Tapping into Earth’s Natural Hydrogen Reserves
Many climate experts and energy industry insiders believe that hydrogen will be an essential part of achieving global climate goals because of its utility in hard-to-decarbonize heavy industry. Hydrogen can be burned at high heat like fossil fuels, but unlike coal, oil, or natural gas, it leaves behind nothing but water vapor when combusted. This makes it a very attractive alternative for industries that rely on hot-burning fuels like thermal and coking coal, and could potentially transform the steelmaking and shipping industries, just to name a couple of heavy hitters. The potential benefits of a wide-scale replacement in high-heat industrial applications are difficult to overstate. “Replacing the fossil fuels now used in furnaces that reach 1,500 degrees Celsius (2,732 degrees Fahrenheit) with hydrogen gas could make a big dent in the 20% of global carbon dioxide emissions that now come from industry,” Bloomberg Green wrote in a report titled “Why Hydrogen Is the Hottest Thing in Green Energy.” There’s just one problem. Creating hydrogen for these kinds of industrial applications is energy intensive, and the resulting hydrogen is only as green as the energy source used to make it. Hydrogen is already widely used in heavy industry today, but the vast majority of it is produced using fossil fuels (known as ‘gray hydrogen’), which defeats the purpose of using it for decarbonization. ‘Blue hydrogen’, which refers to hydrogen produced using natural gas, yields lower emissions than other fossil fuels and is seen by some as a stepping stone to full decarbonization. But the real buzz is around green hydrogen, which is produced using renewable energy and is therefore seen as a clean energy source that could be integral to the global clean energy transition. There is a serious downside to green hydrogen, however. A 2022 report from the International Renewable Energy Agency (IRENA) warned against the “indiscriminate use of hydrogen,” arguing that extensive use of hydrogen “may not be in line with the requirements of a decarbonised world.” In particular, the report argues that producing green hydrogen requires vast amounts of clean energy that may be better used in other applications, making the mass production of green hydrogen counterproductive for reaching climate goals. But now a new color has been added to the hydrogen rainbow, and it could completely sidestep the issues faced by existing forms of hydrogen production. Gold hydrogen (also sometimes referred to as white hydrogen) is the name being used to refer to hydrogen which is naturally occurring in certain geological areas of the world (subsurface geologic accumulations, to be exact), sometimes in vast quantities. It’s produced underground when water chemically reacts with iron-rich rocks or radioactive minerals. And it’s the new holy grail of hydrogen exploration. This kind of hydrogen was previously dismissed as fictional at worst or untappable at best, but in the last few years “reservoirs have been discovered in the United States, Canada, Finland, the Philippines, Australia, Brazil, Oman, Turkey and Mali, leading would-be gold diggers to believe that there are numerous sources waiting to be discovered,” Reuters recently reported. According to one estimate published in Earth-Science Reviews back in 2020, we could be extracting 23 million tons of hydrogen from the ground each and every year. And there’s already a new wave of startups looking to do just that. One such startup, Natural Hydrogen Energy (NH2E), was founded by Viacheslav Zgonnik, the chemist who wrote the 2020 Earth-Science Reviews paper. Zgonnik thinks that the potential for gold hydrogen extraction is even greater than his paper, which is based on a conservative estimate of existing tappable reserves, suggests. “That is the currently available estimate of generation of geologic hydrogen from the ground but, in my opinion, the real number should be two to three orders of magnitude higher because we still don’t know a lot about the hydrogen system and have very scarce measurements of hydrogen on the planet,” he told Reuters. Not everyone is as optimistic as Zgonnik, however. Reporting on gold hydrogen is couched in caveats, and while there is a lot of excitement about the fuel’s potential, it’s just far too early to declare that gold hydrogen will be a silver bullet for the climate. It’s almost completely untested – at present, the village of Bourakébougou in Mali has the only place in the world with a functioning hydrogen well already being used as a fuel source. Furthermore, there needs to be a whole slew of studies conducted to determine exactly how clean this underground hydrogen is. Many scientists are concerned that when we extract this stored hydrogen, we will release greenhouse gasses along with it. Others worry that hydrogen exploration will lead to the discovery – and use – of new fossil fuel reserves. Still others think that gold hydrogen will be misused for greenwashing purposes á la carbon capture.
