Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the BNF podcast. The hydrogen industry loves to assign colors
Speaker 1: to different production sources. Some of the names are instinctual,
Speaker 1: like green hydrogen, which is produced from renewable energy. Today
Speaker 1: we're talking about gold hydrogen, and with a name like that,
Speaker 1: we would assume that it's at the top of the stack.
Speaker 1: So what makes geologic hydrogen gold? Well, firstly, it's naturally
Speaker 1: occurring rather than man made, and it has the potential
Speaker 1: to be less carbon intensive and importantly less expensive than
Speaker 1: any other form of hydrogen. However, there are very limited
Speaker 1: successful examples of extraction and utilization to date, and the
Speaker 1: economics are nowhere near where they need to be. So
Speaker 1: will technology improvements and synergies with the helium industry help
Speaker 1: unlock its potential? To answer that question? Today, I am
Speaker 1: joined by Sammy Alisowi from BNF's Hydrogen team, alongside Mushfka
Speaker 1: Mishi from our Technology and Innovation team. They share some
Speaker 1: of the research found in their recent report Technology Radar
Speaker 1: Geologic Hydrogen. BNF clients will be able to find this
Speaker 1: at BENF go on the Bloomberg Terminal or at benf
Speaker 1: dot com. So let's discuss geologic hydrogen and whether it
Speaker 1: should truly be considered gold. Mushwika, thanks for joining us,
Speaker 1: Thanks for having me and Sammy great having you here too.
Speaker 2: Thank you for having me as well.
Speaker 1: Here we go. This episode is going to be gold.
Speaker 1: We're talking about gold hydrogen. We did a show many
Speaker 1: moons ago at this point, I want to say it
Speaker 1: was well over a year ago where we went through
Speaker 1: all of the colors associated with hydrogen and each of
Speaker 1: them has invariably a different source that the hydrogen came from.
Speaker 1: So today we're going to talk about gold hydrogen and
Speaker 1: to give a bit of additional color and open in
Speaker 1: tended so some context to that. It actually represents geologic hydrogen.
Speaker 1: So let's start off with this definition. What is gold
Speaker 1: or geologic hydrogen?
Speaker 3: Yeah, so geologic hydrogen, also known as clear why native orange,
Speaker 3: or as you said, gold hydrogen, is naturally occurring hydrogen
Speaker 3: that forms underground and often builds up in reservoirs within
Speaker 3: the Earth's crust. But let's break that down a little further, right, So,
Speaker 3: although the mechanisms of hydrogen production is uncertain, there's three
Speaker 3: kind of big hypotheses that have been thrown around or proposed.
Speaker 3: Researchers agree that at least some hydrogen is produced by
Speaker 3: each pathway, but which pathway is dominating unclear. So you've
Speaker 3: got the first one, which is radiolysis. It's basically a
Speaker 3: radioactive decay of heavy metal securanium or thorium, and essentially
Speaker 3: that radioactive decay can split water to become multiple particles
Speaker 3: like hydrogen, hydroxide, all of that, and this occurs on
Speaker 3: a geological time scale. The second one, which I think
Speaker 3: is like the most widely accepted one, is serpentization, and
Speaker 3: that when water reacts with iron rich automatic rocks like
Speaker 3: olivene under really high temperatures and the iron is reduced
Speaker 3: and in the process of reduction it releases hydrogen. There's
Speaker 3: some research out there that suggests that some eighty percent
Speaker 3: of the Earth's hydrogen could be a result of this process.
Speaker 3: The third one, which is highly debated but worth mentioning,
Speaker 3: is mental degassing, and that's when plate techton activity can
Speaker 3: essentially trigger the degassing of hydrogen that's already present in
Speaker 3: the Earth's core and mantle from way back, you know,
Speaker 3: the Big Bang.
Speaker 1: So I know that we benef like to actually refer
Speaker 1: to hydrogen by the fuel source, so we tend to
Speaker 1: refer to things as geologic hydrogen. I'm going back to
Speaker 1: these colors again, clear, white, orange, gold, What is the
Speaker 1: most popular one used?
