Natural gas and hydrogen storage ‘fundamental’ to tackling energy crisis and decarbonisation

A meeting, held between the UK’s Minister of State for Energy and Climate and the chief executive of UK Oil & Gas (UKOG) and its wholly owned subsidiary UK Energy Storage (UKEn), highlighted the importance of ramping up energy storage infrastructure while showcasing the ties that bind natural gas and hydrogen, as solutions to the current energy crisis and transition to low-carbon and green energy sources.

UK Oil & Gas, which aims to build a sustainable oil and gas production base that can act as a springboard to further worldwide petroleum opportunities while building its UK hydrogen and geothermal energy businesses, reported on Thursday, 26 January 2023, that its chief executive, together with its subsidiary UK Energy Storage, attended “an encouraging meeting” in Parliament on 25 January 2023 with the Minister of State for Energy and Climate, Graham Stuart MP and the MP for South Dorset, Richard Drax, who facilitated the event. 

Stephen Sanderson, chief executive of UKOG, remarked: “It was important to gain the support of the minister for our project and to learn more about the government’s plans to provide a workable business model to attract investment into vital energy storage infrastructure. I look forward to taking these discussions further with the minister, Mr Drax and their teams. I am most grateful to both for their time and enthusiasm for our project.”

According to the company, the meeting covered all areas of UKEn’s energy storage hub project at Portland Port, for which the firm inked a lease agreement in May 2022, covering two sites at the former Royal Navy port in Dorset, with the intent to develop – subject to new planning consent and securing necessary development finance – a planned integrated Portland Energy-Hub, centred around hydrogen-ready gas storage and a future green hydrogen generation capability.

Furthermore, the UK player underlined that the discussions, which were carried out during the meeting, included the need for “more strategic level energy storage,” both natural gas and hydrogen, as “a fundamental part of the solution to the post-Ukraine energy crisis, the energy transition and future UK green energy independence.”

The company claims that the delivery of Portland’s strategic level underground salt cavern storage, “the largest planned in the UK onshore,” will – if delivered – double the UK’s onshore storage capacity. It would be built to handle both hydrogen and natural gas from inception.

While looking at the inroads hydrogen is making with Europe at the helm of the proposed solutions to substitute natural gas with green hydrogen to remove emissions from hard-to-abate sectors, Offshore Energy wrote earlier this month about a report from the House of Commons Committee, which warned that hydrogen was not “a panacea for reaching the net-zero emissions reductions by 2050” but could grow to become “a big niche” fuel in particular sectors and applications.

In the wake of the current energy and climate crises, hydrogen’s potential to sideline gas as the key player in the decarbonisation strategy has been pushed to the forefront, although, the current situation in Europe and the world leads to the conclusion – recently accentuated by Frans Timmermans, the European Commission Executive Vice-President – that “gas will remain a transition fuel in many sectors and regions.” 

However, as the energy transition moves forward, global industry players continue to invest in cleaner energy sources, with hydrogen among the front-runners, as outlined in a recent whitepaper on hydrogen from Bureau Veritas. The whitepaper underscores that the demand for this carbon-free energy source has increased threefold since 1975 and is set to grow further as the energy transition accelerates.

In line with this, the Fuel Cell and Hydrogen Energy Association previously indicated that a competitive hydrogen industry could meet 14 per cent of U.S. energy demand by 2050 if the U.S. stepped up its investments in hydrogen.

Moreover, Bureau Veritas emphasises that hydrogen can only fulfil its potential as a sustainable energy source if a carbon-free value chain for hydrogen generation, storage, distribution and use is secured. In a bid to build out the hydrogen value chain, the whitepaper points out that the investments from governments, banks and energy providers need to be scaled up, as an investment of $1.2 trillion in low-carbon hydrogen funding is estimated to be needed for global net zero emissions by 2050.

The hydrogen production costs also need to be reduced to make the solution more competitive while industry players need to shift to larger-scale hydrogen production plants. Bureau Veritas claims that the cost of green hydrogen production could be reduced by 30 per cent by the end of the decade if hydrogen production is ramped up and the price of renewable energy declines.

In addition, the whitepaper says it is vital to tackle project and risk management, thus, limiting risk and ensuring safety “must be a non-negotiable element of hydrogen production and use from end to end,” since hydrogen is both volatile and flammable. Several studies – such as the ones published by Columbia University, the Environmental Defense Fund, the universities of Cambridge and Reading, and the Frazer-Nash Consultancy – have been done on the risk of leaks undermining hydrogen’s climate benefits.

Despite the potential pitfalls, Bureau Veritas concludes that hydrogen has a major role to play in helping industry players decarbonise their activities: from powering ships and trains, to decarbonising manufacturing and construction, to feeding electrical grids, “hydrogen – a small molecule with huge energy storage capacity – can greatly reduce environmental impact.”

This aligns with the views expressed by the Hydrogen Council, claiming that hydrogen is the missing piece of the clean energy puzzle and should be embraced as “a global energy solution now more than ever.”

Additionally, Bureau Veritas underscores that specialised training will “become essential for workers across sectors,” to accompany developments in hydrogen technology, since handling hydrogen and working with hydrogen-powered technologies is “not without its safety risks, so it is crucial that training be thorough, up-to-date, and delivered by experts.”

In October 2022, the American Petroleum Institute (API) released a new analysis on the benefits of low-carbon hydrogen produced from natural gas, which was commissioned by API and conducted by ICF. Based on the findings of this study, hydrogen produced from natural gas with carbon capture and produced from electricity and other energy sources could eliminate an additional 180 million metric tons of greenhouse gas (GHG) emissions on average per year through 2050.

With hydrogen portrayed as the fuel of the future, investments in the hydrogen industry have increased recently, however, it is still believed that 2022 proved to be a disruptive year for the hydrogen industry due to supply chain developments, carbon footprint reductions and the rise of low-emission hydro.

Offshore Energy recently obtained insights from Rajiv Sabharwal, VP, Business Development and Energy at Bureau Veritas North America, who provided more information on the state of hydrogen and trends that will impact the industry in 2023. 

According to Sabharwal, technology advancements are driving the hydrogen industry forward, as illustrated by the Bipartisan Infrastructure Law, which “authorises and appropriates $62 billion for the U.S. Department of Energy (DOE), including $9.5 billion for clean hydrogen, in new tech developments. These include carbon capturing, mass-scale volume production, and electrolyzers, etc.”

Sabharwal further explains that the rise of ESG is an important factor in the hydrogen boom, as “hydrogen plays a key role in 2023 ESG strategies. Companies determined to reduce their carbon footprint will use hydrogen to do so.”

Another important factor for hydrogen is mobility across the industry, highlights Sabharwal while elaborating that “warehousing hydrogen mobility internally with cranes and equipment is rapidly growing. Hauling with both large trucks and vehicles is reducing carbon emissions and contributed to EV and hydro fuel cells developments, pushing the industry forward.”

In line with the views about the hydrogen workforce, expressed in Bureau Veritas’ whitepaper, Sabharwal warns that “handling hydrogen and working with hydrogen-powered technologies is not without its safety risks, so it is crucial that training be thorough, up-to-date, and delivered by experts – whether they are involved in project conception, design, operations, monitoring or maintenance.”