OPEC+ Oil Output Books Steepest Decline Since July
Oil production by the members of the OPEC+ group fell by the most in six months in January, an S&P Global Platts survey has shown. Cuts agreed last year and field outages in Libya contributed to a combined 340,000-bpd monthly decline in OPEC+ production, the survey revealed, with the total at 41.21 million barrels daily. Of this, OPEC output stood at 26.49 million barrels daily and its partners’ output stood at 14.72 million barrels daily. The Platts figures confirm a Reuters survey from the end of January, which also found that OPEC+ production for the month had fallen by the most since July last year. That survey, however, pegged the decline in production at 410,000 bpd compared with December. In December, the extended cartel’s output actually increased, earlier surveys showed, but it seems that this year members have decided to take their reduction pledges more seriously. Some, however, posted higher production, including Saudi Arabia, where survey figures showed an increase of 40,000 bpd in January from December. Libya, however, did not reduce its production voluntarily in January. In its case, the output decline was the result of field blockades by protesters who demanded a change in social policies. The blockades affected Libya’s largest field, El Sharara, which can produce up to 300,000 barrels of crude daily. Meanwhile, a month earlier, Angola left OPEC because it was unwilling to surrender any more of its output. On the contrary, the West African producer has been itching to start boosting its production, which was incompatible with the OPEC goals for this year. Saudi Arabia, meanwhile, suspended work on its oil production capacity expansion plan. Said plan was supposed to boost its maximum sustainable capacity from 12 million barrels daily to 13 million bpd in three years. The order for the suspension came earlier this month from the Saudi government.
Net-Zero Targets Face Reality Check
Back in 2021, the International Energy Agency published what it called a landmark report titled “Net Zero by 2050: A Roadmap for the Global Energy Sector”. The report made quite a splash, not least because of the assumptions it involved about oil, gas, and coal use. Many companies, however, especially in the financial services world, took the report at face value and made it a basis, or at least a reference point, for their net-zero plans. Now, they have to revise these. Because it turned out the IEA’s assumptions were quite far-fetched. And they weren’t the only ones. Bloomberg reported this week that banks are among those busy adjusting their net-zero plans, which were based on assumption-rich forecasts such as the IEA’s original net-zero roadmap. And with good reason. That roadmap included statements such as an end to “investment in new fossil fuel supply projects, and no further final investment decisions for new unabated coal plants.” Several months after the publication of the roadmap, the IEA was calling on the oil and gas industry to invest more in oil supply because a shortage was looming. And that was before the war in Ukraine even started, offering transition advocates a much-needed reality check and reasserting the primary importance of energy security. “We can’t stay in the 2021 view of the world,” Celine Herweijer, HSBC chief sustainability officer, told Bloomberg. “We can’t choose a pathway that is several years out of date and just stick to it. We will need to keep looking at how the net zero-aligned scenarios are evolving.” Indeed, HSBC’s chief sustainability officer is right. Just last year, the IEA was forced by energy realities to publish an update of its net-zero roadmap where coal and oil demand were revised significantly—upwards. Even so, the IEA also projected in its latest report that demand for oil and gas will peak before 2030—when demand has been breaking record after record, contrary to the IEA’s and others’ regular forecasts of demand and supply trends. It’s not only oil demand, either. Coal demand is rising, driven by China and India. The latter recently said it would slash transition funding for state oil firms and double down on coal generation capacity. Oddly enough, Germany is building new gas-power plants. The poster child of the transition, the country with some of the highest capacity of both wind and solar power that has recently boasted about breaking records in output, is building gas power plants. The motivation for that is to “guarantee electricity supply security as the share of intermittent renewable energy increases and coal is phased out,” per Clean Energy Wire. Yet coal was phased in last year, rather than out after the ruling coalition in Germany closed the country’s last three remaining nuclear power plants—despite half of Germans being against it. Neither the IEA nor anyone else could have predicted that, perhaps. Yet it happened, along with other seemingly unpredictable things, such as the slowdown in EV demand in key markets. It happened right when sales were starting to take off, too. Meanwhile, despite massive government support for wind and solar, both sectors are struggling in both Europe and North America. This was not supposed to happen, according to those upbeat transition scenarios that the IEA and other advocates fed the investor world. Indeed, wind and solar capacity were supposed to grow without restraint. Yet it has emerged recently that government support is not enough to ensure this unrestrained growth on its own. Factors such as inflation and borrowing costs, as well as technological challenges and competition, asserted themselves as valid for even the wind and solar industries—as they are for all other industries. The upbeat forecasts and roadmaps ran headlong into reality. Now it’s time to rush to adjust those net-zero targets that so many companies based on those forecasts.