Speaker 3: I would say gold hydrogen is the one that mainstream
Speaker 3: media has taken up, but we like to still refer
Speaker 3: to it as geological age two.
Speaker 2: There's one more. Natural hydrogen is pretty popular. There's a
Speaker 2: summit in Pairs that happened a couple weeks ago that
Speaker 2: I attended, and the summit is basically called Natural Hydrogen
Speaker 2: Summits or HNT. So natural hydrogen was also a very
Speaker 2: popular term.
Speaker 1: So surely if natural hydrogen was easy to extract and plentiful,
Speaker 1: there would not be need for companies to be making
Speaker 1: hydrogen from other fuel sources like renewables or natural gas
Speaker 1: or nuclear. So I could keep going. But hydrogen made
Speaker 1: from so many different sources. So I want to know
Speaker 1: how much of an opportunity is this and how much
Speaker 1: hydrogen are we talking about? Can you put this into context?
Speaker 1: You know, is this going to be Could it be
Speaker 1: the dominant source of hydrogen at some point or will
Speaker 1: it always be kind of on the fringe.
Speaker 2: So again, yeah, we're talking about a fraction that's accessible
Speaker 2: and that amounts to again in theory, we don't know
Speaker 2: how much, but it's in the millions per year. And
Speaker 2: how much that is is that a lot, like is
Speaker 2: a million a year a lot.
Speaker 1: For example years of what what's the unit of measure.
Speaker 2: Tons per year? And to put it into context, hydrogen
Speaker 2: consumed nowadays, the unabated or the not clean hydrogen every
Speaker 2: year is around nineteen million tons per year. So yeah,
Speaker 2: just to put into context that when we still talk
Speaker 2: about a fraction of what's out there or what's possibly
Speaker 2: out there, it's two things. One, it's very theoretical, but
Speaker 2: it has people optimistic because even a fraction is saw
Speaker 2: a lot.
Speaker 1: Okay, so we have it out there and it can
Speaker 1: in theory be extracted, but you have pointed out this
Speaker 1: may be very difficult to get to. So what are
Speaker 1: the technical barriers that are keeping us from being able
Speaker 1: to get it out of the ground? Basically, why do
Speaker 1: we not have this yet?
Speaker 3: So in theory, like oil and gas, geological hydrogen could
Speaker 3: be extracted from the earth using drilled wells, and there's
Speaker 3: kind of three main reservoirs or like stores of hydrogen
Speaker 3: people are investigating. So there's traps. That's the one that's
Speaker 3: kind of most akin to oil and gas. It's an
Speaker 3: accumulation of hydrogen that becomes trapped below like an impermeable
Speaker 3: layer of rock over time. And then there's the direct
Speaker 3: kind of root, which some developers are aiming to drill
Speaker 3: directly into iron ritual where cerpertalization is occurring and extract
Speaker 3: the H two as it is being generated. Theoretically, that
Speaker 3: could make geological hydrogen a renewable source of energy. The
Speaker 3: third bit, which I haven't heard a lot of activity
Speaker 3: being but it has been thrown around as a possibility,
Speaker 3: is stimulated hydrogen. That's a type of development where you
Speaker 3: could drill where it would potentially be produced, and then
Speaker 3: stimulated artificially by injecting hot water and produce it artificially.
Speaker 3: That's the one that's being referred to as orange hydrogen.
Speaker 1: This doesn't sound totally dissimilar from fracking. Am I right
Speaker 1: in drawing that parallel?
Speaker 3: You could do that parallel? Yeah, and I have also
Speaker 3: asked that question to people in the industry, But we're
Speaker 3: not there yet. We're not at the point where you
Speaker 3: could even consider stimulating the production of hydrogen. We're still
Speaker 3: at the point where just finding traps is becoming the
Speaker 3: main topic.
Speaker 1: Okay, so we're trying to locate where in the world
Speaker 1: these deposits are and then figure out how to get
Speaker 1: them out. Do we have an idea of where they
Speaker 1: are they evenly distributed? Everybody's got this or is it
Speaker 1: really constant in some countries?
