Natural gas producers compete in the hydrogen energy market due to the shift of energy focus

According to a report from World Petroleum in London on May 31, the global natural gas industry is in a life-and-death race: Either find a way to become part of the next generation of energy, or risk being replaced by alternative energy sources.

Oil producers such as BP, Equinor and Royal Dutch Shell are all looking for hydrogen to help ensure demand, otherwise demand may weaken as the rate of decarbonization accelerates.

The most direct way to achieve net zero emissions is to use hydrogen produced by renewable electricity-called "green hydrogen" in the industry-but with the popularity of wind and solar energy, it is expected that the price of blue hydrogen will increase by at least 2030.

Al Cooke, executive vice president of development and production at Equinor, headquartered in Stavanger, Norway, said: "Green is the destination, but we will reach the destination through a blue highway.

By 2050, clean hydrogen will meet a quarter of the world's energy needs, with annual sales reaching 630 billion euros (770 billion US dollars).

At present, without emitting greenhouse gases, hydrogen is costly to manufacture, difficult to store, and extremely flammable, so NASA uses it to push rockets into space.

Despite this, the International Energy Agency (IEA) stated in its net-zero emission roadmap published on May 18 that as the transportation, steel, and chemical industries take actions to reduce pollution, demand is expected to increase by six times by 2050.

Today, almost all hydrogen production uses natural gas.

　　At present, natural gas is cheaper than renewable electricity.

　　Paul Boggs, Shell’s vice president of hydrogen energy business, said that enhanced carbon capture means that the blue hydrogen energy project can be launched on a large scale from the first day.

　　Replacing natural gas with hydrogen is a way for energy companies to work hard to meet increasingly stringent emission reduction requirements.

　　The urgency of natural gas companies stems from widespread support for green hydrogen, which is made from water and renewable electricity.

　　Europe’s largest utility company Iberdrola SA is currently focusing on renewable energy and green hydrogen energy.

　　Diego Diaz Pilas, Iberdrola's new head of venture capital, said: "In the short term, there is an opportunity to invest in blue hydrogen, but in the medium term (5--10 years), this will be a stranded asset.

　　Qiu Yin excerpted from World Petroleum

　　The original text is as follows:

　　Natural gas producers jockey for position as focus shifts to hydrogen

　　The global natural gas industry is in an existential race: either find a way to be part of the next generation of energy or risk getting supplanted by alternatives.

　　BP, Sinopec, Equinor and Royal Dutch Shell are among the producers looking to hydrogen to help secure demand that otherwise may falter as decarbonization speeds up.

　　The straightest route to net-zero emissions uses hydrogen produced by renewable electricity - known in the industry as green hydrogen - but the blue variety is expected to be cheaper until at least 2030 as wind and solar power ramp up.
Natural gas companies aiming to lower emissions now and avoid obsolescence next decade are planning to pour billions of dollars into building their blue businesses.
At least 15 projects are scheduled to go online through 2027 in the UK, Germany, Norway, the Netherlands, Sweden and New Zealand.

　　“Green is the destination, but we'll get there on a blue highway,” said Al Cook, executive vice president for development and production at Stavanger, Norway-based Equinor.
“At some point, green hydrogen might well be lower cost than blue, but that will likely not be for at least a decade.
"

　　Clean hydrogen could meet a quarter of the world's energy needs by 2050, with annual sales reaching 630 billion euros ($770 billion).
Production of blue needs to be scaled up quickly because projects that don't come online by 2030 risk becoming uncompetitive, according to BloombergNEF.

　　Right now, hydrogen is expensive to make without expelling greenhouse gases, is difficult to store and is so highly combustible that NASA uses it to propel rockets into space.

　　Still, demand is expected to increase six-fold by 2050 as the transportation, steel and chemicals industries move to reduce pollution, the International Energy Agency said in its road map for net-zero emissions published May 18.

　　Natural gas is used in almost all hydrogen production today.
That earns the disdain of ESG investors, environmental groups and governments trying to slow climate change because the most common method, called steam-methane reforming, also produces large amounts of carbon dioxide, which are dumped in the air.
The quickest way to remedy that is by capturing the carbon and storing it underground or reusing it.
The process has been around for decades, and it's usually deployed in natural gas plants, fertilizer manufacturing and ethanol production facilities.

　　Gas currently is cheaper than renewable electricity, giving blue hydrogen an advantage even with the added costs of carbon capture and storage.

　　Bolting on carbon capture means blue hydrogen projects can be rolled out at scale from day one, said Paul Bogers, vice president for hydrogen at Shell.
The Netherlands-based company is involved in several, including the UK's Acorn Project and Net Zero Teesside, both scheduled to go online in 2025.

　　Swapping natural gas for hydrogen is one way energy companies could advance their efforts to meet increasingly strict mandates for lowering emissions.
Shell previously pledged to reduce its greenhouse gas emissions by 20% within a decade, but a court in The Hague ordered the company on May 26 to slash them by 45% in the same time period.

　　The urgency for natural gas companies stems from the near-universal backing for green hydrogen, made from water and renewable electricity.
The cost of green hydrogen is expected to fall 80% by 2030 and be cheaper than blue in all 28 markets analyzed by BNEF as renewable energy and the electrolyzers using it to make hydrogen both come down in price.

　　Iberdrola SA, Europe's biggest utility, is focusing on renewable power and green hydrogen, bolstered by Spain's commitment to spend 35 billion euros of EU stimulus on energy transition.
American industrial giant Cummins Inc.
said May 24 it will partner with Iberdrola to build a factory in central Spain for making electrolyzers.

　　"In the short term, there are opportunities in which you can apply blue, but in the midterm - five to 10 years - it's going to be a stranded asset," said Diego Diaz Pilas, head of new ventures at Iberdrola.