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.

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.

“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