Speaker 3: So I do have to highlight that current hotspots of
Speaker 3: geological hydrogen are a function of where it has historically
Speaker 3: been measured, rather than where it could be found in
Speaker 3: the future. So currently today scientists have recorded resources in
Speaker 3: a number of geographies, including the US, Australia, Brazil, Canada, Mali, Oman,
Speaker 3: the Philippines, Russia. Most of the recordings we have so
Speaker 3: far of actual national hydrogen artificially does concentrate in Eastern
Speaker 3: Europe and the general Northern Asia area, and that's because
Speaker 3: researchers were sponsored by the Soviet Union Soviet government rather
Speaker 3: to find another kind of abiogenic source of producing oil
Speaker 3: way back in the Cold War times. So where can
Speaker 3: we find it? Unsure? But it has been found kind
Speaker 3: of all across the world, and most of the activity
Speaker 3: today does concentrate within the general US North America area
Speaker 3: in Australia.
Speaker 1: I mean when you rattled off that first list of countries,
Speaker 1: those are the ones that are actively involved in other
Speaker 1: forms of hydrogen. So it's not surprising that kind of
Speaker 1: all eyes around hydrogen there, which then leads me to
Speaker 1: what companies have their eyes on this. Are they the
Speaker 1: same players that are exploring green hydrogen that made from
Speaker 1: renewables or those that are coming from blue hydrogen, which
Speaker 1: is natural gas and carbon capture and storage. Are they
Speaker 1: the same companies that are investigating other sources of hydrogen
Speaker 1: and actually energy made from energy or are they completely
Speaker 1: different companies.
Speaker 3: Yeah, that's a very good question. Today we've counted around
Speaker 3: fifty companies that are operating in this gold hydrogen industry,
Speaker 3: headquartered mainly again in North America, Western Europe, Australia, and
Speaker 3: I think the best way to segment the market would
Speaker 3: be within three main categories. So obviously, you have your
Speaker 3: pure play explorers that are prospecting for large reservoirs of hydrogen.
Speaker 3: You also have your oil and gas and you're mining
Speaker 3: like huge energy conglomerates that are funding the research and
Speaker 3: development into the sector. But you also have this new
Speaker 3: sector of people. We show these service providers that are
Speaker 3: hoping to support exploration activities with gas separation equipment, geological surveying,
Speaker 3: modeling tools, providing other geospatial data, or just like general
Speaker 3: like EPCs, which is engineering and procurement construction of folks.
Speaker 1: Okay, so you've said in theory a few times on
Speaker 1: this show, but there is a case of successful extraction
Speaker 1: in Mali. Can you explain kind of how that came about,
Speaker 1: how recently it was, and what they're doing there.
Speaker 3: Yeah, so it's actually a pretty interesting story. So essentially,
Speaker 3: in nineteen eighty seven, hydrogen was accidentally discovered when a
Speaker 3: cigarette of an engineer drilling water wells calls an explosion.
Speaker 3: The well back then was kind of deemed useless and cemented,
Speaker 3: But in twenty twelve, this company based out of Canada, Hydroma,
Speaker 3: purchased the rights to explore in the region. So when
Speaker 3: they unplugged the well, they discovered a nearly pure stream
Speaker 3: of gas made up of ninety eight percent hydrogen by volume,
Speaker 3: which they've soon routed to produce electricity for like nearby villages,
Speaker 3: and it's still used today. So the reservoir today produces
Speaker 3: about five to fifty tons of hydrogen per year. Most
Speaker 3: electoralizers are probably doing about three to four times more
Speaker 3: than that. So if five tons of hydrogen are produced
Speaker 3: and used in a wind turbine or fuel cell with
Speaker 3: fifty percent efficiency, you're looking at about one hundred megawatt
Speaker 3: hours of electricity, which is what like ten houses being
Speaker 3: powered in the US.
Speaker 2: So not a lot long story, short one thing about
Speaker 2: this project and a point that Mushfika mentioned. So this
Speaker 2: project is now being used as an example and a
Speaker 2: benchmark to start like exploring other places around the world,
Speaker 2: and it's definitely global. And speaking of companies, national oil
Speaker 2: companies in the Middle East are getting involved. They're interested,
Speaker 2: you know, they're experts in a lot of technical aspects
Speaker 2: that apply to extracting gold hydrogen of course, because it's
Speaker 2: similar to extracting oil and other molecules from the ground.
