Blue hydrogen projects need four key factors to be in place to succeed, according to Matt Williamson, vice-president of blue hydrogen at BP. The four are a good gas supply, a CO₂ store, regular offtake and supportive regional and national governments.

“A great blue hydrogen project needs these four ingredients,” said Williamson at consultancy Wood Mackenzie’s hydrogen conference. He cites BP’s H2 Teesside as a project that ticks all of the boxes.

H2 Teesside has a terminal receiving gas from the UK central North Sea and is able to store gas in the Endurance field as part of the Northern Endurance Partnership (NEP)—a programme led by BP to store 10mn t/yr CO₂.

BP has also signed agreements with four potential offtakers for the 1GW H2 Teesside blue hydrogen plant. These offtakers are CF Fertilisers, which manufactures ammonia-based fertiliser products; Mitsubishi Chemical Corporation, a Japanese manufacturer of chemical products; Sembcorp Energy UK, which operates combined heat and power plants; and Alfanar, a Saudi materials firm that would use the hydrogen as a feedstock.

“For governments it is about setting clear targets and putting in place business models” Williamson, BP

And H2 Teesside has the support of local government as part of the Net Zero Teesside cluster. That cluster has also received approval from central government for track-one funding. 

“For governments it is about setting clear targets and putting in place business models to allow customers and producers to progress,” says Williamson. “We have the targets and now they need to be supported by the right business models.”

The UK doubled its hydrogen targets in early April and is consulting on its hydrogen business model. The government is likely to favour some form of contract for difference scheme.

Long view

BP is taking a long view over concerns that blue hydrogen projects are not economic because of rising gas prices. Blue hydrogen projects will not come online until the second half of this decade, by which time the current spike in gas prices is likely to have settled, according to Williamson.

“The world will have developed new gas supplies by then,” he says.

A recent analysis by consultancy McKinsey found that gas demand is projected to grow by 10pc in the next decade before peaking around 2035 in the central scenario.

Williamson added that the Middle East will likely see the development of more blue hydrogen projects given its cheap gas and ample opportunities for CO₂ storage.

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Author: Tom Young