ONGC eyes crude-to-chemicals projects; fossil fuels priority for next three decades
India’s ONGC Ltd. is actively looking to widen its upstream portfolio, as it believes that oil and gas will be a major component of the country’s energy mix for the next three decades while pursuing new crude-to-chemicals projects to prepare for the changing energy landscape, its chairperson Arun Kumar Singh said at the India Energy Week in Goa. Singh said the Indian government’s move to release no-go areas in the Indian Exclusive Economic Zone for exploration and production operations covering a total area of 1 million sq km offshore areas in west coast, east coast and the Andaman and Nicobar Islands will provide renewed vigor to the country’s exploration vision. “Oil and gas will remain crucial to the Indian economy over the following three decades despite the ongoing transition,” Singh said. ONGC contributes around 74% of India’s crude oil and around 63% of its natural gas production. The company is deepening its technical and operational expertise in deepwater E&P and is increasingly assessing the prospect of high pressure-high temperature and ultra-deepwater plays in India. The company plans to undertake drilling and exploration in about 500,000 sq km area in the next 4-5 years. Threefold exploration strategy “We are focusing on a threefold exploration strategy — revisiting mature basins, solidifying emerging basins, and exploring potential new frontiers. The company is incessantly striving to bring in other non-producing sedimentary basins into the production fold with extensive exploratory efforts in data generation and interpretation,” Singh said. India’s petroleum consumption is growing at a rate higher than the average global growth rate, Singh said. “Energy demand is anticipated to rise even more as India rushes to meet its economic objectives. The key to grow amid a shifting energy landscape is to explore quickly and produce quickly,” Singh added. ONGC aims to achieve 2.2 million boe/d of hydrocarbon output by 2040 — approximately 1.4 million boe/d of domestic production and 800,000 boe/d of production from international operations. Domestic oil and gas output in fiscal year 2022-23 (April-March) was more than 800,000 boe/d, while its output from overseas operations was 195,000 boe/d. According to S&P Global Commodity Insights, ONGC’s upstream spending is growing again after peaking in 2019. Domestically, in 2015-2019, more than 50% of total capital expenditures was directed to exploration drilling and project development. From 2018, the capex growth was driven by a rise in spending of projects, reflecting the start of development of KG-DWN-98/2 deepwater project in the east coast. Since 2018, ONGC’s investment focus has been on the development of KG-DWN-98/2 and maintaining production from major fields such as Mumbai High, Neelam Heera and from Bassein and Satellite assets. In addition, the company is investing in EOR/IOR techniques to enhance production from mature fields, according to S&P Global. Crude-to-chemicals focus Many Indian refiners are looking to expand their petrochemicals footprint to prepare for a scenario in which rising electric vehicles sales takes away a part of the demand for transport fuels. “ONGC is collaborating with other entities to explore opportunities in oil-to-chemicals, refining and petrochemicals,” Singh said. “Growing India needs both conventional energy and renewables. As a national energy company in India, ONGC has to briskly walk both the ways, conventional and renewables.” ONGC is looking to set up two crude-to-chemicals projects in the country — one in the northern region and another in the south. Singh said that global oil demand is currently inflated and not the true reflection of real demand. “We would like to see global crude prices range from $60-$75/b. In 2024, we expect crude prices to range from $70-$80/b,” Singh said. “Global demand is a manufactured demand and it is not the real demand. That is why this shows up in oil prices,” Singh added. Commenting on the turbulence in the Red Sea, Singh said, the oil market has been oversensitive on the issue. Many ships are avoiding the Red Sea and Bab al-Mandab Strait after a spate of attacks by Yemen’s Houthi militants, threatening the strategic chokepoint for global seaborne trade. Many shippers, tanker owners and some oil companies have suspended voyages through the area.
