Kellas Midstream puts up $942mn for blue hydrogen project

Kellas Midstream is progressing toward a final investment decision on building a 1,000 MW blue hydrogen project in the northeast of England, company officials told Gas Pathways.

The H2NorthEast project will target industrial facilities around the Humber and Teeside regions to low carbon hydrogen fuels. It would be hosted at Kellas Midstream's existing CATS (Central Area Transmission System) gas processing terminal on Teeside, which the company believes can help unlock synergies by sharing distribution and storage infrastructures.

H2NorthEast could receive UK government backing through the energy department's phase 2 cluster sequencing process for blue hydrogen projects. A final decision on whether Kellas will be eligible for government support is expected in May 2022.

It comes after blue hydrogen was backed by Whitehall's refreshed energy security strategy, which seeks to strike a balance between energy independence in light of the Ukraine war, and continued progress to the UK's 2050 net zero obligations.

The UK's first-ever hydrogen strategy paper aims to increase national hydrogen capacity by 5,000 MW by 2030, enough to replace traditional natural gas in around 3mn homes each year. Kellas Midstream welcomed the target, telling Gas Pathways: "We were encouraged to see the UK Government’s Energy Security Strategy announce a doubling of ambitions for hydrogen production to 10GW by 2030, and Government support will be vital in stimulating a UK hydrogen economy."