Speaker 2: And so they are now being more vocal and they
Speaker 2: reach out to those startups, those researchers that have experience
Speaker 2: in analyzing a lot of data to find out exactly
Speaker 2: what the potential is, and those national oil companies and
Speaker 2: just oil and gas giants reach out to them or
Speaker 2: vice versa to work together and collaborate so they fill
Speaker 2: the full picture, some provide data, and again with this
Speaker 2: project that is producing today right now, they've found potential
Speaker 2: with similar gas composition because Mushwika mentioned also it's the
Speaker 2: gas composition ninety eight percent hydrogen and the other two
Speaker 2: percent is methane and nitrogen. But ninety percent of hydrogen
Speaker 2: is a lot. It's very pure. But I'll get back
Speaker 2: to that point about hydrogen purity and how it plays
Speaker 2: into emissions costs and just overall projects.
Speaker 1: Well, so actually you've led right there. Let's talk about
Speaker 1: emissions associated with this because I brought up racking. Is
Speaker 1: this racking? We're going to see some weak and you'd
Speaker 1: mentioned methane, and even though it is a small percentage,
Speaker 1: overall it is a very potent greenhouse gas. So tell
Speaker 1: me how clean is it really? And are we talking
Speaker 1: about something that is really part of a transition to
Speaker 1: a clean economy or is this another bridge fuel which
Speaker 1: many people use to refer to natural gas as it's
Speaker 1: something that's on the way to decarbonizing, but maybe not
Speaker 1: the end game.
Speaker 2: So first off, you have now studies and companies who
Speaker 2: are looking into this, doing something called life cycle analysis
Speaker 2: where they look into a project from start to finish
Speaker 2: and see what are the possible emissions that can result
Speaker 2: from the process of extracting gold hydrogen. So you have
Speaker 2: stuff like fugitive emissions and embodied emissions. Now, fugitive emissions.
Speaker 1: Does sound like the ones that escape when you're extracting
Speaker 1: that's it.
Speaker 2: So fugitive emissions are the ones that are attributed to
Speaker 2: like methane, gas, nitrogen or yeah, any gas that escapes
Speaker 2: while you're in the process of like extracting the gold hydrogen.
Speaker 2: Embodied emissions are technically those indirect emissions that come from
Speaker 2: different processes and are attributed to different parts of extracting
Speaker 2: the gold hydrogen. So it's not directly related.
Speaker 1: I mean, it's everything related to the process. Right, It's
Speaker 1: kind of like the equivalent of a scope three.
Speaker 2: But for this exactly that's exactly it. So let's get
Speaker 2: down to whether or not it's clean. So based on
Speaker 2: life cycle analysis studies, they found that it is clean.
Speaker 2: How clean, it's cleaner than most types of hydrogen being produced.
Speaker 2: So in terms of numbers, in a gas mix of
Speaker 2: eighty five percent mole percentage of hydrogen and twelve percent
Speaker 2: nitrogen with around two percent methane, the carbon intensity is
Speaker 2: about zero point four kilograms of CO two per kilogram
Speaker 2: of hydrogen gas. That is extremely low. When you think
Speaker 2: about again other types of hydrogen working up from cleanness
Speaker 2: to less clean and then to what we have today,
Speaker 2: gold hydrogen sits at the lower end, meaning that it's
Speaker 2: the cleanest form of hygroen, or has the potential to
Speaker 2: be the cleanest, because again this is all in terms
Speaker 2: of potential and in theory and based off analysis. When
Speaker 2: we look at green hydrogen or hydrogen produced from machines
Speaker 2: called electrolyzers that split the water into hydrogen atoms and
Speaker 2: oxygen atoms. That's powered by green electricity or renewable electricity
Speaker 2: solar wind, and that's what makes it green hydrogen. Those
Speaker 2: emissions are anywhere between one kilogram of CO two emitted
Speaker 2: perkologram of hydrogen upwards to five kilograms of CO two
Speaker 2: perculogram of hydrogen. Now that's a lot of numbers, but
Speaker 2: just to say that gold hydrogen, it's less than one
Speaker 2: kilogram of CO two emitted percilogram of hydrogen. But that
Speaker 2: depends on hydrogen purity. So when there's less hydrogen in
Speaker 2: the gas composition, there's going to be more methane more nitrogen.
