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Regulator sees Hydrogen decarbonizing 30% of UK natural gas

London — Integration of the UK's offshore energy systems could potentially deliver 30% of the country's 2050 net-zero carbon dioxide emissions target, primarily through carbon capture and storage as part of hydrogen production, a report published by offshore energy regulator the Oil and Gas Authority said Aug. 5.

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To achieve this level of reduction, national coordination of crude oil, natural gas, renewables, hydrogen production and associated carbon capture and storage would be required, the report said, while additional offshore renewable power generation in the form of wind, wave and tidal energy, could contribute a further 30% reduction to the overall legally binding target.

The report, produced in conjunction with UK energy regulator Ofgem, the Crown Estate, and the UK's governmental Department for Business, Energy and Industrial Strategy, concluded that the close integration would not only be valuable for cutting emissions and energy production, but would also help the emerging technologies become more economically viable.

"The UK Continental Shelf has the potential to make a deep and meaningful impact on the UK's overall net-zero target, and offshore energy integration can be the game changer." OGA Chief Executive Andy Samuel said.

"By closely coordinating our energy systems a secure energy supply can continue to be delivered from a diverse mix of production, while unlocking more and more of the green energy and carbon capture needed to help take the UK to net zero."

The OGA also said that they were already over 30 energy integration projects underway across the UKCS, with more than 10 of these actively engaged by the OGA alongside the study.

The report and its findings were welcomed by the UK's government, and also by the devolved administration in Scotland, where the majority of the UK's oil and gas production makes landfall.

"It is great to see this report set out a clear path towards net zero, highlighting that the offshore energy sector has the capacity to help deliver huge carbon reductions," UK minister for Energy and Clean Growth Kwasi Kwarteng said.

"The skills, expertise and infrastructure of the oil and gas sector and its supply chain will be vital in unlocking the opportunities for the integration of offshore energy systems," Scotland's energy minister Paul Wheelhouse said.

Hydrogen

The OGA envisages that blue hydrogen -- which is produced by steam reforming natural gas into hydrogen and by-product carbon dioxide -- could decarbonize approximately 30% of the UK's natural gas supply by 2050, equating to 250TWh/year, while potentially supporting around half the expansion in carbon capture and storage (CCS) in the same timeframe.

This level of production would require 70Mt/year of carbon dioxide to be sequestered, which would support the development of CCS, it said, estimating potential UKCS storage capacity at 78Gt of carbon dioxide, sufficient for hundreds of years of UK demand. This would require more than two pilot and two commercial-scale projects to be developed by 2030, so that necessary learning and expansion can be derived from these.

The report also said that the repurposing of oil and gas reservoirs and infrastructure can accelerate CCS development, which would connect to what it called "net zero hubs," and ultimately save 20-30% of capital expenditure on specific projects.

"To reach the CCS scale in support of net zero, the UK needs to develop around 20 individual CO2 stores for a total capacity of over 3Gt by 2050 (with large CCS projects featuring multiple stores)," it said.

Green hydrogen production -- produced by the electrolysis of water into hydrogen and by-product oxygen -- could support a "significant expansion of offshore renewables in the 2030s and beyond," the report said, while offering an "efficient storage and energy transportation solution."

The OGA also posited that offshore infrastructure could support offshore renewables expansion, such as floating wind warms, forming part of a 75GW capacity ambition by 2050, and that the electrification of offshore infrastructure was essential to cutting production emissions in the short term.

"Electrification can abate operational emissions by 2-3Mt per annum by 2030. This is the equivalent of reducing 20% of today's production emissions, rising to 40% by 2030," the report said.

Next steps

The OGA recommended that, in regulatory terms, pioneering integration projects needed to be supported, raising cross-industry awareness of potential synergy, and identifying and overcoming economic hurdles to development.

It also called for greater regulatory coordination, with support for a "shared vision of UKCS energy integration" among the report's contributors and extended stakeholders in a "timely, open dialogue," as well as promoting greater data availability in the form of a single database.

Specifically for hydrogen, the report recommended the development of hydrogen markets, local (industrial) demand clusters, and more widespread ground transportation and distribution, including the conversion of existing pipeline systems.

A focus on pilot projects to improve the economics of production was also advised.

"Blue hydrogen could accelerate the CCS ramp-up by supporting more scalable business cases," the report said.

"A faster growth timeline could support more opportunity to reuse oil and gas assets (eg terminals, pipelines and natural gas resources.)"

"Reducing the costs of the technology involved in electrolysis would be needed to support the faster uptake of this technology," the OGA added, recommending research and development "to abate electrolyzers' costs and increase their energy efficiency."