Why the Oil Majors Retreating from Hydrogen Projects?
The Paris Agreement is an international treaty on climate change that was signed in 2016. The treaty covers climate change mitigation, adaptation, and finance. The Paris Agreement was negotiated by 196 parties at the 2015 United Nations Climate Change Conference near Paris, France.
Many of the major oil companies, in support of ?Paris Agreement, , an international treaty on climate change signed in 2016, announced shifting of their focus from oil & gas exploration and production to hydrogen, a cleaner energy source. However, within a short span of time they all are rethinking their strategy and slowing down the investment decision on hydrogen as alternate clean energy technologies
Several major oil companies have been reassessing their hydrogen strategies, often scaling back investments or shifting focus. This trend probably is due to the challenges like high production costs, regulatory hurdles, and competition from other clean energy technologies.
While hydrogen is still viewed as a potential component of a low-carbon future, oil majors may prioritize other cost-effective renewable energy sources. This may also reflect a strategic move toward greener technologies which align better with long-term sustainability goals. The consultancy firm McKinsey has now cut down its forecast of global demand of hydrogen by 25% for 2050.
Here are some key oil majors and their recent strategy regarding hydrogen:
Shell: Shell has invested significantly in hydrogen but has recently tempered its ambitions, focusing more on the development of green hydrogen projects and renewable energy sources. They plan to continue to explore hydrogen's role in their overall energy strategy but with more caution. Shell started developing several hydrogen projects in Northeast Asia, focusing on green hydrogen produced from renewable energy sources. They planned to establish a hydrogen supply chain in the region. In the UK also, Shell is part of the HyNet project, which combines hydrogen production and CCS to decarbonize industrial processes.
Noe the Shell is not planning to pursue a project that would have used natural gas from its Nyhamna processing facility to make blue hydrogen due to a lack of demand.
The Norwegian government has been keen to develop projects for producing blue hydrogen made from fossil fuels but paired with carbon capture and storage to reinforce the country’s oil and gas sector. Still, hydrogen in all its forms faces regulatory and cost uncertainties.
Equinor: Equinor has been proactive in the hydrogen projects, focusing on both blue and green hydrogen. They continue to explore partnerships and projects that can integrate with their existing infrastructure and expertise. ?Equinor's floating wind farm project in Norway is linked to hydrogen production, showcasing how renewable energy can be integrated with hydrogen generation. Equinor is also involved in the Northern Lights project, which focuses on CCS but is exploring synergies with hydrogen production. However, Equinor has recently announced that it is scrapping the plans to develop a pipeline to transport hydrogen to Germany due to a lack of customers, supply and an adequate regulatory framework.
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BP: BP had announced shifting of its focus towards renewable energy. It is involved in a large-scale hydrogen project in the UK, aiming to produce blue hydrogen from natural gas with carbon capture and storage (CCS) technology and other projects. The projects aim to support local industries and reduce carbon emissions. However, now it is re-evaluating its hydrogen projects, particularly in areas where they see more immediate returns, such as offshore wind and solar.
ExxonMobil: ExxonMobil has maintained some interest in hydrogen, particularly in blue hydrogen (which involves capturing carbon emissions). It is investing in a hydrogen plant in Texas, focusing on blue hydrogen to supply its refining operations while capturing CO2 emissions. However, it has faced criticism for not moving quickly enough toward renewable options. Their primary focus remains heavily on traditional fossil fuels.
TotalEnergies: ??A major project in France aims to produce green hydrogen from renewable sources is supported by TotalEnergies. TotalEnergies is exploring partnerships with various entities to enhance its hydrogen capabilities, particularly in Europe. Although, TotalEnergies is still investing in hydrogen, it is increasingly aligning its efforts with broader renewable energy initiatives, such as solar and wind, to complement hydrogen production.
Post COP 21 in Paris, many of the companies are forming partnerships with technology firms, governments, and other energy companies to advance their hydrogen agendas. The push for hydrogen is often tied to regulatory frameworks and incentives in different regions, impacting progress of the hydrogen projects. These projects illustrate the evolving landscape of hydrogen production, with a focus on sustainability and reducing carbon footprints.
The Oil majors are currently navigating a complex landscape of high cost, market dynamics, Regulatory Challenges, Competition from other renewable Alternatives, Technological Hurdles and ?Investor Pressure, which is influencing their hydrogen strategies and retreating..
While hydrogen remains a potential component of a low-carbon future, these challenges are causing oil majors to reassess their roles in the hydrogen market and shift resources toward more immediate and viable renewable energy solutions.
Upstream Technical Business Advisor / Project Integrator : Highly experienced and diversified Senior Oil and Gas professional
1 个月There are 3 types of Hydrogen as power source...its claimed Blue and Grey uses powering up the electrolysis process using fossil fuel. The green type (so called) electrolysis process uses solely on electricity generated from renewable sources like solar, wind, or hydroelectric power. Now question still remains is these renewable energies are they really green in their entire life cycle?? Don't they use fossil fuels in running of motors, turbines? If yes, then how green is the green. Points to ponder
Vice President & Head of Development Petrophysics, Reliance Industries Limited
1 个月Very interesting and thoughtful discussion. The efforts of oil majors towards Hydrogen was well compiled.
La detección de petróleo es mi pasión
1 个月https://thebulletin.org/2024/03/golden-hydrogen-or-fools-gold/
Willkommen in der Realit?t
self employed, consultancy upstream oil and gas.
1 个月It is too early to assume/ consider Oil Majors are retreating from Hydrogrn projects. In the initial days of Solar energy , it was very costly and it took few decades to poularise Solar energy as good source of alternate energy . Further few governments are giving due financial and technical support, still many had not acted as it is too costly for many nations . Fortunately India is one of the country who are supporting Hydrogen energy projects from end to end . As per attached articke Shell had withdrawn from Blue Hydrogen project. There is major difference between Blue Hydrogen and Green Hydrogen. Pl member Blue Hydrogen is better than fossils fuel consumption, but still it emit some % of Carbon di oxide, where as Green Hydrogen is not having any such emissions issues. As of now one of the major challenges is how to store good qty of Hydrogen in small fuel tanks of automotive at reasonable pressure ( not too high storage pressure) due to safety measures. Though work on composite material is processing well , still it may take time to come out from laboratory to commercial stage . So far projects and work on green Hydrogen are progressing well and in coming time it will be good source of alternate abd clean energy.