How a $7 billion investment in clean hydrogen could cut the refining industry’s “carbon intensity”

The Air Liquide hydrogen production facility in La Porte, Texas, looks like a giant outdoor industrial jungle gym because of all the metal tubes and cylinders. New hydrogen molecules are made there from steamed natural gas. The hydrogen will make its way to customers concentrated along the Gulf Coast through the company’s pipeline.

The plant is part of the hydrogen ecosystem that has been developing for decades along the Gulf Coast — one that the federal government hopes to transform through its $7 billion investment in seven regional clean hydrogen hubs. Based in Texas and Louisiana, the Gulf Coast hydrogen hub launched in November and is poised to be the nation’s largest, with much of the associated industry already concentrated there.

“Clearly, when you look at the Texas ecosystem, there are a number of advantages. There is natural gas, it is abundant, it is price competitive,” said Errico De Francesco, business development vice president of large industries at Air Liquide, a Gulf Coast hydrogen hub partner. “Here you have a large number of industrial plants in chemical, in refining, in [the] materials sector, and so on.”

Of the roughly 10 million to 12 million metric tons of hydrogen produced and consumed in the United States each year, around a third is concentrated in Texas and southwest Louisiana along the Gulf Coast, according to Brian Weeks, senior director of business development at GTI Energy, a research and development firm administering the Gulf Coast hydrogen hub. 

“And that’s conventional hydrogen, which is used in petrochemical plants. It’s used in ammonia production. It’s used in methanol production,” Weeks said.  

And it’s petroleum refiners who are the big consumers of hydrogen. 

“About 70% goes into refining and chemicals, and it’s used to take impurities out of crude oil, so sulfur or nitrogen out of that crude oil, so it doesn’t end up in the gasoline you burn in your car,” said Brian Murphy, an analyst with S&P Global Commodity Insights. “And then we use about 30% of it to make ammonia, which is the main component of chemical fertilizers.”

That’s right — hydrogen is essential to feed and fuel Americans.

“It’s sort of this hidden feedstock,” he said. “It’s behind some of the food you eat. It’s behind some of the gas you put in your car every day,” he said. 

The challenge is while hydrogen has helped clean the sulfur from our fuel, the way hydrogen is typically produced — using super hot steam to transform natural gas — emits planet-warming greenhouse gases.

“There are significant greenhouse gas emissions associated with hydrogen. It’s usually about 10 kilograms of CO2 produced for every kilogram of hydrogen,” Murphy said. 

These emissions associated with hydrogen is why the expansion of new clean hydrogen technologies through hydrogen hubs is so important, according to Brett Perlman, CEO of the economic development organization Center for Houston’s Future.

“If we basically substitute these cleaner forms of hydrogen for the existing hydrogen that emits a lot of CO2, we can both continue to have an oil and gas industry, but have it reduce the carbon intensity of the output of that industry,” Perlman said.   

Just from the Department of Energy investment, the Gulf Coast hydrogen hub will build four clean hydrogen production facilities and a clean hydrogen pipeline.

“There’s one production project that will use natural gas with carbon capture and sequestration to produce clean hydrogen, and there’ll be three that use electrolysis, using water with renewable electricity to create hydrogen,” said hub program manager Ted Barnes, with GTI Energy.

With these projects and new tax incentives, the goal is to bring down the cost of clean hydrogen and boost supply and demand for this more expensive, environmentally friendly product.

At the Air Liquide hydrogen production plant in La Porte, the promise of clean hydrogen is in the middle of the facility made of cylinders and tubes and machinery. There’s a large open area that one day, the company plans on building carbon-capture technology that could remove roughly 95% of the carbon dioxide emitted from this hydrogen plant that’s currently being released into the air. 

Timing isn’t definitive, but plans have been in the works since before the plant was built in 2011.

“Even though we announced our climate objectives later, from the inception of the vision that we brought with this plant, it was to have a plant that was capture-ready where, in fact, you can plug in a technology to capture the CO2 that is produced,” said Errico De Francesco. 

Clean hydrogen at this plant has been years in the making. Still, the transition across the industry is just beginning.