Gas-based hydrogen, carbon capture needed to speed global emission reduction - Equinor
By Gavin Evans
Dec. 4 (BusinessDesk) – Hydrogen fuels will have to be developed using natural gas if they are to deliver material emissions reductions quickly enough to help limit global warming, Norwegian oil giant Equinor says.
Making hydrogen from gas and reinjecting the extracted CO2 is a proven technology and one that can be deployed relatively quickly and at scale, Bryn Kløve, the firm’s New Zealand country manager said.
Existing pipelines and infrastructure can be re-purposed to deliver gas-derived ‘blue’ hydrogen and can then carry hydrogen made through renewable processes as they are commercialised and scaled up.
“That is the important thing – doing it at scale,” he told BusinessDesk.
“And as we add on renewables we can then start using ‘green’ hydrogen.”
The potential of hydrogen and carbon capture and storage has been forced back onto this country’s climate change agenda in recent weeks – causing discomfort for some environmental activists.
Hiringa Energy is developing hydrogen fuel in partnership with trucking group TIL Logistics. It will initially use gas-derived hydrogen while it establishes stocks of renewables-based product.
8 Rivers’ proposed $3 billion Pouakai project in Taranaki would use natural gas with carbon capture to produce zero-emission electricity, and urea and hydrogen in a dynamic process intended to flex with seasonal electricity generation requirements. The venture is seeking government support for a feasibility study under the Provincial Growth Fund.
Yesterday, Ports of Auckland, Auckland Council, Auckland Transport and KiwiRail announced a proposal to make hydrogen for heavy transport operators – including the port’s tugs and straddle carriers – using mostly renewable electricity to split hydrogen from water.
And last week, in Taupo, the local Tuaropaki Trust and Japanese hydrogen process provider Obayashi turned the first sod on a small-scale hydrogen production plant powered by geothermal energy. The government has recently signed a memorandum of cooperation with the Japanese government to jointly explore hydrogen economy opportunities.
Equinor – the former Statoil business – was granted its first New Zealand exploration permit in 2013. Its successful use of CCS to reduce emissions and its increasing investment in hydrogen is a stark contrast to the thinking of groups like Climate Justice Taranaki, whose desire to reduce emissions is matched by their determination to shut down the oil and gas industry.
Greenpeace also remains sceptical of CCS, a technology the International Energy Agency has spent years urging countries to ramp up. Last week the agency reiterated that the Paris climate change targets can’t be met without CCS.
Equinor commissioned its first carbon capture and storage project at its Sleipner field in the North Sea in 1996. It has spent the past decade storing CO2 from its Snohvit LNG project and to date has stored more than 23 million tonnes of CO2 overall.
It is also a partner in the H21 North of England venture, which earlier this month proposed using hydrogen to heat 3.7 million homes and businesses from Liverpool north to meet 14 percent of the UK’s domestic heating needs by 2034.
If it proceeds it will be the world’s biggest clean energy project and will involve construction of a 12 gigawatt gas-based hydrogen plant and the injection of 20 million tonnes of CO2 annually. The phased change-over of homes and businesses would take seven years starting in 2028 and conceptually could be expanded to another 12 million homes by 2050.
Kløve said the recent reports of the Inter-governmental Panel on Climate Change should have been a wake-up call on the need to accelerate emissions reduction if there is to be any hope of meeting the Paris target to hold global warming to 1.5 degrees by the end of the century.
That pressure is felt strongly in Europe where – unlike New Zealand and Norway – many states rely on nuclear and coal-fired generation for much of their base-load electricity generation.
Gas – with half the emissions of coal – will play a big role, but CCS and hydrogen conversion will be needed to accelerate the emissions reduction there, he said.
“We thought we could just displace coal but that’s not good enough,” Kløve said in Wellington last week.
Advantages in Europe are the ample supply of gas, strong backing from policymakers for action, and existing international frameworks for operating pipelines across borders, he said. Now they shift gas and oil, but future pipelines could also shift hydrogen and CO2 around the continent.
There are also international partners to work with. Equinor, part-owned by Norway’s government, is working with manufacturers on the country’s east coast to develop a carbon storage facility on the west coast.
The project, being developed in partnership with Shell and Total, will also take CO2 from Vattenfall’s 1.3 GW gas-fired Nuon Magnum power station in Holland, where one of its three units is being converted to run on hydrogen.
Equinor’s focus on new technologies is part of a strategic shift aimed at keeping the business relevant as the world adapts to a low-carbon future. It is deliberately focusing on projects that can deliver material impacts and is aiming to have up to a fifth of its investment effort going into renewables and other new energy solutions by 2030.
It already has 750 MW of wind capacity operating off the UK coast and a pipeline of more than 7 GW of wind development options there, the US, Poland and Germany. Its development of the Hywind floating turbine has vastly increased the scope for offshore wind generation globally.
It is now a natural resources business but oil and gas remain core both to its commercial success and its emission reduction efforts.
Per-barrel CO2 emissions from the oil and gas fields it operates are already close to half the industry average at 9 kilograms. It is aiming to get that down to 8 kg by 2030, even as ageing fields require more energy for extraction.
It is also targeting resources it believes are likely to be lower in carbon and cheapest to produce. The firm sold its Canadian oil sands interests in 2016 and may in future face harder decisions to leave some resources in the ground, Kløve said. It is aiming for a US$21 a barrel break-even cost for its new developments.
Kløve said the company, which applies an internal US$50 a tonne carbon cost to all its operations, can’t develop low-carbon options without a commercially sustainable business.
And sovereign wealth funds and other major investors, already taking a tougher line with heavy emitters, will increasingly measure firms on their production emissions. Paying carbon taxes won’t be enough.
“That’s the future for every oil and gas energy company,” he said.
“Not all barrels are the same.”
Equinor has interests in four permits off the North Island’s East Coast where it is looking for large-scale gas deposits in partnership with operators OMV and Chevron.
Its venture with OMV has committed to the next stage of exploration in its permit off the Central Hawke’s Bay coast. It faces a similar decision mid-2019 on the three Chevron-operated permits to the east and south that it has stakes in.
Kløve said the firm’s thinking about New Zealand hasn’t changed. The company came here seeking large-scale deposits – capable of delivering the equivalent of more than 120,000 barrels a day – in frontier areas.
Its remaining permits can run through to 2030, and the ventures have already gathered sufficient seismic data to meet the requirements of the next phase of their work programmes.
While the firm’s initial exploration off Northland was unsuccessful, Kløve said the work was a great experience for the firm. It came to listen and learn from the community and was also pleasantly surprised by the expertise of the local oil and gas sector and the contracting industries supporting it.
Nor has the policy change of the new government – halting new offshore exploration – changed its approach and its belief in the role that gas can play in reducing emissions.
“We can only tell our part of the story,” he said.
“We need to stay open as possible and then let people make up their own minds.”