LNG industry provides template rather than asset base for hydrogen/ammonia [LNG2023]
Repurposing LNG assets for future hydrogen or other low carbon fuel use has been a hot topic of recent times, and in some cases a justification for investment in new gas infrastructure. However, speakers at LNG2023 in Vancouver, Canada, presented a rather different picture of the crossover between new and old liquified fuels.
According to Juancho Eekhout VP Business Development, Sempra Infrastructure, hydrogen and/or ammonia facilities will come in addition to LNG infrastructure, in part reflecting an expectation that LNG demand will endure, certainly beyond the point at which hydrogen and ammonia production starts to scale up.
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However, there are important synergies both in terms of the way in which the new markets are likely to develop and where.
Eekhout said LNG production sites typically have the same electrical connections, supply chains and export infrastructure needed for hydrogen and ammonia trade. Likewise, Austin Knight, VP Hydrogen Chevron, said that in terms of infrastructure, resources and customer base, hydrogen/ammonia closely mapped existing LNG production and consumption, pointing to a strong case for co-location.
Richard Voorberg, President, Siemens Energy North America said the LNG industry’s modularisation and its ability to raise project finance provided important lessons and outcomes, which should be applied to the nascent markets for hydrogen and ammonia. He said these fuels were not in competition with LNG, but necessary elements of a diverse set of technologies needed to deliver a low carbon future, one in which LNG would continue to play a major role.
Ammonia first, hydrogen second
Assessing how the market will develop, Tracey Lothian, Vice President, Low Carbon Solutions, ExxonMobil Asia Pacific, pointed to the need for close producer/customer coordination and end-to-end supply chains, which she sees as the genesis of future trade in hydrogen/ammonia as international energy commodities. This would closely mirror longstanding producer/ consumer collaboration in the LNG market.
All speakers agreed that international trade was likely, but that it would take time to emerge, and all saw ammonia as quicker to market than hydrogen. International trade will be driven by an enduring need for energy imports in a wide range of consuming countries.
A market for ammonia would develop faster because the fuel is already traded and has existing direct end-uses without further transformation, which makes it more economic.
Policy is likely to prove the critical factor in what the speakers called the ‘activation’ stage, pointing to the US Bipartisan Infrastructure Law and the Inflation Reduction Act as creating a supportive framework for market development.
This feature was originally published in the LNG2023 Daily, produced by NGW during the LNG2023 conference in Vancouver July 10-13.