How Do We Achieve Clean Energy

Global energy demands & society’s climate goals are in competition.

• How do we future-proof viable oil and gas energy assets in the realm of emerging climate laws, and yet still commercially exploit (not produce) them in a climate beneficial way to satisfy society’s energy demands?
• How do we reduce the cost of low-carbon hydrogen and carbon capture & storage (CCS), without increasing the requirement for new CO₂ surface infrastructure? (e.g., via high volume, lower unit costs and additional revenue streams)

Despite being considered a critical part of the energy transition, low-carbon hydrogen (blue, green, yellow) currently only makes up <1.0% of the global hydrogen production. The high cost of major capex components, expensive and intermittent supply of renewable energy and inconsistent energy policies are some of the key obstacles.

To overcome oil & gas sustainability obstacles, we need to improve the lifetime economics of existing infrastructure (i.e., pipelines, wells) and delay their decommissioning.​

By keeping methane (CH₄) and carbon dioxide (CO₂) downhole we reduce the need for downstream atmospheric CCS. This reduces the process energy, commodities, need for specialist metallurgy and chemicals used in downstream, surface CCS equipment. When we don’t burn, produce or leak these powerful greenhouse gases to the atmosphere, this minimises the damage that these atmospheric greenhouse gases do, and the associated repair costs from future climate change.

Steam Methane Reforming (SMR)

SMR is the most widespread technology for hydrogen production from natural gas at large scale, though ATR is also in use. Natural gas in SMR is both a fuel and a feedstock (together with water). Typically, 30– 40% of the methane feedstock is combusted to fuel the process, giving rise to a “diluted” CO₂ stream, while the rest of the methane is split by the process into hydrogen and more concentrated “process” CO₂. SMR is likely to remain the dominant technology for large-scale hydrogen production in the near term because of its favourable economics and the large number of SMR units in operation today.

CCS can be applied both to SMR and ATR hydrogen production. Using CCS with SMR plants can lead to a reduction in carbon emissions of up to 90%, if applied to both process and energy emission streams.

[Ref.: The Future of Hydrogen, pages 17 & 39. Report prepared by the IEA for the G20, Japan, June 2019]

Hydrogen Production

At around 70 million tonnes per year (MtH₂/yr), hydrogen is almost entirely supplied from fossil fuels, with 6% of global natural gas and 2% of global coal going to hydrogen production. This is responsible for carbon dioxide (CO₂) emissions of around 830 million tonnes of carbon dioxide per year (MtCO₂/yr), equivalent to the CO₂ emissions of Indonesia and the United Kingdom combined.

Natural gas is currently the primary source of hydrogen production, accounting for around three quarters of the annual global dedicated hydrogen production of around 70 million tonnes.

The production cost of hydrogen from natural gas is influenced by a range of technical and economic factors, with gas prices and capital expenditures being the two most important.

Fuel costs are the largest cost component, accounting for between 45% and 75% of production costs.

[Ref.: International Energy Agency, June 2019]

 Clean Energy Security

Many governments are currently discussing carbon taxes (i.e., polluter pays), carbon capture & storage (CCS) credits, hydrogen credits, and alternative ways to subsidise and finance the future green economy with CCS. But what happens when the subsidies end? (e.g., 45Q CO₂ credits, 45V H2-GREET, CO₂ tax deductions, H₂ subsidies)

To make CCS sustainable it should made be part of a net-energy generation process. The Metharc process combines CCS with hydrogen generation, providing CCS as a free biproduct of the wellbore methane reformation process used to generate hydrogen.

Giving emphasis and assistance to the growing hydrogen economy would help drive hydrogen volumes up, the price of hydrogen down, improve its accessibility, motivate an increase in hydrogen use and therefore its demand (which further incentivises hydrogen production at ever increasing volumes, driving down hydrogen’s unit price).

Note:  Auto-Thermal Reforming (ATR)  Carbon Capture and Storage (CCS)