What’s happening with hydrogen in Alberta? The Alberta Hydrogen Roadmap has put us on the “path to building a provincial hydrogen economy and accessing global markets.” According to the website Alberta is already the largest hydrogen producer in Canada, with all the resources, expertise, and technology needed to quickly become a global supplier of clean, low-cost hydrogen. They quote an estimate of the worldwide market to be worth over $2.5 trillion a year by 2050 and predict hydrogen can be the next great energy export. But then the roadmap prescribes policy actions that will be introduced in the coming months and years when time is short in the race to capture the market.
Then there’s Alberta Innovates’ Hydrogen Center of Excellence– intended to accelerate technology and innovation across the hydrogen value chain, closing innovation and support gaps to strengthen Alberta’s hydrogen economy.
But looking at what’s happening now in hydrogen development globally, recent conferences in Norway and Italy indicate that European countries are aggressively pouring billions of dollars into hydrogen development – more aggressively than Canada. The risk is that time is not on our side as Canada has higher carbon taxes than every European country but Norway. The time factor is a huge risk, according to Grant Strem, Chair & CEO of Proton Technologies who attended the conferences in Norway and Italy.
“The emphasis for us is certainly the drag on our economy increasing carbon prices will create. The current carbon tax will be $170 per ton by 2030. If you multiply the 2030 carbon tax by our current emissions (roughly 275 million tonnes of CO2), the result is more than $40 billion per year in carbon tax. So to avoid that $40 bn per year drag on our economy, it certainly makes sense to aggressively invest in carbon-negative technologies and hydrogen production is an energy commodity that we can certainly use to replace many of our current uses in order to decarbonize.”
In addition, hydrogen can be produced at a lower cost than natural gas. H2 development not only avoids carbon tax, it involves saving money on energy production as well. We can also use hydrogen as a significant energy export to satisfy European and global demand. Alberta certainly has immense geological resources for producing hydrogen as well as formations that are ideal for sequestering CO2 that could be repurposed towards hydrogen. When the world market is wanting hydrogen, it is an opportunity that Alberta needs to move quickly on says Strem.
Current Alberta plans for hydrogen megaprojects leverage Alberta’s abundant natural gas reserves combined with carbon capture and sequestration to reduce the carbon footprint. But since they involve the production of natural gas, there will be some amount of emissions and an environmental footprint on the upstream side and some of that will be through the energy consumed in drilling as it’s a fairly energy-intensive process. Then when tying in, there’s an ecological footprint and disturbance associated with that process. So you can try your best to minimize methane emissions upstream, but it’s difficult to get to 100%.
The intention to capture 95% of the CO2 is a significant improvement and helpful from a carbon tax perspective. In addition, one of the reasons that Alberta has been driving toward blue hydrogen is so the government can continue to collect much-needed royalties on natural gas production. But what about leveraging hydrogen production that doesn’t involve natural gas production directly but utilizes an O&G company’s assets- existing wells and infrastructure at the same time as we expand hydrogen megaprojects?
“Our solution is a process where oxygen is injected from the air directly into an old oil and gas deposit.” says Grant Strem. “That triggers reactions that produce hydrogen in large quantities. The process also produces some CO2 in the ground, but it is all converted into carbonate rock within the pore space of the same oil field. So we can get all of our CO2 captured, plus more CO2 as provided and sequester it all in the rock within the same system. The carbon intensity is below zero. And our cost per unit of energy is cheaper than natural gas.”
Strem is seeing this Alberta-developed technology proliferate very quickly worldwide. The company is already doing licence deals in places around the world. Most recently, the largest gas company in Ukraine, Naftogaz, obtained a 2000-ton-per-day production license for using Proton’s technology. The solution is ideal for company wells that are at the end of their life cycle. Once the future value of the production is exceeded by the abandonment liability on the balance sheet, wells have a negative value to the company that owns them. A company can choose to license the technology and repurpose wells, or sell their field usually for $1.00 and have Proton repurpose it.
It’s a solution that fits wells that have not been fully abandoned but can work for older oil fields. Strem notes it’s easier to manage a project or take over a project while it’s still alive but says there are some scenarios where it would work for an abandoned project as well.
In addition, most of the large old oil sites have very good infrastructure including existing power lines. By installing a hydrogen fuel capable turbine, the hydrogen is produced and powers an electricity generating turbine. The electricity is easily sold onto the Alberta power market. This is because Alberta has an unregulated power market. An electrical producer can find a huge market very readily due to the 10 or 11-gigawatt grid capacity. In addition, it is low-carbon electricity.
The process also generates large quantities of nitrogen from the air separation unit. To inject oxygen, it is separated from the air, generating a pure nitrogen stream. Since nitrogen and hydrogen are the ingredients of ammonia, they can be combined with turbine exhaust heat facilitating the generation of ammonia, which can be injected into soils for agricultural fertilizer, or it can be a feedstock for other types of fertilizer and is easily transported as there is already a significant infrastructure for distribution.
Strem sees the advantage of hydrogen is that it is the same grade of product everywhere. It’s just H2- whether you burn it in a turbine or use it in a fuel cell. In his words, “You don’t need elaborate production processes to produce different grades of H2 fuel like we currently use for oil and gas. In addition, the international export markets eschew products that have a high carbon intensity. It’s better to aggressively decarbonize and produce large-scale carbon negative export products, where you can put a sticker on it saying this product was manufactured with a negative carbon intensity of X, Y or Z.”
Maureen McCall is an energy professional who writes on issues affecting the energy industry.