Speaker 2: The more methane rather than hydrogen, that means it's definitely
Speaker 2: going to be a lot more emissions. So it really
Speaker 2: comes down to the gas mixture. But based on studies
Speaker 2: of the most common gas mixture sites that they found
Speaker 2: and they do want to extract from, we're talking about
Speaker 2: zero point five to three kilograms of CO two per
Speaker 2: kilogram of hydrogen extracted. It is also within the guidelines
Speaker 2: of accessing tax credits and definitions in the IRA for example,
Speaker 2: or the Inflation Reduction Act, where they have outlined what
Speaker 2: is considered clean hydrogen. And again to put it into context,
Speaker 2: when we're talking about these numbers, these low numbers for
Speaker 2: gold hydrogen that falls within that definition.
Speaker 1: So let's talk about economic viability, which is the big
Speaker 1: elephant in the room here. So it can be hard
Speaker 1: to determine this with emerging technologies, and I feel like
Speaker 1: this is almost an unfair question, but there is some
Speaker 1: information that we should consider when it comes to extraction.
Speaker 1: So how much is it going to cost and will
Speaker 1: this cost comparison to other sources of production? Are we
Speaker 1: going to get there? And is it going to some
Speaker 1: days the hope that it is cheaper. I'm kind of
Speaker 1: asking a leading question, but my real question is just
Speaker 1: do we see a path to economic viability on gold
Speaker 1: hydrogen that is maybe more compelling than the other sources
Speaker 1: of hydrogen that are out there, given that there is
Speaker 1: so much waste when you make energy from energy.
Speaker 3: Long story short, geological hydrogen developer are targeting the cost
Speaker 3: of a dollar per kilogram of hydrogen as it is
Speaker 3: exiting the processing facilities, but it is unclear whether this
Speaker 3: value is the cost needed to kind of outcompete existing
Speaker 3: methods as you can have alluded to, or if the
Speaker 3: tech actually can achieve this cost. It's a little too
Speaker 3: early to kind of make either claim, but we can
Speaker 3: look at kind of what is driving the costs. There
Speaker 3: is I would say three main things to look at.
Speaker 3: The first thing, obviously, is capital expense. Geological hydrogen projects
Speaker 3: are very capital intensive with huge, like long bill times,
Speaker 3: so a project can easily cost five hundred million dollars
Speaker 3: to a billion dollars, depending on how many wells you're building,
Speaker 3: where in the world, it is, how deep each well is,
Speaker 3: what kind of processing of the gas you need, what
Speaker 3: the gas make sure actually is if you have more contaminants,
Speaker 3: like Sam you mentioned the methae, the nitrogen is you're
Speaker 3: going to have to spend a lot of energy and
Speaker 3: effort to kind of separate out the gas to make
Speaker 3: it like a pure stream of hydrogen. So capital costs
Speaker 3: can easily equal to like twenty cents per kilogram of hydrogen.
Speaker 3: And as I mentioned, you have a kind of a
Speaker 3: pure stream scenario and a mixed gas stream scenario. Operational
Speaker 3: expenses grow almost tenfold in a mixed gas scenario as
Speaker 3: opposed to one with a pure gas stream, and this
Speaker 3: is mainly driven by energy costs of gas processing, the
Speaker 3: need to kind of maintain and replace the equipment, and
Speaker 3: talking to these industry folks, the biggest expense is like
Speaker 3: the membranes and the equipment you're using to separate the gas.
Speaker 3: Additional costs can accrue upon like the depletion of the well,
Speaker 3: which then needs to be plugged or decommissioned, which can
Speaker 3: add like upwards of a one hundred thousand dollars per well.
