Understanding the Barriers to Offshore Green-Hydrogen Production

Abstract

The stage is set to begin making “green” hydrogen from the world’s abundant supply of seawater. But whether this niche-within-a-niche can stand on its own and become a competitive energy source remains uncertain. Today, only about 1% of man-made hydrogen is considered to be green, and not a single atom of it is produced offshore. In the offshore concept, the green label will be earned by splitting the hydrogen out of desalinated seawater with electrolyzers that run on renewable wind energy. This represents an opportunity for oil and gas companies to not just lower their carbon footprints, but to leverage billions of dollars’ worth of existing offshore infrastructure. Their platforms can host the electrolyzers. Their pipelines can transfer the product to shore. They may even be able to power their offshore facilities using the hydrogen produced at sea. Offshore producers should also have no problem finding a market. PriceWaterhouseCoopers said in a report from last year that green-hydrogen exports could be worth $300 billion annually by 2050, supporting some 400,000 jobs globally. However, the first set of offshore pilots are still in planning mode. It will take a few more years to assess the results once they start up. That means we may not know if offshore hydrogen is commercially viable until decade’s end. Some of the biggest barriers that must be overcome were highlighted by a panel of leading hydrogen experts at the recent Offshore Technology Conference (OTC) in Houston. Green Hydrogen in the Red “The major hurdle is still the cost,” explained René Peters. “The cost of hydrogen production with electrolysis is still extremely high compared to gray- and blue-hydrogen production.” Peters is the business director at the Dutch technology group TNO which is one of a dozen partners trying to launch PosHYdon, the pilot for offshore hydrogen production. Startup is expected by early 2023 on a normally unmanned oil and gas platform operated by independent oil and gas company Neptune Energy. Peters’ comments on cost were not relegated to the offshore aspect since all green hydrogen is made onshore today. In terms of tipping point for profitability, these are the relevant benchmarks.