London — BP said March 18 it will consider developing what would become UK's largest blue hydrogen production plant on the northeast coast of England as part of a plan to transform the region into a hub for the low carbon fuel.
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The oil company said the project would potentially grow to 1 GW of production capacity by 2030, capturing CO2 equal to the emissions from heating a million homes in the world's sixth-largest economy.
BP said a 1 GW facility could in theory produce around 260,000 metric tonnes hydrogen per year, "but the facility will need some time for maintenance and will be producing as hydrogen demand occurs, so likely production levels will be lower."
S&P Global Platts Analytics said 1 GW of hydrogen capacity would typically produce over 150,000 metric tonnes of hydrogen per year.
BP is conducting a feasibility study into the project, with a final investment decision scheduled for 2024. If approved, the project -- which would produce hydrogen from natural gas in a reforming process, capturing CO2 emissions for storage -- would be operational by 2027.
"The proposed development, H2Teesside, would be a significant step in developing ‎BP's hydrogen business and make a major contribution to the UK government's target of developing 5 GW of hydrogen production by 2030," the company said in a statement March 18.
An initial 500 MW of blue hydrogen capacity will be deployed by 2027 or earlier, BP said, with additional capacity coming online by 2030.
BP said it had also agreed a memorandum of understanding with Northern Gas Networks to work on introducing hydrogen into the UK's gas networks, helping industrial customers and residential customers to decarbonize via their gas connections.
The UK government awarded GBP171 million ($238 million) in funding on March 17 for nine projects across five industrial clusters to accelerate its decarbonization strategy, centered on CCS and blue hydrogen.
The projects -- located in Scotland, south Wales, Merseyside, Humber and Teesside -- support engineering and design studies into carbon capture usage and storage and hydrogen infrastructure. These include the HyNet North West project on Merseyside, Net Zero Teesside and H2H Saltend on Humberside.
On Teesside, Net Zero Teesside and the Northern Endurance Partnership are to receive a net GBP52 million in support of a full-chain CCS project, to include an 850 MW gas plant fitted with carbon capture, and an offshore CO2 transport and storage system.
H2Teesside will integrate with Net Zero Teesside and the Northern Endurance Partnership carbon capture use and storage (CCUS) project, in both of which BP is lead operator. The area is close to North Sea storage sites, pipelines and existing operational hydrogen storage and distribution.
"The project's hydrogen output could provide clean energy to industry and residential homes, be used as a fuel for heavy transport and support the creation of sustainable fuels, including bio and e-fuels," the company said.
"Clean hydrogen is an essential complement to electrification on the path to net zero," BP executive vice president of gas and low carbon energy Dev Sanyal said.
"Blue hydrogen, integrated with carbon capture and storage, can provide the scale and reliability needed by industrial processes," he said. "It can also play an essential role in decarbonizing hard-to-electrify industries and driving down the cost of the energy transition."
Separately, BP has signed a memorandum of understanding with Tees Valley Combined Authority to "explore the potential" for green hydrogen -- produced by renewable-powered electrolysis of water -- in the region, it said. The plans include developing Teesside as the UK's first hydrogen transport hub, as outlined by the Department for Transport in September 2020.
Green hydrogen projects including the Gigastack green hydrogen project on Humberside involving Orsted, Phillips 66 and ITM Power, were absent from the list of industrial decarbonization project winners.
S&P Global Platts last assessed the production cost of blue hydrogen via steam methane reforming in the Netherlands with carbon capture and storage at Eur1.75/kg, including capex and carbon, March 16. Green hydrogen, produced via alkaline electrolysis, was assessed at Eur3.35/kg.
Platts plans to launch a UK hydrogen cost of production price April 1. Platts will consider the daily cost of hydrogen production via three pathways: autothermal reforming with CCS, proton exchange membrane electrolysis and alkaline electrolysis, with a second set of assessments that will include assumptions for capex.
The current global demand for hydrogen is roughly 70 million mt/year, according to the International Energy Agency. S&P Global Platts Analytics estimates that a shift to zero-carbon hydrogen in existing applications, along with modest penetration in gas pipelines and trucks, can reduce global energy combustion CO2 emissions by more than 7%.