‘World is grateful’: India keeps oil prices cheaper by buying from Russia, Indian oil minister says
India keeps global crude prices affordable by buying oil from Russia, India’s energy minister said. “The world is grateful to India for buying Russian oil. It’s not that they don’t want us to buy Russian oil,” India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri told CNBC’s Sri Jegarajah on the sidelines of the India Energy Week conference in Goa. “If we start buying more of the Middle Eastern oil, the oil price will not be at $75 or $76. It will be $150,” he added. Since Russia’s invasion of Ukraine in February 2022, India’s refiners have been snapping up discounted Russian oil. Moscow has since become India’s leading source of crude oil, accounting for about 36% of the South Asian nation’s crude imports. Consequently, India’s imports of Middle Eastern oil fell to a record low. Oil prices have been under pressure in spite of rising tensions in the Red Sea and fears of a widening conflict in the Middle East. Such uncertainty would typically push energy prices higher but gains have been limited amid record output from the U.S., and an ongoing global economic slowdown. The Indian minister said he was not “unduly worried” about whether there will be a spike in prices as a result of a lack of availability or affordability of the oil. “The fact of the matter is half the work is in recession,” he said, adding that higher oil prices will invariably end up becoming a “self fulfilling prophecy” where higher prices will curtail demand.
HPCL to commission Barmer refinery by January 2025: Co exec S Bharathan
Hindustan Petroleum Corporation Ltd (HPCL) will commission the country’s newest oil refinery at Barmer in Rajasthan by January next year that will help meet rising fuel demand in the north India, a senior company executive said. “The 9 million tonnes a year refinery is 76 per cent mechanically complete and will be completed by year end or so. First product from the refinery will flow in December or January next year,” HPCL director for refineries S Bharathan told reporters on the sidelines of India Energy Week here. The project is part of India’s target of having an installed capacity to turn 450 million tonnes of crude oil into fuels such as petrol and diesel to meet the energy needs of the world’s fastest growing major economy. India’s current refining capacity is a shade under 254 million tonnes. He said the Barmer refinery will operate at 75 per cent to 80 per cent of the capacity in the first year as various units get commissioned. “The full capacity will be reached by 2027.” HPCL currently operates two refineries at Mumbai and Vizag in Andhra Pradesh. It also has a joint venture refinery at Bhatinda in Punjab. The Vizag facility has just been expanded to 15 million tonnes from 8.33 million tonnes previously. The company sells more fuel than it currently produces and the Vizag expansion as well as Barmer refinery will bridge the gap. It controls roughly a fourth of petrol pumps in the country but just 13 per cent of the refining capacity. The Barmer refinery will also have a petrochemical complex, which will be commissioned a little later, he said. The refinery-cum-petrochemical complex is being built by joint venture company HPCL Rajasthan Refinery Ltd (HRRL), where HPCL holds 74 per cent stake and the Rajasthan government the remaining 26 per cent. The project was conceived in 2008 and was initially approved in 2013. It was reconfigured and work commencement was done in 2018. It will produce BS-VI grade petrol and diesel as well as petrochemical products like polypropylene, butadiene, linear low-density polyethylene (LLDPE), high-density polyethylene (HDPE), benzene and toluene and is slated to cater to the increased demand of petroleum and petrochemical products in the northern, western and central parts of India. The refinery-cum-petrochemical complex will cost Rs 72,937 crore.
“Enough oil in the world”: Oil Minister Hardeep Puri says India not concerned about OPEC+’s output cuts
Union Oil Minister Hardeep Singh Puri on Friday stated that India’s stance on OPEC+ production cuts and Saudi Arabia’s decision not to expand output capacity remains firm. “There is enough oil in the world and new suppliers are coming in,” Bloomberg quoted Puri as saying on the sidelines of India Energy Week in Goa. “You decide, you want to sell it or you want to keep it in the ground,” he added. During his address, Puri stressed the necessity of a structured transition to cleaner energy sources while maintaining access to traditional fuels for India. He rejected the demonization of fossil fuels, underlining the significance of affordable energy alongside sustainability goals. Puri highlighted the challenge of ensuring a smooth transition to renewable energy without compromising access to traditional fuel sources, reported ANI, citing to S&P Global Commodity Insights. “The challenge is to make sure transition is done in an orderly manner so that we have access to traditional fuel and making predictable transition to cleaner fuel. Balanced and realistic dialogue is needed and not vilification of fossil fuel,” ANI quoted him as saying, underlining the importance of affordability in India’s energy landscape. The International Energy Agency’s recent report predicts significant expansion in India’s role in global oil markets over the coming decade, driven by economic growth, population dynamics, and demographic shifts. Puri said, “Energy transition is important, but not over affordability. And energy sustainability comes after that,” he added. Puri underscored the importance