Someday we may live in a green hydrogen economy: a future where planes, trains and automobiles run on fuel cells, and renewable energy is stored in tanks and transported through pipelines. More likely, only portions of our economy will shift to clean hydrogen. But whichever version comes to pass, the first phases may be a decade away.
In 2021, the hydrogen economy is decidedly grey, and the oil and gas industry is a major producer and consumer. Refineries use large amounts of hydrogen as a feedstock in the desulphurisation of crude oil. This process has grown in importance as more stringent regulations for fuels have come into force. In North America, most of this hydrogen is produced through steam methane reforming, which also produces major carbon emissions.
Decarbonise to survive
Today’s oil and gas companies are responding to investor, government and market pressure by setting goals to reach net-zero carbon emissions by 2050 or sooner. According to a recent report by the Oil and Gas Climate Initiative, a CEO-led coalition of oil and gas companies, it is a commercial imperative to implement a broad portfolio of near-, mid-, and long-term low-carbon solutions.
Hydrogen can play a role in every phase. In the near term, grey hydrogen processes can be made more efficient to reduce the rate of carbon emissions per unit of hydrogen. In the medium term, those same facilities can add carbon-capture processes to shift from grey to blue hydrogen. In the long term, enormous investment in renewable energy will make green hydrogen the leader.
But these sorts of purely qualitative predictions are not particularly helpful. Oil and gas companies need numbers. They face a wide range of possible actions with tremendous technical and economic uncertainty, and they must continue to deliver profitability in what remains a highly competitive industry. How can a company choose a path, make investments and manage risk in such a complex environment? And how they can do it at the speed the market demands?
Digital transformation is the key accelerator that will drive the decarbonisation of hydrogen production in the oil and gas industry. Digital transformation brings together digital tools and work processes to enable more informed business decisions for both engineering, procurement and construction companies (EPCs) and owner-operators, across brownfield and greenfield facilities.
A complete digital twin, including process behaviour, allows engineers to explore their ideas in an integrated, collaborative analysis framework. Project teams can consider an unlimited range of operating scenarios and engineer plants to minimise emissions and optimise risk. Technology is changing quickly in the nascent hydrogen economy, and rigorous simulations offer better predictions than relying on data from older processes and plants.
Executing hydrogen projects
The digital twin is critical to the ability of oil and gas companies to make plans. To reach the goal of decarbonised hydrogen, plans must be executed. Traditional capital project execution methodologies result in projects being delivered on average 20 months late and 80pc over budget. It is imperative that this does not happen with clean hydrogen projects. As of July 2021, CEO-led initiative the Hydrogen Council reports more than $150bn in clean hydrogen projects at a mature investment stage.
The success of these projects will determine the prospects of future multibillion dollar capital developments and the viability of the hydrogen transition in oil and gas. Luckily, the data-centric approach to design facilitated by the digital twin also significantly improves handover with a complete representation of all 1D, 2D and 3D data transferred from EPC to owner operator. This holistic digital twin approach unlocks instant value by informing the project delivery process itself and can be leveraged to empower operations to provide lasting value for years to come.
Operate with intelligence — human and artificial
As oil and gas facilities shift their hydrogen production from grey to blue to green, the people running the plants will face a more complicated operating environment. Process economics will become more dynamic as solar and wind are increasingly used.
In an integrated hydrogen economy, operators may face ongoing technoeconomic decisions about when to sell hydrogen and when to use it as feedstock or fuel. Here, too, the digital twin enables a smarter industry. Simulators and AI-driven advisers can help human operators reach their full potential to ensure the sustainable plants of the future are safe, reliable and profitable.
Want to learn more about decarbonising hydrogen production? Watch our webinar on Simulating the Hydrogen Transition.