Speaker 3: But it's interesting because the revenue projections people have given
Speaker 3: or disclosed to me do make this seem like it
Speaker 3: is worthwhile. Yeah, you're spending almost a billion dollars building
Speaker 3: a project, but the potential revenue that can come into
Speaker 3: the next like fifteen twenty years as the gas is
Speaker 3: being depleted is quite attractive.
Speaker 2: And to add to Mashrika's point, So in an actual
Speaker 2: what it's going to cost is hundreds of millions of
Speaker 2: dollars to extract gold hydrogen, and it really depends on
Speaker 2: the different sites, different purity levels. But those are estimates.
Speaker 2: You know, we're not gonna know for sure until we
Speaker 2: see a project come to fruition. And actually this is
Speaker 2: definitely speaking from experience and what we've seen with green
Speaker 2: hydrogen again bringing it as an example and what comes
Speaker 2: down to it. In the industry, when you think about costs,
Speaker 2: people are interested in how much a kilogram of hydrogen costs.
Speaker 2: So when we think about gold hydrogen, with certain assumptions,
Speaker 2: not even factoring in transport costs, which is that separate issue,
Speaker 2: geologic hydrogen can go from zero point five dollars to
Speaker 2: around just above two dollars per kilogram of hydrogen in
Speaker 2: terms of cost. Now, again that's an estimate with a
Speaker 2: lot of assumptions attached to it. When we look at
Speaker 2: green hydrogen, with some projects that we've seen actually get
Speaker 2: awarded funding and actually get a sign like how much
Speaker 2: it's going to cost and how with the subsidies it
Speaker 2: costs upward of twelve dollars per which is extremely expensive.
Speaker 2: When we think about gray hydrogen or the hydrogen being
Speaker 2: produced today, it's at one dollar per kilogram of hydrogen
Speaker 2: that's mostly in the US because of cheap natural gas prices,
Speaker 2: and you can go up to three dollars per kilogram
Speaker 2: of hydrogen. You want to make gold hydrogen competitive, so
Speaker 2: that's why, like Mushfika said, we want to target one
Speaker 2: dollar or less than one dollar percilogram of hydrogen. And
Speaker 2: based on estimates right now, they think geologic hydrogen can
Speaker 2: be cheaper, so it can be competitive. But what we've
Speaker 2: seen so far from green hydrogen, it's more than six
Speaker 2: times as much as hydrogen being produced today.
Speaker 1: So Sammy, I love that you brought up transport because
Speaker 1: this relates to more than gold hydrogen. This molecule it's smaller, lighter,
Speaker 1: more flammable than natural gas. And meanwhile, you hear the
Speaker 1: industry talks so much about how we're going to use
Speaker 1: a lot of the same infrastructure and we're going to
Speaker 1: put them on the same ships and use the same pipes,
Speaker 1: and I know that we have on this show talked
Speaker 1: about how that's not immediately going to be possible. They'll
Speaker 1: be quite a bit of retrofitting needed so in order
Speaker 1: to make this form of hydrogen possible to be used
Speaker 1: around the world, because think about the fact that now
Speaker 1: we can no longer locate the production facilities near where
Speaker 1: they need to be. The hydrogen is where it is
Speaker 1: in nature. How's the transportation story coming along, and have
Speaker 1: there been any breakthroughs there on the I guess technology side,
Speaker 1: but essentially, can we contain that molecule to get it
Speaker 1: where it needs to go?
Speaker 2: That's a great question. And again, the issue with transports
Speaker 2: ties back to getting it where it needs to be.
Speaker 2: So we're talking about demand at the same time, which
Speaker 2: has been a topic for hydrogen for a long time.
Speaker 2: Now issues with demand, and it's good to see now
Speaker 2: at different forums and summits like the recent one that
Speaker 2: happened in Paris, the Natural Hydrogen Summit, it was good
Speaker 2: to see that they're thinking about demand at this point,
Speaker 2: maybe not as much as they need to be, but
Speaker 2: it is a topic of discussion because they can't control
Speaker 2: where gold hydrogen is being extracted from those sites are static,
Speaker 2: so you're really limited to those sites or specific sites.
