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Fuel for Thought: Alaska looks to ammonia from natural gas as part of energy transition strategy

  • Featuring
  • Tim Bradner
  • Commodity
  • Electric Power Energy Transition Natural Gas Shipping
  • Topic
  • Energy Transition Environment and Sustainability Hydrogen: Beyond the Hype US Policy

With the world headed into a low-carbon energy future, Alaska, rich in fossil fuels, is trying to hitch a ride on the green bandwagon.

A joint project underway by the University of Alaska Fairbanks and the US Department of Energy's Pacific Northwest National Laboratory is looking at whether ammonia could be made from vast proven natural gas reserves on the North Slope with the hydrogen in the ammonia used as a carbon-free fuel.

The research is being supported by the US Department of Energy's Advanced Manufacturing Office.

"It's an interesting concept," said Corri Feige, Alaska's commissioner of natural resources. But Feige noted there could be technical problems with liquid ammonia as it is "very corrosive to steel," and introducing it into the Trans-Alaska Pipeline System, or TAPS, for shipment "could have detrimental effects."

Others are interested in Alaska's ammonia-to-hydrogen connection, however. Tim Fitzpatrick, spokesperson for the Alaska LNG Project, a proponent of an 800-mile gas pipeline from the North Slope, said ammonia could be made in an existing, although mothballed, ammonia plant at Nikiski near the terminus in south Alaska.

"We think ammonia could add a lot of value to our project," which would also ship LNG, Fitzpatrick said. Agrium Corp. has been studying a restart of the plant but is stymied by a lack of sufficient natural gas supply.

There's large upside if problems can be solved. Hydrogen is increasingly seen as the fuel of the future because its emissions are essentially water, and industries and companies worldwide studying how to use it.

Global hydrogen demand | S&P Global Platts Analytics

"There's a huge amount of interest in hydrogen today, and some big money is flowing into research on how it can be used," said Nathan Prisco, the principal investigator on the DOE/university project.

Daimler-Benz recently announced it will incorporate hydrogen-powered fuel cells in heavy trucks, reducing reliance on diesel.

Hydrogen's downside is that its production, transportation and storage can be expensive. The process to make green hydrogen, basically splitting water molecules with renewable energy, isn't cheap, and making it from natural gas, called blue or sometimes gray hydrogen, doesn't have the same environmental advantages.

Prisco said using ammonia as an intermediate "carrier" for the hydrogen solves some of the problems. Making liquid ammonia from natural gas is a conventional process, and liquid ammonia can be shipped like propane through pipelines, he said.

Ammonia-hydrogen interest growing

Interest in the ammonia-hydrogen connection is growing. Mitsubishi recently concluded a deal to buy ammonia from Saudi Arabia for use as a no-carbon fuel in power plants, the only pollutant being nitrous oxide, which power plants are equipped to handle.

"Japan's largest electric utility, JERA, plans to burn ammonia as a clean fuel at its coal power stations," Prisco said. "This is just for a quick energy transition. In the future, Japan plans to use high-efficiency ammonia turbines or fuel cells."

The ammonia would also be shipped to new hydrogen fueling stations being built in the European Union which are being equipped to "crack" the hydrogen out of the ammonia at the location.

Brian Murphy, senior hydrogen analyst at S&P Global Platts Analytics, said there's a lot of interest in ammonia being used as a fuel in shipping.

"Maritime shipping is a big source of carbon emissions, comprising about 2% of emissions worldwide," he said. Japanese companies are also leading in the demonstration of maritime vessels powered by ammonia.

The idea for Alaska is for the ammonia to be manufactured from part of the 8 Bcf of gas now produced on the slope but mostly injected back underground, and at a stiff cost.

The gas is produced along with about 280,000 b/d of crude oil in the Prudhoe Bay field. The crude is shipped to market through the TAPS, but the gas is reinjected because there is yet no natural gas pipeline from the North Slope producers.

Research so far indicates an optimal project for the North Slope might involve 120,000 b/d of liquid ammonia produced from 330 million cf/day of gas from a set of three 10,000 mt/day ammonia plants, Prisco said. TAPS is now moving less than 500,000 b/d of crude oil and has ample spare capacity (the pipeline once moved 2 million b/d).

However, there may be technical problems in blending ammonia with crude oil in TAPS, and that's the major point of the current research, Prisco said. It must be also shown that the ammonia can be economically separated from the blended liquids stream at Valdez, the TAPS southern terminus.

"Most of the ammonia can be recovered in bulk, but excess ammonia will likely end up in the vapor recovery system at Valdez, where it must be treated," Prisco said.

Potential roadblocks

There could be effects of the ammonia on the chemistry and sales quality of the crude shipped in TAPS, which will have to be compensate for in the Quality Bank mechanism TAPS shippers use to adjust for quality differentials of the various crudes produced on the North Slope.

There is also the problem of what to do with the carbon left on the North Slope when ammonia is made from methane. As a rule of thumb, "for each metric ton of ammonia produced there are 2 metric tons of carbon dioxide emitted," Prisco said.

"However, capturing carbon dioxide from an ammonia plant is less costly than capturing it from power plant flue gas," and costs might range between $40-$60/mt, he said. The overall cost of producing the ammonia with the carbon dioxide extracted might be $200-$240/mt, compared with $120/mt without carbon capture, Prisco said.

However, new federal tax credits on carbon capture could help. If the carbon dioxide is used in enhanced oil recovery on the North Slope, which producers there believe is possible, a $35/mt tax credit might apply. The US carbon capture credits are being phased in and will be fully in place in 2026.

If geologic sequestration can be done, the CO2 could be injected into depleted oil reservoirs. This is done now with hazardous waste on the slope.

Murphy, at Platts Analytics, sees potential roadblocks in the cost of facilities and adaptations of TAPS, as well as in mixing the ammonia with crude oil, but he is intrigued by the possibility that depleted North Slope oil reservoirs could be used for carbon storage and infrastructure is now in place on the slope to do the injection.

Prisco said Alaska's cold climate is another advantage. Certain carbon capture technologies perform better in the cold, just as the large oil processing plants on the slope become more efficient in the winter, Prisco said.

There's a geographic advantage, too. Valdez is also closer or as close to to Japan compared with other sources of ammonia, Prisco said. Costs of shipping liquid ammonia from the Persian Gulf are estimated at $40/mt and from the US Gulf Coast $80/mt; while the cost from Valdez is likely to be closer to $40/mt or below, Prisco said.

However, one competitor in the market, Murphy said, will be the big projects planned in Australia to make green hydrogen, with water with power supplied by renewable solar and wind facilities.

But he agreed Alaska could be competitive in the market if problems can be solved. Prisco believes large volumes of ammonia could be shipped to customers in Asia as a low-carbon fuel for power generation and ultimately as a source of pure hydrogen for use in vehicles and other applications.

"Compared with other project around the world, Alaska has a strong hand to play in the coming transition," Prisco said.

Feige agrees: "Alaska has a vast array of natural resources that could be used as new technologies are developed that use feedstocks found here and benefit from environmental conditions like cold temperatures for efficiency."

Platts Atlas of Energy Transition

7th Asia LNG and Hydrogen Gas Markets Conference | October 26-27, 2021 | 9am to 6pm GMT+8

As part of SIEW (Singapore International Energy Week), the 7th LNG and Hydrogen Gas Markets Conference joins the biggest gatherings of policymakers, industry CEOs, and international thought leaders in the region. Register early to get your discount!

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