Hydrogen production is a potentially transformative way to bring cleaner energy to markets, and natural gas represents a pathway to accelerating its development. The development of a commercial, industrial-scale hydrogen industry is attractive to governments across the world as it is a cleaner source of energy with the potential to reduce emissions in line with Paris Agreement targets. Australia, with its existing gas expertise and history, also recognises the potential of hydrogen.
Pathways for scaling up the emerging hydrogen industry have been proposed by governments and industry in Australia and internationally, one thing is agreed by all parties: the potential benefits of hydrogen are too large to ignore.
In April this year, the Federal Government announced nearly $540 million in funding for new hydrogen hubs and carbon capture and storage (CCS) projects. In addition, $566 million was allocated for strategic international partnerships on low-emissions technologies.
Blending hydrogen
One place that has proven an effective case study for this brand of international partnership is Singapore, which has pursued memorandums of understanding with several developers on hydrogen blending projects that hold the potential to decarbonise the city-state's existing gas supplies while still solving the intermittency challenges caused by renewables like wind and solar.
Similar proposals are also underway in Australia; the Western Australian Renewable Hydrogen Strategy and Roadmap released by the WA Government in November 2020 includes a stretch goal to achieve up to 10% renewable hydrogen blend in its state gas networks by 2030, for example. Looking globally, estimates from the International Energy Agency show that hydrogen could account for around 15% of global gas network volume by 2030 (Net Zero by 2050: A Roadmap for the Global Energy Sector).
Production methods
There are several different hydrogen production methods in various stages of development. These are generally referred to in shorthand by colour codings, such as blue, green, pink, white, or even turquoise hydrogen.
Blue hydrogen - i.e. hydrogen produced using gas through steam methane reformation in combination with CCS - is the most pertinent method related to the oil and gas industry. Blue hydrogen production splits natural gas into hydrogen and CO2 with steam reformers before capturing and storing the CO2, mitigating environmental impacts.
Blue hydrogen will be an important technology to meet future demand for hydrogen and complement the uptake of green hydrogen, produced through electrolysis using renewables.
Indeed, VP Technology, Woodside Jason Crusan, speaking in Perth at the 2021 APPEA Conference in June, said that blue hydrogen could even be important in the long term "as long as it is done with a responsible carbon management approach".
A new export sector
The development of the hydrogen sector in Australia using blue hydrogen production methods could enable lower emissions domestically and overseas through exports (leveraging our existing world-class LNG expertise), supply feedstock for industrial uses and manufacturing and deliver additional energy security.
The Australian Government's National Hydrogen Strategy, released in 2019, cited statistics from a that found Australia's hydrogen industry could generate 7,600 jobs and around
$11 billion a year in gross domestic product by 2050 in a more conservative targeted scenario, or as much as $26 billion and 16,900 jobs according to a high-growth scenario.
Therefore, scaling up the hydrogen sector over the next 10 years will be so important to driving cost competitiveness, and the next 10 years will be a particularly crucial time for industrial hydrogen development in Australia.
The Australian gas industry already possesses much of the infrastructure and expertise required to fast track hydrogen development. Its commercial success as an LNG exporter ensures a head start for a prospective hydrogen export industry as well.
Western Australia Minister for Mines, Petroleum and Energy the Hon Bill Johnston, also speaking at this year's APPEA Conference, said that this represented a tremendous opportunity, with a strong synergy between Australia's skills in the LNG workforce and the future hydrogen industry.
"The customers that are going to want hydrogen are the customers currently buying LNG; it's true that there is a transition globally," Mr Johnston said.
