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Shell and Uniper agree to progress blue hydrogen production facility in UK

© BloombergShell north sea

Shell (LON: SHEL) has penned a co-operation agreement with Uniper (ETR: UN01) to progress plans for low-carbon hydrogen production in the UK.

Based at the German energy company’s Killinghome site in North Lincolnshire, the fuel could be used to decarbonise heavy industry, transport, heating and power across the region.

The Humber Hub Blue project includes plans for a blue hydrogen production facility with a capacity of up to 720 megawatts.

It would combine gas reformation technology with carbon capture and storage (CCS) to mitigate the emissions produces in the process.

Captured carbon would be fed through the proposed Zero Carbon Humber onshore pipeline, part of the East Coast Cluster, of two clusters that was picked to form the UK Government’s CCS vanguard.

Humber Hub Blue recently passed the eligibility criteria for Phase-2 of Westminster’s cluster sequencing process.

Successful projects, which could be eligible for government funding, will be shortlisted from May 2022.

Phase-2 projects are expected to take final investment decisions from 2024 with a view to being operational from 2027.

David Bunch, country chairman, Shell UK, said: “Shell is ready to play our part in ensuring an orderly transition to net zero while bolstering the UK’s energy security.

“We plan to invest up to £25 billion in the UK energy system over the next decade subject to Board approval, and more than 75% of this is for low- and zero-carbon technology. Hydrogen and CCS will be key to these plans. They can also help stimulate economic growth and jobs. That is why it is critical that both government and industry continue to work together to drive change.”

Axel Wietfeld, chief executive of Uniper Hydrogen, said: “The Humber Hub Blue hydrogen project is a key part of Uniper’s hydrogen ambitions in the UK and we’re extremely pleased that Shell is joining us on this initiative.”

Blue hydrogen production at Killingholme could lead to around 1.6 million metric tonnes (Mt) of carbon being captured a year.

Unlike green hydrogen, which is produced using renewable energy and water, blue hydrogen uses natural gas as its feedstock.

As a result there is still a degree of scepticism towards and some believe it is not truly low carbon.

Emissions generated through the production of blue hydrogen will be tackled using CCS, and the UK Government has set a target to capture 10 Mt of carbon a year by 2030.

The agreement between Shell and Uniper follows a memorandum of understanding signed by both companies in 2021 to explore accelerating the development of a hydrogen economy in Europe.

The pair will now jointly progress process design studies and site development activity, with a view to taking the project to front end engineering and design by 2023.

Mike Lockett, Uniper UK country chairman and chief commercial officer power, said: “The development of a hydrogen production hub at Killingholme represents a significant step towards decarbonising the UK’s largest industrial cluster. Future proofing the industry, this investment has the potential to secure and grow the region’s economy.”

UK energy minister Greg Hands said: “We’ve set ambitious targets for hydrogen production in our British Energy Security Strategy and are investing £360 million in innovative energy technologies to get us there. Today’s announcement shows real confidence in hydrogen – creating high-quality jobs to level up the Humberside region, based on this clean, cutting-edge new super fuel.”

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