Hydrogen hubs could help solve blue hydrogen's cost problem

A series of planned North American hydrogen hubs could provide a way to cut the cost of blue hydrogen, especially when it comes to storing and moving captured CO2.

While blue hydrogen derived from natural gas is cheaper than zero-carbon green hydrogen, it still commands a premium over the standard, carbon-intensive hydrogen that dominates the market today. Plans to build regional hydrogen hubs could play a critical role in driving down some — but not all — of that cost premium, panelists said during a Jan. 11-12 online event hosted by the Ontario government and the University of Texas at Austin Energy Institute.

Blue hydrogen involves capturing carbon emissions from the production process, which accounts for the low-carbon fuel's cost premium.

Leveraging pipelines

The natural efficiency of pipeline transportation yields a key advantage for blue hydrogen developers, according to Gordon Salahor, CEO of Calgary-based Wolf Midstream Inc.

That efficiency boils down to math, Salahor said: An operator only needs to build a 16-inch pipeline in order to double the capacity of a 12-inch pipeline.

Hydrogen hubs can help drive down carbon transportation costs by providing enough supply and demand to justify building higher-capacity CO2 pipes, Salahor said. Simply by increasing pipeline throughput, operators can drive costs to the low end of an estimated $10-$20 per metric tonne range for CO2 transportation. Since carbon storage benefits from similar economies of scale, sequestration costs could drop to the low end of a $5-$15 per tonne range.

"That's the only secret to transportation and sequestration," Salahor said. "The technology isn't really the key here."

Petrochemical regions that consume hydrogen and boast geological resources fit for long-term carbon storage, including the Texas Gulf Coast and Sarnia, Ontario, are articulating their visions for hydrogen hubs.

By 2035, the Gulf Coast aspires to be the leading U.S. hydrogen hub by scaling up use of low-carbon hydrogen among the region's petrochemical facilities and gas-fired power plants, said Brett Perlman, CEO of the Center for Houston's Future. The plans also included developing several hydrogen and low-carbon ammonia production facilities, hydrogen fuel cell vehicle filling stations, and hydrogen export capacity, he said.

Wolf Midstream's nearly 150-mile Alberta Carbon Trunk Line system and other new CO2 pipelines currently serving industrial facilities with carbon capture operations could serve as the backbone of future hubs, Salahor said. The Alberta Carbon Trunk Line is currently running at only about 10% of capacity, leaving plenty of room for participants in an Alberta hydrogen hub, he said.

Wolf Midstream announced plans on Jan. 11 to develop a 350-mile CO2 pipeline in Iowa through an affiliate.

Hubs cannot address other large costs

When it comes to the carbon capture process — the chief cost concern for producing blue hydrogen — scale will not provide a solution, Salahor said. Purifying and compressing CO2 is highly energy-intensive, and the energy usage profile does not improve at larger scale, Salahor explained. The cost of purification and compression, which runs about $25-$35 per tonne, also does not reduce at scale, he said.

The same is true for liquefaction costs, also estimated at $25-$35 per tonne, a key consideration for CO2 pipelines that run at supercritical pressure, Salahor said. Pipeline operators have an incentive to liquefy CO2 for pipeline transport because it occupies less volume in compressed forms.

Only technology advances will reduce carbon capture costs, and one way to cut capture cost would be to change how hydrogen is made, Salahor said.

Specifically, operators could shift from steam methane reforming, the dominant way to make hydrogen, to a technology called autothermal reforming, Salahor said. This method uses oxygen to drive the necessary reaction. Autothermal reforming decreases both the concentration and pressure of CO2, which decreases the volume of supplies, in turn requiring smaller equipment and less capital, he said.

Shipping hydrogen out of the region could also present challenges.

The economics "get a little dicey" when transporting hydrogen via pipeline beyond 1,500 km, or roughly 930 miles, according to Samuel McDermott, technical manager for hydrogen at Ontario gas distributor Enbridge Gas Inc. Beyond that distance, hydrogen shippers may need to consider shipment via liquid organic hydrogen carriers, or LOHCs, which involves pairing hydrogen with an organic compound for safe, long-term storage.