London — Norway's Equinor sees the development of blue hydrogen -- fuel produced from natural gas in combination with carbon capture and storage -- as currently more worthy of pursuing than green hydrogen, CFO Lars Christian Bacher said July 24.
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Earlier this month, Equinor said it was leading a project in the UK to develop one of the world's first "at-scale" facilities to produce blue hydrogen at Saltend Chemicals Park near the city of Hull in northeast England.
Equinor -- one of the biggest suppliers of gas to the UK -- said that subject to supportive government policy, it would mature the project toward a final investment decision during 2023 with potential first production by 2026.
"We believe that pursuing different opportunities is a way to broaden our understanding and to have optionality to figure out where we really want to put our bets going forward," Bacher told analysts on a conference call following the release of the company's second-quarter results.
"Blue hydrogen is cheaper than green hydrogen, and for green hydrogen to actually work, it is very dependent on overcapacity in renewables," Bacher said.
"So our current thinking as of today perhaps is that blue hydrogen is somewhat more of an alley to pursue," he said.
Green hydrogen is the production of hydrogen from renewable energy using electrolysis and is generally favored by environmentalist groups as being cleaner than blue hydrogen.
The European Commission wants the EU to install at least 6 GW of electrolyzer capacity able to produce up to 1 million mt of renewable hydrogen by 2024, it said in its EU hydrogen strategy published on July 8.
The initial phase of Equinor's UK blue hydrogen project would comprise a 600-MW auto thermal reformer with carbon capture, the largest plant of its kind in the world, to convert gas to hydrogen.
According to an Equinor spokesman, hydrogen production capacity for such a plant would be around 125,000 mt a year.
"For the world to be decarbonized, I think we need to pull a lot of different strings for that to happen, hydrogen being one of them," Bacher said July 24.
In May, Equinor and its partners took a final investment decision on Northern Lights, Europe's first commercial-scale carbon transportation and storage project off the coast of Norway.
If the Norwegian government makes a positive FID in 2020, the first phase of Northern Lights is expected to be operational by 2024, Equinor said.
Bacher also said that Equinor would be able to transition smoothly into onshore wind if it chose to do so given its competitive advantage in offshore wind.
"When we learn the offshore, to know, master and operate it, it's not that difficult to operate onshore," he said, adding that any future investment would have to make a good return.
Equinor is building material offshore wind clusters in the UK, the US North East and in the Baltic Sea.
It has particular experience with UK offshore wind having built and put into operation the Sheringham Shoal, Dudgeon and Hywind Scotland projects.
It is also partnering with SSE Renewables to deliver Dogger Bank offshore the UK -- set to be the world's biggest offshore wind farm.