Oil Refineries
Feature Articles
Net Zero Commitments Increase Refinery Investment in Hydrogen
March 2021
The most abundant element in the universe, hydrogen, is viewed as a tantalising substitute to natural gas and coal to help heavily polluting sectors such as aviation, steelmaking, and shipping de-carbonise. As an added bonus, some of the existing infrastructure in our carbon-dependent economy, from pipelines to refineries, can be retrofitted to hydrogen-based energy production.

Global Interest

Countries are increasingly embedding blue and green hydrogen’s potential to decarbonise hard-to-abate sectors such as refineries within ambitious strategies. The list of countries is growing and not surprisingly its dominated by European countries. It includes France, Japan, Australia, Norway, Germany, Portugal, Spain, Chile, and Finland, with plans to stimulate the production of hydrogen.  These countries have policies that directly support investment in blue or green hydrogen technologies.

According to the International Energy Agency’s (IEA’s) Hydrogen Projects Database, nearly 320 green hydrogen production demonstration projects have been announced worldwide, a total of about 200MW of electrolyser capacity.


UK Advances Blue Hydrogen Hubs

Two UK companies are advancing plans to spend about US$1.0bn to develop hydrogen production sites at a UK refinery, converting natural gas and storing the carbon dioxide from the production process beneath the seabed.

Refiner Essar Oil Ltd. and project developer Progressive Energy Ltd. Intend to build a 3TWh hub at Essar's Stanlow refinery in northwest England. The first unit would be fully operational by 2025 followed by a second one double the size, giving a combined production capacity of 9TWh per year.

Both units would produce so-called blue hydrogen, using a process called Steam Methane Reforming (SMR) to turn natural gas and fuel gases into hydrogen while capturing the resulting carbon emissions. The carbon would then be stored in offshore reservoirs.

The Stanlow refinery project is the latest in a string of hydrogen projects underway across the U.K. as the fuel gains in popularity for decarbonizing broad swathes of the economy. National Grid.  Also several local gas network operators are testing how to convert their pipelines from natural gas to hydrogen, while a range of other projects focus on production, storage and import of the fuel.

While UK companies have shown themselves more open to blue hydrogen, most new ventures in the EU focus on green hydrogen, which is produced using renewable electricity. On the same day as the Stanlow project was announced, French oil giant Total SE and utility Engie SA announced plans to build a 40MW electrolyser at one of Total's refineries, which will be powered by solar farms. 

While the EU's and other countries' hydrogen strategies clearly favour green hydrogen, the UK also boasts several large-scale industrial clusters and ample opportunity for carbon storage, which both make it more suitable for blue hydrogen, according to National Grid.  The UK are in a better position than most European countries as it can decarbonize quickest by focusing on blue hydrogen first.

Essar Oil and Progressive Energy aim to use their low-carbon hydrogen for Essar's own operations, as well as across the region, for example, to fuel buses and trains, heat homes or generate electricity.  Progressive Energy has been working with several other companies in the region to explore switching industrial operations to low-carbon hydrogen through existing gas networks and the refinery venture with Essar forms part of that wider project, dubbed HyNet. It already received US$10.3m in funding from the UK government in 2020.

The companies have announced their latest agreement will enable the JV to take the project through final development and into the construction phase. Further capacity growth from the project is planned to eventually reach 80% of the UK government's target of 5GW of low-carbon hydrogen production by 2030.


Germany’s 10MW Green Electrolyser

Meanwhile construction work is well underway on the world’s largest Proton Exchange Membrane (PEM) electrolyser at the Shell Rhineland refinery in Wesseling, Germany.  The electricity used in the 10MW plant will be fully supplied by renewable energy sources, and the green hydrogen produced, approximately 1,300 tonnes per annum (tpa), can be fully integrated into refining processes, for example for the desulphurisation of conventional fuels.

The EU is supporting the pilot plant through the Fuel Cells and Hydrogen Joint Undertaking (FCH JU). The builders are Shell and the energy equipment specialist ITM Power, other partners in the project are SINTEF, Element Energy and Sphera. If successful, it lays the foundation for future large-scale, commercial 100MW industrial plants.

Furthermore, BP plans to take its first steps into the burgeoning market for green hydrogen alongside the offshore wind developer Ørsted by developing a hydrogen project at one of its refineries in Germany. The energy companies plan to create the clean-burning gas by using renewable energy, generated by Ørsted’s North Sea wind farms, to split water into hydrogen and oxygen at BP’s Lingen refinery from 2024.

The refinery will host an industrial-scale electrolyser with an initial capacity of 50MW which is capable of producing enough of the green gas to replace 20% of the refinery’s existing hydrogen demand, which relies on fossil fuels.  BP’s decision to begin producing green hydrogen, which can replace fossil-fuel gas without the carbon emissions, is an important step in its aim to become a carbon-neutral company by 2050. It intends to make a final investment decision on the project in 2022, depending on whether it can secure funding from the EU to support the project.


Italy’s Green Hydrogen for Refineries

Italy's largest utility Enel and oil major Eni have agreed to jointly develop 20MW of electrolysis capacity to supply hydrogen to two of Eni's Italian refineries. The two pilot projects will involve electrolysers of 10MW in each case and are expected to start generating green hydrogen by 2022 or 2023

The electrolysers will be located near two of the Eni refineries where green hydrogen appears to be the best decarbonization option.

Eni's other hydrogen plans include a large carbon capture and storage project around Ravenna to create one of Europe's biggest CO2 stores and blue hydrogen hubs, while at its biorefinery in Porto Marghera, Venice, it is working with NextChem on a possible waste-to-hydrogen production plant.


Spain’s Bilbao Refinery  

Repsol in Spain is targeting 64,000tpa of renewable hydrogen production by 2025 and 192,000tpa by 2030. The production will be integrated with the refineries as much as possible meaning a feedstock of 50% biomethane, which will be produced by modifying its steam reformation units, and 50% by electrolysers fed by its own renewable generation.  Repsol plans to build a 10MW, green hydrogen plant which it will use to produce synthetic fuels in collaboration with Saudi Aramco at its Bilbao refinery. The plant is part of an US$97m decarbonisation project that will also include a carbon-capture project and a fuel-from-waste plant, and should be completed by 2024.