2030. The figure has been put at around £9bn a year in the UK, just for producing it. Analysts Rystad predict that upstream oil and gas portfolios could see their value drop by 30-40 per cent, as the energy transition speeds up.
BP’s CEO Bernard Looney has described hydrogen as being “like an LNG-type business in its infancy,” while Shell’s CEO Ben van Beurden has said “It’s absolutely essential for the energy mix of the future. Without hydrogen by 2050 I do not believe we can aim to be a net zero economy.”
Van Beurden also warned that it will take time. There’s no market for hydrogen yet and it’s more expensive than both the gas and electricity used to make it.
Mike Tholen, upstream policy director at industry body Oil & Gas UK, says: “We need to start growing a market now for it to be the right scale by 2050 (the UK’s net zero target).” Blue hydrogen is the fastest way to do that, he argues, as there’s not yet enough renewable electricity in the system. But we do also need to be working on green hydrogen solutions, he says.
A large focus has been put on major integrated schemes to decarbonise entire industrial regions, to create scale. Incorporation of blue or green hydrogen depends largely on regional factors - for example: CO2 pricing, access to low-cost renewable power and/or gas grid infrastructure.
Norwegian energy firm Equinor is involved in various blue hydrogen projects across Europe, including the Zero Carbon Humber alliance, the kick-starter project of which, Hydrogen to Humber (H2H) Saltend, could initially comprise a 600MW auto-thermal reformer (ATR) with carbon capture, the largest plant of its kind in the world, to extract hydrogen from natural gas. Equinor’s ambition is to expand the infrastructure at Saltend five-fold, enough for 3GW of blue and green hydrogen by 2030.
The H21 report, which Equinor contributed to, sets out a wider North of England vision for 12GW of hydrogen production from nine ATR units, with 8TWh of hydrogen storage in 300,000 cubic metres of caverns and 17 million tonnes per annum of underground offshore CO2 storage.
Steinar Eikaas, VP of low-carbon solutions at Equinor, says: “H2H Saltend is our flagship project in the UK because it’s the first step on a journey which will make what’s today the UK’s most CO2-intensive cluster fully carbon-neutral by 2040. We believe you need this scale to kick-start the hydrogen economy.
“The ideal is full electrification and renewables to generate the electricity. That’s the ideal. But you cannot electrify everything. You need energy storage; you need the muscles in molecules-based energy. Today, it’s oil and gas that deliver this, and hydrogen can replace those.”
Equinor’s other projects include converting a Dutch power station from running on natural gas to blue hydrogen, with hydrogen storage for production flexibility. The hydrogen would cost 50 per cent more than natural gas, but would still be half the cost of electricity, says Equinor. It’s also testing use of the gas grid to distribute hydrogen to homes and industry.
Oil companies Total, Chrysaor and Shell are involved in the Acorn project in Scotland, which is looking to capture CO2 from St Fergus gas plant then store it underground offshore, as well as producing blue hydrogen. Shell, SSE, Arup and others are considering converting imported LNG to blue hydrogen at the Isle of Grain to supply London. A 200W initial project is expected to see first hydrogen in 2026/27. Centrica is assessing hydrogen storage at Rough, where it usually stores natural gas. The list of projects grows daily.
Green hydrogen is also a focus. Projects include NortH2 in the Netherlands, involving Shell and again Equinor, targeting 0.4 million tonnes of green hydrogen production by 2030 and 1 million tonnes by 2040, using power from offshore wind. Some projects use both, such as Shetland’s Orion project.
Clean energy islands – and offshore platforms
The Orion project on the Shetland islands is targeting electrification and blue and green hydrogen production. The project, involving Shetland Islands Council, OGTC and Highlands and Islands Enterprise, would harness Shetland’s 5-10 GW of offshore wind potential. Some 4GW of that (plus some onshore wind and tidal energy), could electrify the islands and nearby new and existing offshore oil and gas platforms.
That includes potential new oil and gas developments to the west of Shetland – Rosebank, Cambo and Claire South – which contain some 700 million barrels of oil. Existing fields, including Ninian and Magnus, that are expected to continue producing beyond 2030, could also be electrified.
Shetland wouldn’t need all the power that would be produced, but couldn’t export it either, as a planned mainland link is just 600MW capacity, says Paul O’Brien, manager of the DeepWind Cluster (an industry group), making hydrogen production, use and export attractive. So the project is also looking to produce 32 TWh of hydrogen annually by 2050, for use in transport (road and marine) and heating, to displace fossil fuels, and export to the UK and elsewhere.
