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19 April 2019

Green Hydrogen goes hyper at BP – watch for rival oil major moves

The Hydrogen argument has been around for a long time – and it remains the strategy that most excites people who live in the oil and gas industries, reaching for either Blue or Green hydrogen so they can carry on almost as they are now.

Blue Hydrogen comes from cleaning existing natural gas, and is really only seen as a stepping stone to Green hydrogen, made from electrolysis and water, making it one of the most bountiful supplies on the planet.

So when one of the oil majors makes a major move in this direction we should all sit up and listen, so our eyebrows raised as this week BP said it will join forces with Nouryon, and the Port of Rotterdam to add electrolysis to its refinery in Rotterdam. On the surface this is not a bid for renewables glory, not quite, as BP already uses a lot of hydrogen in its refinery, but which comes from hydrocarbons, and uses it to desulphurize products. It now sees that it can replace this with green hydrogen produced entirely from water and renewable energy and this could result in a reduction of 350,000 tons of CO2 emissions a year at the refinery. It may also learn many lessons about the production of Green Hydrogen that may stand it in good stead if it wants to extend this and use it for fuel.

The deal has been earmarked with a signed MOU to study the feasibility of building a 250 MW water electrolysis which would output some 45,000 tons of green hydrogen and that would make it the largest site of its kind in Europe.

Nouryon would be expected to build and operate the facility – it is an established leader in industrial electro-chemicals. The Port of Rotterdam would help out with local facilities but also investigate the idea that this becomes the center for a green hydrogen hub with other partners joining in. A final investment decision won’t be made until 2022. By then the economic viability of green hydrogen as a fuel will start to become clearer too.

Ruben Beens, CEO of BP Netherlands said: “BP is committed to advance a low carbon future. We have committed to reduce emissions in our operations, improve our products to help customers reduce their emissions and create low carbon businesses. The use of green hydrogen, made from water with renewable energy, has the potential to deliver significant emissions reductions at Rotterdam. Working with Nouryon and the Port of Rotterdam will allow us to explore and fully understand the technical, operational and financial dimensions of this potential opportunity.”

BP back in early 2017 began to talk about sustainable electricity coming out of its Rotterdam base, specifically then highlighting the production of fuels. TNO, Stedin, Smartport, Uniper, BP Refinery Rotterdam and Port of Rotterdam Authority said that the time they would investigate a power-to-gas plant in the Rotterdam port area, as well as the necessary amendments to regulations. The parties signed a cooperation agreement in January.

In January this year things got more serious due to the fact that there will be a series of huge wind farms built offshore in the Netherlands in the North Sea means a large amount of green electricity is about to become available and using it to generate Green Hydrogen is the preferred option from many oil based businesses in the coming decades. One point where that could hit land is via the Tennet grid at Maasvlakte, very close to Rotterdam. The hydrogen could then be used as a transport fuel or added to the gas grid.

So eventually the BP venture could be two fold and multi-purposed, depending upon which market develops most rapidly for the Blue Hydrogen. If it’s still to desulfurize its products, then fine, and if there is some left over to use as fuels, so be it – that will depend upon price. BP is likely to get the energy really cheaply as the offshore wind farms look to offload any energy that is not pre-sold to the grid.

Meanwhile it will get a big know-how leap ahead of rivals and perhaps use the additions at its refinery to make bolder Green Hydrogen moves around Europe at a later date.

Initially the Green Hydrogen ideas emerged in projects between Nouryon in partnership with Tata Steel and it looks like the common factor in all of this is the Port of Amsterdam. A year ago it began to study building a 100 MW electrolysis facility but now that seems to have been upgraded.

The green hydrogen industry is scaling up rapidly across Europe and another

oil major Shell is also known to be interested and feels it could be a future pathway for aviation. Until then BP had shown little interest in Green Hydrogen but has already signed a similar cooperation agreement with German power company Uniper to develop a green hydrogen in Lingen, Germany.