Speaker 2: And so now you think about, okay, we after we extract,
Speaker 2: after we're done with all of that, how can we
Speaker 2: get it where it needs to go? And how much
Speaker 2: it's going to cost. When I go back to the
Speaker 2: cost that I mentioned, that wasn't even accounting for transport costs,
Speaker 2: which can reach up to seven dollars per kilogram, which
Speaker 2: is a lot when you think about it. And when
Speaker 2: we talk about transport, one of the most common ways
Speaker 2: that they're thinking about right now, or that they were
Speaker 2: mentioned in Europe specifically, we're pipelines existing gas pipelines that
Speaker 2: maybe they can transport to now it would make economic
Speaker 2: sense if they're in large enough quantities like the hydrogen
Speaker 2: being transported.
Speaker 1: Are we seeing any of these projects happening yet, Are
Speaker 1: we seeing pipelines being retrofitted effectively?
Speaker 2: And where in the world right so for other forms
Speaker 2: of clean hydrogen, green and blue, how they're being transported.
Speaker 2: We've seen pipelines work, yes, but still not well enough
Speaker 2: for it to really make economic sense. And also there's
Speaker 2: a lot of issues around it being a very flammable source.
Speaker 2: It's very hard to deal with hydrogen, and it's complicated
Speaker 2: because it takes up more volume than other types of gases.
Speaker 1: So this is a tough question. So then I guess
Speaker 1: we're getting to a place where you might be actually
Speaker 1: looking at the demand sources, potentially going to where the
Speaker 1: source of the hydrogen actually is instead of the other
Speaker 1: way around. So then let's talk a little bit about extraction.
Speaker 1: Are there any synergies with any other industries, because if
Speaker 1: you're out there looking for hydrogen, you may come up short.
Speaker 1: You brought up a few times that this is something
Speaker 1: where we're still looking for the deposits, we're still trying
Speaker 1: to figure out how to extract it. Is there any
Speaker 1: chance that a company that's out there searching for something
Speaker 1: else and try and extract something else might actually stumble
Speaker 1: upon it? And where did those synergies lie?
Speaker 3: So companies that are extracting hydrogen, they are also hoping
Speaker 3: to extract helium, which often is co founded with hydrogen.
Speaker 3: And the thing about helium is that helium is currently
Speaker 3: in shortage across the world for a lot of things.
Speaker 3: Obviously you see your fancy party balloons, but also helium
Speaker 3: is used for a lot of other things like medical
Speaker 3: imaging and labs. And the biggest thing to note here
Speaker 3: is that when you co produce helium, you can almost
Speaker 3: double the revenue that you're getting back using a gold
Speaker 3: hydrogen project, and most of that it's because the helium
Speaker 3: is so so expensive right now. Will the cost of
Speaker 3: helium go down as a lot of these projects are
Speaker 3: producing helium, then we have a different problem where we're
Speaker 3: at an oversupply and low demand potentially, But talking to
Speaker 3: people in the industry, it seems like they've already accounted
Speaker 3: for a decreasing prices in their economic modeling for projects.
Speaker 3: The helium could be a huge boon for the gold
Speaker 3: hydrogen industry as a whole. One project that we have
Speaker 3: profiled extensively in my note is a Mazlim project in
Speaker 3: Spain being created by Helius Aragon, and that project model's
Speaker 3: production of helium to be nearly two eight hundred tons
Speaker 3: in twenty twenty nine, and that progressive few decreases to
Speaker 3: thirty one tons in twenty fIF three. For contact, that
Speaker 3: is two percent of the gas by volume that the
Speaker 3: project is expecting to produce, So two percent of helium
Speaker 3: is going to bring in almost fifty percent of the
Speaker 3: revenue that the project as a whole is expected to
Speaker 3: bring in.
Speaker 1: Because when you see this industry alignment, this is where
Speaker 1: you see some really great breakthroughs. I mean, batteries is
Speaker 1: a great example. When you see them in consumer goods,
Speaker 1: you see them for storage, you see them for electric vehicles,
Speaker 1: So lithium ion batteries, then everybody's got their eyes on them,
Speaker 1: and then we see massive cost of clients. So there's
Speaker 1: a lot of hype around hydrogen and we'll see what
Speaker 1: comes to pass. This is definitely an area under development.
