The $245M bid to pull clean hydrogen straight from the earth

Governments and industry players alike are furiously investing billions in cleaning up the production of hydrogen gas to create an alternative to fossil fuels. But startup Koloma is taking a different path: searching for underground reservoirs of naturally occurring hydrogen that have been largely ignored or lain undetected until now.

It’s called geologic (or ​“white”) hydrogen, and Koloma just raised an eye-popping, gobsmacking $245 million round of venture funding to develop tools and technologies to locate and eventually extract the now-coveted gas from the earth.

Hydrogen is the gas of the moment because it could replace fossil fuels in certain applications, particularly in energy-intensive industrial processes such as ammonia production, petroleum refining and steelmaking. It’s also being considered, in limited cases, as fuel for power generation and transportation.

But hydrogen only works as a fossil fuel replacement if it’s made without producing carbon emissions — ideally with clean electricity, water and machines called electrolyzers. Today, almost all of the 95 million metric tons of hydrogen used globally each year is produced through steam methane reformation, a dirty process that uses fossil gas as a feedstock and produces significant CO₂ emissions as a byproduct.

Producers of clean hydrogen have received fountains of government funding in recent years. The federal government has earmarked $9.5 billion for building clean hydrogen infrastructure, and the Inflation Reduction Act provides a generous tax credit of $3 per kilogram for low-carbon hydrogen.

Though hydrogen holds promise — and has generated plenty of hype — it remains unclear how useful the gas will ultimately prove to be in the energy transition. The outlook is even murkier when it comes to the geologic hydrogen Koloma is going after. Though there could be a bounty of pure, carbon-free hydrogen underneath our feet, the gas would still face the same core challenges as its human-made cousins: It’s expensive to transport and prone to leaking.

Koloma was started up by Monolith co-founder Pete Johnson in 2021, along with Nascar driver turned entrepreneur Paul Harraka and earth sciences professor Tom Darrah, who has spent more than a decade researching geologic hydrogen.

Khosla Ventures, a VC firm known to make black swan investments, led the funding for this Series B round, joined by Amazon’s climate fund and United Airlines’ VC arm. Bill Gates’ Breakthrough Energy Ventures, Energy Impact Partners, Evōk Innovations, Prelude Ventures and Piva Capital invested in the firm in July 2023. Koloma also just received funding from a program in the Department of Energy’s ARPA-E division devoted to geologic hydrogen modeling, characterization and well stimulation.

No smoking near the water well 

It’s no secret that hydrogen accumulates in underground cavities and occasionally leaks to the surface. But until now, the discovery of geologic hydrogen has largely been by chance.

In 1987, an engineer digging a water well in the Mali village of Bourakebougou paused for a smoke break and set off an explosion from a shallow underground reserve of hydrogen, singeing the village and himself in the process. Additional wells drilled in the vicinity have located more of the gas in cavities near the surface.

Other accidental discoveries of hydrogen have been made across the world, stumbled upon by miners or petrochemical surveys. Substantial subsurface deposits have been located in Albania, Australia, Brazil, France, Morocco, Oman, Spain and the United States.

This naturally occurring hydrogen mostly originates from a process called serpentinization. When subterranean water comes in contact with iron-rich rock such as olivine, it essentially rusts, creating iron oxides — and leaving behind hydrogen. The gas can then make its way up through permeable rock and soil to be released into Earth’s atmosphere, or contained in impermeable underground domes.

Koloma and other startups such as Natural Hydrogen Energy, which drilled the first U.S. well to search for hydrogen in 2019, aim to be among the first to intentionally locate — and exploit — such deposits.

For now, the search for hidden hydrogen will use technology similar to what’s used in oil and gas exploration, such as seismic mapping, satellite imaging and AI-assisted tools. New modeling software will seek sites where hydrogen accumulates in porous rock and is sealed by adjacent formations, or by scanning for a telltale sign of hydrogen seeps: semicircular depressions in the earth with bleached vegetation, called ovoids.

Measuring hundreds of yards across, the depressions have so far been found to be common in Russia and North Carolina. Researchers in Western Australia also recently located natural hydrogen by detecting ovoids.

Scouring our hydrogen-rich planet

It’s early days for green hydrogen fuels and even earlier days for the startups pursuing the geologic version of the gas.

Basic questions need to be answered: Can geologic hydrogen be extracted at scale? Enough to justify the economics of a pipeline with a 40-year life? What are the new tools and technologies needed to cost-effectively locate and extract hydrogen? What other geological clues point to hydrogen deposits?

Legacy industries and innovative startups are mobilizing to build a clean hydrogen industry from scratch. It’s the type of startup climate that venture investors crave: a hypergrowth industry with the chance of being able to scale, fueled by government incentives and edict. But it’s unclear if the economics will work on geologic hydrogen, even with these tailwinds.

Mining the smallest element in the universe also comes with its share of environmental worries.

Some hydrogen reserves contain methane, an incredibly damaging greenhouse gas. Hydrogen is itself an indirect greenhouse gas, so releasing it into the atmosphere could accelerate warming. Leaks from pipelines and wellheads are a reality, regardless of the origins of the hydrogen. Still, white hydrogen is the ​“most environmentally friendly way of making hydrogen that’s out there,” according to Mark Gudiksen, managing partner at Koloma investor Piva Capital, a conclusion supported by early peer-reviewed research on the subject.

Naturally occurring hydrogen could be available in vast, accessible and continuously replenished deposits. Some earth scientists believe there could be trillions of tons of the stuff beneath the earth’s surface, with more being generated all the time. A controversial theory by geologist Vladimir Larin contends that Earth is a ​“primordially hydrogen-rich planet.”

Or the gas pockets might be spread out, unreliable, contaminated with greenhouse gas accelerants, and not located anywhere near a usage point. The 2023 Global Hydrogen Review from the International Energy Agency points out that naturally occurring hydrogen stores may be ​“too scattered to be captured in a way that is economically viable.”

Transport, after all, makes up the ​“bulk of hydrogen systems costs,” energy analyst Michael Liebreich told Canary. ​“Even finding 100 percent pure white hydrogen thousands of kilometers from users would, in most cases, be utterly useless. White hydrogen might have an advantage over green hydrogen on production, but drilling, extracting, purifying, compressing, disposing of methane co-production, etc., are not cheap.”

Gudiksen admits to harboring some ​“skepticism” about hydrogen, whether human-made or naturally occurring, working out as a decarbonization cure-all, but he says he’s bullish on the immediate value of ​“using hydrogen for the molecule, rather than for the electron.” It’s crucial to ​“choose your applications correctly,” he stressed. He thinks ​“the petrochemical, ammonia and steel industries” have the most potential.

But even if we know where the gas can be most useful to the energy transition, we don’t know what role geologic hydrogen will play — if any at all. In the coming years, the successes or failures of Koloma, with its hundreds of millions of dollars, will help provide answers to that question.