“There’s a lot of potential around hydrogen, blue and green, and electrification,” says Gunther Newcombe, Orion Energy Hub project coordinator. It means building out offshore wind at scale, but can also make use of gas that already comes into Shetland from offshore fields. Export could also be done using existing facilities or in tankers as liquid organic hydrogen carriers (LOHCs), ammonia or methanol. CO2 by-product from blue hydrogen production could be used in enhanced oil recovery at offshore fields or be stored underground offshore, says Newcombe.
A big challenge, when producing green hydrogen from offshore wind, is where to do it. Rene Peters, at Dutch technology institute TNO, has been researching this area for some time. He says: “When you move to floating wind and deeper offshore, you have got to question how to bring that energy to demand centres. Converting it to hydrogen is probably one of the easiest ways to do that.”
One reason is existing power cable limitations. Dutch/German grid operator TenneT is developing an HVDC connection to transmit 2GW of offshore wind to shore. It’s expensive, and “you are on the edge of what’s possible,” says Peters. What’s more, 100km-long HVDC power cables, with converter stations, will cost more than €1bn (£858,000). A pipeline can transport hydrogen at a tenth of the cost, Peters says, and existing natural gas pipelines could be used.
The Dutch PosHYdon project is looking to test these concepts. An initiative of Nexstep, a Dutch association focusing on reuse of facilities, and TNO, it involves putting a 1MW PEM (polymer electrolyte membrane) electrolyser on an offshore gas production platform, powered with wind-generated energy from shore, to create green hydrogen from seawater.
“The main aims are how to handle saline (seawater) and operating in a harsh environment,” explains Peters. “It’s also looking at how efficient and effective intermittent operation is, because wind is not always at full power.”
In the UK, a Crown Estate Scotland study is looking at whether oil platforms could be reused as hydrogen production hubs. Companies, including fabricator Lamprell, are even considering floating hydrogen production units. Another option, being pursued in Denmark, is energy islands, where offshore wind energy can be redistributed as power or hydrogen.
It seems it’s all to play for. There are no technical hurdles to using hydrogen, says Eikaas. “To switch from natural gas to hydrogen, from a technology perspective, is not difficult. It will cost more, so there are economic hurdles. There’s also a safety component. Hydrogen needs to be managed differently, but it’s safe if managed the right way.” Another hurdle is the political dimension, he says. “We’re fully dependent on politicians delivering on their ambitions.”
It’s also a big industrial opportunity. “This is a little bit like the industrial revolution 200 years ago,” he explains. “Everything since has been incremental steps. To get to net zero from where we are today is really going to be a transformation.”
Martyn Tulloch, head of energy system integration at OGTC, a technology accelerator in Aberdeen, also says the commercial framework is not there yet. “We need a CO2 tax, the contracts for difference piece. But governments and the EU are now starting to move to meet their national strategies.”
Malcolm Forbes-Cable, vice-president for upstream consulting and supply chain lead at consultancy Wood Mackenzie, says the oil majors can see the long term and hydrogen’s strategic importance. “But we are also still at the early stage of understanding these things and how oil companies can play in it – as producer, distributor – and what the business model is.”
Connecting the energy dots
A growing number of projects, some led by oil service companies, are looking to integrate hydrogen production directly with offshore wind or even tidal energy, including to power offshore platforms.
• Oilfield services firm TechnipFMC’s Deep Purple project involves powering offshore oil and gas facilities with offshore wind and using the excess to produce hydrogen to be stored locally and power fuel cells when needed. It could provide 35MW stable power and cut oil and gas platform emissions by 80 per cent, says Marit Mork, manager, innovation projects, Deep Purple, at TechnipFMC. Spanish oil firm Repsol, which has a target to produce 1.2GW of hydrogen by 2030, is a partner. A two-year, part public-funded pilot starts this year, with a full-scale offshore pilot from 2025.
• Dolphyn, led by Environmental Resources Management, is looking at green hydrogen production from offshore floating wind using seawater and piping the hydrogen to shore. Their 10MW turbine concept has integrated water treatment and electrolysers. ERM hopes to have a 2MW pilot running by 2024, followed by a 10MW project by 2027. Doosan Babcock, Nel Hydrogen, ODE and Tractebel are involved.
• Ørsted (formerly Danish Oil and Gas)’s Oyster project aims to integrate an electrolyser onto offshore wind turbines and to transport green hydrogen to shore. Siemens Gamesa Renewable Energy and ITM Power, are partners.
• Total is working with Denmark’s Floating Power Plant on the O/G Decarb project to help power offshore oil and gas production facilities using combined wind, wave and hydrogen facilities on a floating foundation, which includes electrolysis.
• UK-based HydroWing and Dutch tidal energy developer Tocardo are working on the Tidal Hydrogen Production, Storage and Offloading concept to convert tidal energy into hydrogen, store and offload it.
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