Shell’s deal yesterday to produce hydrogen in a collaboration with German utility Uniper has underlined predictions that it will become a ‘carbon management’ ‘ business in future.
Uniper’s Killingholme power station site will produce blue hydrogen to decarbonise industry, transport and power throughout the Humber region, said Shell.
Blue hydrogen is a derivative of natural gas, unlike the green variety that comes from water, but is more expensive as it requires carbon capture and storage facilities.
The ‘Humber Hub Blue’ project includes plans for a hydrogen production facility with a capacity of up to 720 megawatts, using gas reformation technology with carbon capture and storage (CCS).
Shell and Uniper aim to take the project to front end engineering and design by 2023.
“The Humber Hub Blue hydrogen project is a key part of Uniper’s hydrogen ambitions in the UK and we’re extremely pleased that Shell is joining us on this initiative,” said Axel Wietfeld, CEO of Uniper Hydrogen.
David Bunch, Country Chair, Shell UK, added: “We plan to invest up to £25bn in the UK energy system over the next decade subject to board approval, and more than 75% of this is for low- and zero-carbon technology. Hydrogen and CCS will be key to these plans”.
As part of its new energy strategy, the government doubled the target for UK low carbon hydrogen capacity to 10Gw by 2030.
BP has plans for a site on Teeside that will also use natural gas and carbon capture.
One broker last week predicted that as a result of their ‘greening process’ oil giants such as Shell and BP might eventually transition into carbon management companies.
“The energy sector is re-inventing itself, and those companies which embrace this have the potential to deliver profitable decarbonisation,” said analysts at Barclays.
“Effectively the opportunities from transition and decarbonisation outweigh the long-term decline in fossil fuels.
“Essentially the companies start to offer something that they haven’t before –carbon management.”
Shares in Shell rose 1.6% to 2,200p today, as oil prices rallied again on the strife in Ukraine.