INTERVIEW: Uniper sees strong support for Wilhelmshaven LNG, hydrogen unit

Uniper sees strong regional and national support for its LNG project at Wilhelmshaven with a senior official at the German utility saying it was the best placed LNG project in Germany.

Uniper COO David Bryson said the company was also actively looking for opportunities in sustainable hydrogen, with its Wilhelmshaven coal plant site an attractive location.

In the UK, however, a coherent hydrogen strategy was awaited.

"We are very pleased about developments at Wilhelmshaven. For us it is the best placed LNG project Germany has in terms of its geography and cost efficiency," Bryson told S&P Global Platts in an interview.

"We have a lot of support regionally for this project. Germany has recognized the need for this type of infrastructure projects and we do not expect a significant challenge to the approval as we have already taken significant steps with the bespoke design of the FSRU to meet environmental standards."

In May, project company LTW (100% owned by Uniper) and Japan's MOL ordered the FSRU designed for Wilhelmshaven, Germany's only deep sea port, allowing for 'easy maneuvering' for all tanker sizes.

The project was progressing commercially but would need to be continually tested against market developments, Bryson said.

"We had the first phase of the open season in 2019. We aim to start the binding interest phase in the coming period. We have certain interested parties, but I cannot go into details," he said.

Plans to add LNG infrastructure in Germany were a surprise inclusion in the 2018 coalition treaty.

Germany is the EU's biggest gas market, but previous plans to build an LNG import terminal fell by the wayside due to uncertainty over future gas demand.

LNG would give the country an alternative gas supply to pipeline imports from Russia and Norway, and as the Netherlands phases out the Groningen gas field.

Meanwhile Uniper is one of five European financial investors in the Nord Stream 2 pipeline project bringing more Russian gas to Europe.

"We continuously monitor developments, also what is coming out of Washington," Bryson said in reference to final construction delays and geopolitical disputes. It would be an "escalation" for EU-US energy relations if the project was not completed, he said.

"Diversification of gas supply into Europe is important. We need multiple channels to access the market as natural gas demand is certainly set to increase."

Uniper has around 35 TWh of LNG supply contracts compared to 400 TWh of pipeline gas contracts, Bryson said.

A senior official at Dutch gas grid operator Gasunie, part of a consortium to develop the German LNG terminal at Brunsbuettel, said June 17 the German gas market could support two LNG import terminals.

"This is a long-term game. We have a very odd situation right now [mild winter, COVID-19, storage full]. The likelihood that gas prices remain this low is very low. I am fairly confident that the role we are playing now is important whatever the color of the gas," Bryson said.

Hydrogen evolution to greener gas

Providing security of supply would become more important as the energy transition gathered pace, while natural gas supply itself would become greener, the Uniper official said.

"The transition to hydrogen will be an evolution, it will not happen overnight," Bryson said.

Uniper welcomed the German hydrogen strategy presented June 10, with company CEO Andreas Schierenbeck appointed to the national hydrogen council.

"There are still a lot of open topics. It is a very complex issue," Bryson said of the technology pathway to decarbonized hydrogen.

Germany is pledging Eur7 billion ($8 billion) support for 5 GW electrolyzer capacity by 2030 to kick-start a hydrogen economy. A further Eur2 billion have been earmarked for projects abroad.

"It is not a problem that can be solved by Germany alone. If we achieve a hydrogen economy it will be a global one," Bryson said.

Uniper is involved in a number of so-called blue hydrogen projects in the Netherlands and the UK, where the conventional steam methane reforming process is cleaned up via carbon capture, use and storage technologies.

"We are involved in a lot of discussion with the port of Rotterdam," Bryson said.

Uniper operates the 1 GW MPP3 coal plant, now co-fired by biomass on the Maasvlakte area of the port.

"We are looking and scouting at a broad range of options in the hydrogen space, where we can position ourselves," Bryson said.

Uniper has a cooperation project with Siemens and is open for further partnerships with teams assessing all its power plant sites for future compatibility with hydrogen, he said. Wilhelmshaven, where Uniper coal plant is set to shut 2022, was an attractive location, for instance.

A new virtual business line set up by Uniper was "a first step forward with a core group solely focused on hydrogen, and a broader group of people involved across the company looking at our asset base from converting all gas turbines," Bryson said.

CEO Schierenbeck in early May flagged Irsching, where two modern gas-fired CCGT units had been mothballed since 2016, as a possible site for a hydrogen project with Siemens.

On May 28, Uniper decided to return the two units Irsching 4 and 5 with a combined 1.4 GW capacity to the market, one year earlier than planned amid improved generation margins for gas plants in Germany.

"Contractually, we can only start market operations from October 1, 2020," Bryson said.

German gas-fired generation topped the weekly power mix in June for the first time with annual German gas generation set to overtake GB generation in 2020, according to S&P Global Platts Analytics.