of recent energy sector reforms in India, which have helped stabilize petrol and diesel prices domestically, even amidst global fluctuations. Leading Indian CEOs echoed Puri’s sentiments, emphasizing the need for a diverse energy mix and public-private partnerships to address India’s future energy needs. Vartika Shukla, Chairperson and Managing Director of Engineers India Ltd., stressed the importance of considering price points and leveraging partnerships to facilitate energy growth. “We need to grow all kinds of energies for the needs of India tomorrow. We need to look at the price point of these energies, where the public private partnership can play a very important role,” said Shukla. Arun Kumar Singh, Chairman of India’s ONGC Ltd., highlighted the necessity of balancing conventional energy with renewables to meet India’s evolving demands. Singh said, “As a national energy company in India, ONGC has to briskly walk both the ways, conventional and renewables.” However, concerns were raised regarding potential policy backlashes and the necessity of continued investment in fossil fuel production. Haitham al-Ghais, Secretary-General of OPEC, emphasized the importance of multiple pathways in energy transition and the continued need for investment in fossil fuels to meet growing demand. Ghais said, “This is how we should look at energy transition. At OPEC we continue to invest, and we need hundreds of billions of investments over the next 20 years. We need to invest as demand is likely to continue to grow.” Similarly, Qatar’s Energy Minister Saad Sherida Al-Kaabi cautioned against dismissing fossil fuels entirely, noting their ongoing importance in meeting global energy needs. Kaabi said, “Renewable sources of energy do not completely solve the global energy needs. “It is not responsible to say we do not use fossil fuel. It is like humanity shooting itself in the foot”. In a different perspective, Vickram Bharrat, Guyana’s Minister of Natural Resources, highlighted the hydrocarbon discoveries offshore Guyana as a pathway to prosperity. Bharrat said, “The new hydrocarbon find offshore Guyana has made the world notice us. Our policy is very simple. Get hydrocarbons out of the ground as fast as possible and use that to build traditional sectors. The window on oil is closing, not so much for gas.” He emphasized the country’s commitment to responsible and sustainable hydrocarbon development, foreseeing significant oil production growth in the coming years. As discussions around energy transition continue, the conference provided a platform for global stakeholders to address the complexities of balancing traditional and renewable energy sources while ensuring affordability, sustainability, and continued investment in the energy sector.
Russian oil: India’s state oil refiners in talks with Rosneft to secure Russian crude for long term
All three of India’s state oil refiners are in talks with Rosneft Oil Co PJSC to secure long-term supplies of Russian crude, an effort to move away from one-off purchases that have left them vulnerable to competition. Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are in discussions, said people familiar with the matter, but talks have been drawn out as the buyers are seeking clauses to protect them from exits and penalties, should payment issues delay cargoes. In total, Indian refiners want to lock in about 500,000 barrels per day of Russian crude supplies, said the people, who could not be identified as negotiations are private. India, the world’s third-largest crude importer, has long leaned on Middle Eastern nations for its supply of feedstock. The country’s imports from Russia only surged after the invasion of Ukraine in 2022, when New Delhi saw an opportunity to secure cheaper barrels. The flow of Russian oil has dropped off in recent months, though, because of narrowing discounts as well as more frequent payment and other issues, as the US ramps up enforcement of a $60-a-barrel price cap. Aside from India, China is one of the world’s top buyers of Russian crude. The North Asian country was recently quick to pick up extra cargoes of a grade known as Sokol, when India was unable to take delivery of several shipments. Indian Oil signed its first term contract with Rosneft in 2020 as part of the country’s effort to diversify its crude supply. The deal only became economically attractive in 2022, with the two companies agreeing to substantially increase flows in 2023. BPCL and HPCL don’t have existing long-term contracts with Rosneft. This week, the South Asian nation is hosting an annual oil and gas gathering in Goa with a far smaller Russian presence as compared with last year. Rosneft’s Chief Executive Igor Sechin, initially listed on the program line-up as a participant in a panel discussion, was later removed as Moscow sought to keep a low profile. Indian Oil, Bharat Petroleum and Hindustan Petroleum didn’t immediately respond to requests for comment.
IndianOil-Adani Gas JV to invest Rs 2,500 crore to double gas sales
IndianOil-Adani Gas Pvt Ltd will invest 25 billion rupees ($301.24 million) over four years as it looks to double gas sales to small industries and households in India, a company executive said on Friday. The company, an equal joint venture of refiner Indian Oil Corp and Adani Total Gas, daily sells about one million standard cubic metres of gas through its 300 retail outlets, said S.K. Jha, a director in the joint venture. The joint venture aims to double gas sales in four years and strengthen infrastructure to more than 600 retail outlets during the period to meet India’s rising gas demand, Jha added.