Natural gas producers in Europe may concentrate on selling methane in other regions

Gas Materials 2 August 2022 11:15
Baku, Azerbaijan Trend News Agency Leman Zeynalova
Natural gas producers in Europe may concentrate on selling methane in other regions

If the options for LNG decarbonization fail, natural gas producers in Europe may concentrate on selling methane in other regions, Trend reports with reference to Oxford Institute of Energy Studies (OIES).

The latest OIES report points out that the EU Hydrogen Strategy favours renewable hydrogen, which is referred to as the option ‘most compatible’ with the EU’s climate neutrality and zero pollution goal in the long term and most coherent with an integrated energy system, and states that it is the EU’s ‘priority’ to develop renewable hydrogen.

“It acknowledges that ‘in the short and medium term’ low carbon hydrogen will also be needed but appears to be mostly concerned with decarbonization of the existing high carbon hydrogen production20 – by means of retrofitting it with carbon capture and storage (CCUS) equipment – rather than with investment in new low carbon hydrogen production. Indeed, the Strategy states that low carbon hydrogen will be needed ‘primarily to rapidly reduce emissions from existing hydrogen production and support the parallel and future uptake of renewable hydrogen’. Industrial hydrogen demand in the EU for 2020-50 is estimated at ~300 TWh per year, thus giving an indication of how much low carbon hydrogen would be required to decarbonize the industrial sector,” says the OIES report.

The Strategy’s position notwithstanding, it is possible that low carbon hydrogen production – both domestic and imports – could play a significant role in the EU energy transition, well beyond retrofitting the existing high carbon hydrogen production with CCUS.

“For example, if international natural gas producers and exporters were to decide to develop low carbon hydrogen by means of methane reforming and CCUS and then sell it to Europe. This approach would require utilization of offshore depleted fields for CO2 storage and offshore pipelines for CO2 transport as well as subsequent coordination of hydrogen and methane networks. This could be an option for Norway as most of its natural gas is produced offshore. Another possibility is to conduct methane cracking (pyrolysis) close to the consumer.

This could have been an option for Russia as it could have continued to export methane to Europe and turn it into low carbon hydrogen through pyrolysis inside the EU. However, in the aftermath of the 2022 Ukraine crisis its prospects appear limited. There are also several options for LNG decarbonization. It could be carried out at an LNG regasification terminal in or outside Europe, either through methane reforming or methane cracking. If carried out outside Europe, the resulting low carbon hydrogen could be shipped to Europe. Should these options fail, natural gas producers and exporters may decide to exit the European market altogether and concentrate on selling methane in other regions (where GHG emission reduction targets are either absent or less ambitious).”