Paul Rodden • Season: 2023 • Episode: 266
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In episode 266, Air products announces a monster project in the Gulf Coast. And BASF joins forces with Siemens to develop hydrogen in Germany. I’ll go over all of this and give my thoughts on today’s hydrogen podcast.
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Air products announces a monster project in the Gulf Coast. And BASF joins forces with Siemens to develop hydrogen in Germany. I’ll go over all of this and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen. And this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
So just a quick note, before I get into today’s analysis, I want to thank the people that reached out and let me know that I was having issues with our audio for the podcast, the sound output setting was really high and made it sound like I was yelling. Now I’m very passionate about the hydrogen economy, but I promise the yelling was not intended. So I just wanted to make a quick apology for the sound issues. And a big thank you to the people that let me know about the issue. I really appreciate you watching out for the podcast. And so with that being said, I’ll start off today in an article in carbon herald.com. Vasil Velev writes Air Products to go ahead with $7 billion hydrogen project and Louisiana with carbon capture included. During an eventful earnings call last week, Air Products shared news about several hydrogen projects with Porthos, the largest European blue hydrogen facility, grabbing the headlines.
But the company also confirmed that the board has given final investment approval to build an equally important and large project in the U.S. – the Louisiana Clean Energy Complex, a plant located in Darrow, Ascencion Parish, that will produce over 750 million standard cubic feet per day of blue hydrogen for the U.S., as well as blue ammonia for international buyers. The project was unveiled back in 2021 with a price tag of $4.5 billion and Air Products CEO Seifi Ghasemi commented on the latest developments during the call by saying quote, as we moved forward with detailed planning to execute this project, a significant positive event happened in August of 2022 when the United States Congress passed the IRA legislation, which created tax incentives for the production of blue and green hydrogen. first mover advantage was also highlighted by Mr. Ghasemi, as well as the increased demand in both terms of industries as well as specific regions, heavy duty transport and ship fuel or mention as well as the demand signals coming from Europe and Japan. The project has another important feature, its low carbon tag will also be achieved thanks to carbon capture technology, and will be one of the largest facilities to utilize this approach.
Nick Jones, an analyst at BTU Analytics, a FactSet company commented on the project’s economics and scale by saying quote, The Darrow blue ammonia project would capture 5 million tons per year of co2 to be sequestered, at Lake Maurepas a short distance away, the relatively low cost of capturing from autothermal reforming or ATR should mean that capture and sequestration will be a cashflow positive beats you models that 45 Q tax incentives would defray roughly half the levelized cost of hydrogen production. Of course, this is not the first hydrogen or ammonia plant to use carbon capture, but it is the largest such project to have ever advanced past fid and comparison. It will be more than double the size of the OCI Linde blue ammonia plant currently being constructed in Texas. The additional capital will be used to make land purchases to accommodate the larger footprint of the project, and to employ technologies and approaches that will allow it to qualify for the IRA credits.
The carbon storage location under Lake Maurepas has caused concern among local communities and there have been various attempts to slow down or stop the Groundworks and geologic research by the company. The latest ruling on the matter. It was on May of 2023 when the State House decided the project will proceed. Nick Jones also pointed out the importance of regulation. He says the Darrow plant will not only test the economics of large scale production and the market for blue products, but also the regulatory and political support for CCUS projects along the Gulf Coast. Despite the region generally being favorable to energy development.
This project has already drawn activist opposition, including from groups who previously halted a $12 billion petrochemical project nearby. The developers of other projects we’ll be watching closely to see if air products can avoid a risky and expensive regulatory quagmire. According to Jones, there are at least 16 other blue hydrogen and ammonia projects being developed in Texas and Louisiana alone, the success or failure of this Air Products endeavor will very likely be seen as a showcase for the potential of the hydrogen industry, not only in the Gulf Coast region but also in the US as a whole. Okay, so big news from air products on the fid to move forward with their massive Gulf Coast hydrogen project.
Now, I am curious as to how much of the high velocity hub approval announcement had to do with this news, I’d be willing to bet that had the hub not won approval, this project wouldn’t be going forward. And even though there is some blowback from opposition groups, the backing these projects now have from local state and federal government should push this through without any real issues. A couple that with the huge amount of co2 storage this project is bringing to the area will further solidifies development potential. And so with the Porthos project moving forward, along with this gulf coast project, air product is positioning themselves as the premier mover of hydrogen and ammonia in Europe and in the US, and it will be interesting to see what if any response companies like Linde and Air Liquide, will have to showcase their offerings and compete at this level.
Next, in a press release on November 23, co2 free hydrogen BASF receives funding approval for 54 megawatt water electrolysis plant. With the approval of funding from the German Federal Ministry for Economic Affairs and Climate Action and the State of Rhineland-Palatinate, BASF has come a major step closer in building a proton exchange membrane electrolyzer. In cooperation with Siemens Energy, work on the water electrolysis at the Ludwigshafen site – the so-called Hy4Chem-EI project – is now entering the next phase of construction. Dr. Franziska Brantner, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Climate Action, presented the official notification of funding to Dr. Melanie Maas-Brunner, member of the Board of Executive Directors of BASF SE and Site Director Ludwigshafen, in the presence of Malu Dreyer, Minister-President of Rhineland-Palatinate.
With an output of 54 megawatts (MW) and a capacity of up to 8,000 metric tons of hydrogen per year, the PEM electrolyzer will be one of the largest of its kind in Germany once it is operational. Powered using electricity from renewable energy sources, the system will produce CO2-free hydrogen and thereby reduce greenhouse gas emissions at the site by up to 72,000 metric tons annually. BASF will primarily use this hydrogen as a raw material in the manufacture of products with a reduced carbon footprint. In addition, the company will supply hydrogen for mobility in the Rhine-Neckar Metropolitan Region to support the ramp-up of a hydrogen economy in the area. BASF and Siemens Energy plan to begin operating the water electrolysis plant in 2025. In cooperation with the State of Rhineland-Palatinate, the German Federal Ministry for Economic Affairs and Climate Protection is contributing up to €124.3 million to the project – up to €37.3 million of which will be financed by the government of Rhineland-Palatinate. Okay, so it looks like we have further development for hydrogen production in Germany.
This coming on the heels of the recent German announcement that the country is looking to become the nexus for hydrogen in Europe. And announcements like this make that statement even more valid. Now, Siemens has been struggling recently as their wind unit has had monumental setbacks, and their stock has fallen after their underwhelming turnaround plans were unveiled. But this collaboration with BASF could be what Siemens has needed to begin turning that ship around. Siemens knows electrolyzers. And their expertise in this project could further their plans of moving deeper into the hydrogen space, both in Europe and the US. Now this announcement didn’t mention any dates. But the fact that it’s under construction should mean this site is operational before 2026.
All right. That’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcast, Spotify, Google, YouTube, whatever it is, that will be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at email@example.com. So until next time, keep your eyes up and honor one another.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.