Bloomberg reports that oil companies are again eying hydrogen as a way to remain relevant during a future of uncertain oil demand and the transition to net-zero emissions.
Hydrogen as a fuel is not new of course. Lubricant and oil company Shell was an early pioneer in hydrogen-powered cars, but it was edged out as the technology for electric vehicles, especially battery technology, became more feasible.
When burnt as a fuel, hydrogen produces nothing but water as a byproduct. It also burns hot, making it a feasible alternative for energy-intense industries like steel and cement making. The problem, however, lies in how it is produced. For example, most of the world’s hydrogen is currently “grey”, which means it is chemically extracted from natural gas, resulting in the remaining carbon being emitted into the environment. An improvement on this is “blue” hydrogen, where the resulting carbon is instead stored underground. Finally, “green” hydrogen is produced by processing water using renewable energy.
Green hydrogen is clearly the preferred option, but it comes at a price premium. The general manager of hydrogen at Shell, Oliver Bishop, recently said about this:
“You need both routes [green and blue hydrogen] if you’re really serious about decarbonizing all the use cases.”
Hydrogen could therefore represent a way for oil and gas companies to continue using fossil assets in a clean way, with some of its existing natural gas infrastructure being used to transport carbon in the other direction for storage in depleted fields.