In the third of our series The New Elements, writer Hilary Klassen examines hydrogen and the opportunity it offers the energy sector and the Saskatchewan economy.
It’s been called the hottest thing in green energy. The hydrogen market is expanding globally and is expected to be a $1.5 trillion industry by 2050. Hydrogen will increasingly be used in power generation, industrial heating, and transportation.
Saskatchewan’s Proton Technologies expects to play a big role in the transition to clean energy with hydrogen. At its Kerrobert operation, the company is testing its patented technology to extract hydrogen from existing oil reservoirs in a first-of-its-kind global commercial deployment. The process leaves carbon in the ground and produces no emissions.
The project was the first to be approved under the Saskatchewan Petroleum Innovation Incentive (SPII). “Saskatchewan has the resources to become a hydrogen export superpower,” says COO Seta Afshordi. “The province has a great geology and infrastructure for what we’re proposing.” Proton now employees about 27 people in the office and 25 in the field.
As nations sign on to climate treaties and set emissions goals, Proton is readying itself for massive demand. It has patents filed in over 100 countries and has completed licensing deals across the globe. “We are well-positioned to realize our goal of providing 10 per cent of the world’s energy by 2040,” says Afshordi. Proton recently finalized their design related to pure oxygen injection and began construction. They have hired people who have safely injected pure oxygen into oilfields for years, and they have brought on more geomodelling and reservoir engineering expertise. “We received $10 million in investments and have seen a dramatic improvement in revenues from the field.”
Saskatchewan energy minister Bronwyn Eyre recently signaled the province’s intention to prioritize carbon capture. Increasing the potential availability of CCUS hubs and facilities is expected to encourage further development of hydrogen production. “The clean hydrogen industry can be integrated with the existing fertilizer, oil and gas industry including CCUS, renewables, potash, agriculture, cement, steel, refining, upgrading, mining, smelting, and especially electricity production industries. Saskatchewan has the potential to create a carbon-negative economy while maximizing its existing resource sectors and creating value-added industries,” says Afshordi.
The challenge for any up-and-coming energy technologies is moving through an inevitable energy usage transition. It’s simply not possible to flip a switch overnight from one energy source to another.
Components of energy infrastructure, resources, and demand can be transitioned, and the province has been supportive, she says, for example by providing power purchase agreements through SaskPower, and transferable royalty credits through the SPII program. “Connecting pieces together such as renewables, oil & gas, CCUS, midstream, geothermal, SMR’s, requires a clear roadmap and provincial leadership.”
Hydrogen has its own colour palette depending on how its produced. Saskatchewan possesses all the necessary building blocks to develop a hydrogen industry based on blue, green and clear hydrogen.
In terms of commodity value, Proton’s projected production costs fall lower than natural gas and all other forms of hydrogen production, creating significant demand and sizeable profit margins for an array of market prices, Afshordi says. “In the near term, buyers will largely be industrial clusters, power companies, and other demand sources already using hydrogen as an input or requiring minimal adaptation to utilize hydrogen as an energy source.”
The market for hydrogen will develop as hydrogen hubs are built out and markets begin to form, Afshordi continues. The price of hydrogen will vary regionally based on geography, supply costs, the grade of hydrogen, and the related infrastructure. In some cases, it will make sense to truck liquid hydrogen from Saskatchewan to various North American markets that are hungry for clean hydrogen at fueling stations.
U.S.-based RESPEC Consulting works in both Saskatchewan and Alberta and has an office in Saskatoon. Over the years, they did a couple of projects with Saskatoon’s North Rim and eventually the two joined forces. RESPEC (short for Research Specialties) is uniquely focused on hydrogen storage.
Staff consultant Samuel Voegeli says hydrogen storage is going to be critically important when supply and demand issues come into play. “We understand the storage of hydrogen. Both Saskatchewan and Alberta have a unique resource in their underground salt formations and salt is a great storage medium for hydrogen. We can store it and when you need it you can pull it from storage and use it for electricity generation,” says Voegeli.
For hydrogen storage, imagine a very large underground tank in a salt formation that is sunk thousands of metres underground. “This is much safer than having an above-ground hydrogen tank sitting on the surface next to people, and it’s proven.”
For hydrogen to become a viable industry in Saskatchewan, three things must become possible: a) production, b) storage, and c) usage, Voegeli says. The province has the feed stocks necessary for production, it has an ideal geology for storage and as the market develops, usage will expand.
“The move to hydrogen is worldwide. The U.S. has dedicated almost $10 billion to hydrogen hubs in their massive infrastructure bill. Europe is all in. Hydrogen is going to be their clean fuel of the future. There are a lot of indicators across the world that hydrogen has some legs and its going to be going someplace soon,” says Voegeli.