China has embarked on a new scheme to produce grey hydrogen from shale gas, which will include building hydrogen filling stations and other facilities.

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The hydrogen produced from shale gas will be so-called "grey hydrogen", as no carbon capture and storage is planned as part of the scheme.

This week, the government of Weiyuan in southwestern China’s Sichuan province sealed a deal with Shanghai Hanxin Energy Technology to work on a programme aimed at converting shale gas to hydrogen.

Sources said the project could also involve state-controlled oil giant Sinopec, which is currently responsible for marketing shale gas produced at Weiyuan.

The agreement covers construction of a hydrogen conversion unit, hydrogen transportation units, hydrogen filling stations and a number of public utility facilities in an area covering 53,000 square metres within the Weiyuan Economic Development Zone.

Under the agreement, Shanghai Hanxi will invest 200 million yuan ($31 million) to finance the grey hydrogen project as well as providing engineering, procurement and construction services.

Weiyuan houses the Weiyuan shale gas field, one of only a handful of pilot shale gas projects in China. The field is home to 620 billion cubic metres of shale gas reserves with 400 Bcm confirmed recoverable.

The production in 2020 reached 3.1 Bcm from 43 well pads that house 297 wells.

The scheme involves using sorption enhanced chemical looping steam reforming to produce hydrogen from shale gas.

The project is still in the initial planning stage. The size of the envisaged hydrogen unit has not been disclosed.