Green growth for the Gulf

A huge clean hydrogen project leverages the region’s oil and gas know-how for first-mover advantage.

The new facility will use underground salt caves, like this one in Louisiana, as storage. (Robert Nickelsberg/Liaison)
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An energy transition will make more friends if it brings workers along rather than leaving them behind. That doesn’t always happen, for instance, in a shift from coal power to solar plants.

But sometimes experts from the legacy energy industry spot an opening in the clean energy market and go for it. 

The most recent example: A new industrial facility headed for Mississippi aims to build a hub of green hydrogen production in the heart of oil and gas territory.

Green hydrogen is viewed by some as a crucial ingredient for decarbonizing hard-to-clean-up parts of the economy, such as long-distance travel and heavy industry. 

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  • But most of the hydrogen produced now is very carbon-intensive. 
  • Green” or carbon-free, renewably-powered hydrogen is a critical emerging industry for the transition to clean energy.

Jeff St. John reports:

On Tuesday, Hy Stor Energy announced that it intends to build a green hydrogen production and storage complex that could match the large size of such projects being constructed in Europe. By 2025, the first phase of the project could be making 110,000 metric tons of green hydrogen per year and storing more than 70,000 metric tons of it in underground salt caverns.

That’s more than 10 times the 5,500 metric ton storage capacity of the next-largest green hydrogen project announced in the U.S. to date, the Advanced Clean Energy Storage project in Utah, which is expected to come online in 2025 and cost more than $1 billion to build.

The scale of effort here is vast. Hy Stor will build its own clean energy plants, then use that energy to fabricate green hydrogen through electrolysis. Then the company pumps leftover hydrogen underground into salt dome formations, which act as long-term storage tanks. 

This type of underground storage is a well-honed concept in the gas industry, but it hasn’t been attempted at scale in the U.S. with carbon-free hydrogen. If this model works, we could see billions of dollars invested, supporting a whole bunch of skilled labor.

Jeff points out some crucial questions to ask regarding the long-term success of this vision.

What’s the actual market for green hydrogen? Potential uses include fuel for power plants, shipping and aviation, and as a component for decarbonizing heavy industry like steel and cement manufacturing. But it’s unclear when and where green hydrogen will make sense on its own terms, simply because the industry is so nascent. At the very least, the site in Mississippi has access to many routes to market — by water, by land, by pipeline — wherever that market turns out to be.

How do you solve the chicken-and-egg problem of creating demand for green hydrogen alongside production? Industries won’t depend on a resource that’s hard to find, but someone needs to start buying green hydrogen to justify a ramp-up in production. It’s a conundrum.

Will the U.S. create a hydrogen strategy? Places including the European Union, South Korea and Japan have official green hydrogen strategies to grow production on a set timetable that future customers can plan around. The Department of Energy funds research on hydrogen tech, and the federal government offers other funding for projects. But it’s missing a cohesive industrial strategy to guide development.

Lacking a national plan, it’s falling to entrepreneurial types to conceive of hydrogen projects they think they can make money on. We don’t know if they actually will, but some serious energy investors are ready to take the bet.

Julian Spector is senior reporter at Canary Media.