Saudi Aramco sees demand for blue hydrogen beginning to ramp up at the start of the next decade, according to comments made by the state-run giant's chief technology officer.
Ahmad al Khowaiter told Bloomberg Television the investment required to produce blue hydrogen was not significant when compared to investment for conventional oil and gas projects, with the largest challenge facing blue hydrogen projects being the lack of demand to underpin investment in supply.
Blue hydrogen can be produced with steam-reforming processes using fossil fuels combined with carbon capture and storage (CCS).
“We will see those investments happen when the demand appears for blue ammonia and for other low-carbon hydrogen,” he told the news outlet.
“The scale up isn’t going to happen before 2030. We’re not going to see large volumes of blue ammonia before 2030, and that’s based on the projections of both the Hydrogen Council and the International Energy Agency.”
Khowaiter also believes that blue ammonia projects would be established in a similar method to liquefied natural gas projects, which typically establish offtake agreements prior to making capital investments in projects.
“From the time you make clear off-take agreements, you’re talking about a five- to six-year capital cycle to invest in the production and conversion requirements,” Khowaiter told Bloomberg TV.
“You’re talking about a pretty long timescale.”
While the company has been focused on blue hydrogen, Khowaiter claimed Aramco had not ruled out pursuing green hydrogen developments in the future, adding the company had been exploring synergies between blue and green hydrogen development.
Green hydrogen is produced using renewable energy to power electrolysis — splitting water molecules into hydrogen and oxygen.
However, he stated the cost of producing blue ammonia was currently about one-fifth the cost of green ammonia projects, noting that blue ammonia projects were similar to natural gas projects, with a CCS aspect attached.
He claimed the cost of the CCS part of the projects would be around $1 billion per million tonnes of ammonia.
Aramco has previously indicated that fossil fuels will still dominate its asset portfolio in the years ahead, and when questioned on the Saudi giant’s position on renewables, Khowaiter said the company is “evaluating all options" to reduce emissions and provide sustainable energy.
“We are experimenting and we have actually developed a number of renewables projects within our own business and we are looking at increasing the use of renewables in our business, but it will have to be competitive economically and renewables are, up to a point, quite competitive today,” he added.
Aramco last August exported the world’s first shipment of high-grade blue ammonia to Japan for use in zero-carbon power generation, a significant step towards sustainable hydrogen usage.
In January 2020, Aramco joined the Hydrogen Council as a steering member. The organisation promotes collaboration between governments, industry and investors to provide guidance on accelerating the deployment of hydrogen solutions globally.