Speaker 1: So for those who have actually been to a BNF summit,
Speaker 1: you're going to notice that we have debates at the
Speaker 1: summit and it's actually one of my favorite types of
Speaker 1: presentations that our analysts do at these events. So, given
Speaker 1: this is a space with a lot of hype around it,
Speaker 1: I want one of you to take the side of
Speaker 1: the hypeman for hydrogen. I want the other to take
Speaker 1: the side of the skeptic and tell me why. And
Speaker 1: I think, Sammy, you decided you were going to take
Speaker 1: the hype man side, and Muspeka you're going to take
Speaker 1: the skeptic. And you know what, because I want to
Speaker 1: end on a positive note. Mispeka, I'm going to make
Speaker 1: you go first with the skeptic argument, specifically for geologic hydrogen.
Speaker 3: Yeah, for sure. You know it's not news that I
Speaker 3: am a skeptic of hydrogen and specifically for gold hydrogen.
Speaker 3: The main thing for me, I think is only one
Speaker 3: project has been like fully completed at commercial level. So
Speaker 3: until we see more projects at least produce hydrogen and
Speaker 3: actually sell it, I'm not buying this. Secondly, I think
Speaker 3: the bigger thing is hydrogen demand as a whole is struggling.
Speaker 3: You can see that supply exists, but only like I
Speaker 3: think twelve percent of all the supplies that's expected to
Speaker 3: come out actually has contracted optakes, and not even all
Speaker 3: of them are binding optakes. So until you can show
Speaker 3: me the demand for hydrogen and show me how people
Speaker 3: are actually going to pay the amount of money that
Speaker 3: they're paying for these premiums, I just don't see how
Speaker 3: gold hydrogen as a whole is going to take off.
Speaker 3: It has huge potential, I admit I agree with that
Speaker 3: it has much potential, but until they transport kinks, the
Speaker 3: issues with demand, the issues with actually drilling and finding
Speaker 3: hydrogen can be done economically. I just don't see how
Speaker 3: this becomes like a huge, multi billion dollar market.
Speaker 2: Okay, sammy counter right, that's tough to counter. But here's
Speaker 2: my thing, innocent, I provement guilty. So so far, what
Speaker 2: we have with gold hydrogen or geologic or natural hydrogen,
Speaker 2: it's not a lot. I agree. There's a lot of
Speaker 2: potential though, and based on estimates right now, and it
Speaker 2: always starts with estimates and overviews and just sizing up
Speaker 2: the potential, there is a lot. Here's why I think
Speaker 2: geologic hydrogen could work in the industry right now. We
Speaker 2: are already seeing sites and where they found a lot
Speaker 2: of hydrogen potentially with a lot of high purity levels,
Speaker 2: gold hydrogen has the potential to be the cheapest of
Speaker 2: all the other types of hydrogen. A problem that was
Speaker 2: mentioned is getting it where it needs to be. We're
Speaker 2: already seeing projects though that are close to demand centers
Speaker 2: in Europe which could solve that challenge. So there's always
Speaker 2: a solution to a problem. And when we think about
Speaker 2: emissions associated because at the end of the day, the
Speaker 2: two main things we talk about are the economics and
Speaker 2: the environmental impact. So we've seen based on the estimates
Speaker 2: that it has the potential to be really cheap, and
Speaker 2: we've seen based on estimates and life cycle analysis, it
Speaker 2: could be really clean, cleaner than any other form of
Speaker 2: hydrogen we've seen today being produced. I think that's promising.
Speaker 2: When you see these numbers based on extensive and thorough analysis,
Speaker 2: this bodes well to at least start looking into this
Speaker 2: and start developing these projects. It could work or it couldn't,
Speaker 2: but it's always good to see numbers like this. And finally,
Speaker 2: when we talk about the potential how much is there,
Speaker 2: because we do need a certain amount of hydrogen to
Speaker 2: be produced to decarbonize or replace the unclean hydrogen weap today.
Speaker 2: One of the numbers that we mentioned was an order
Speaker 2: of magnitude. There's possible in the world to be up
Speaker 2: to billions of tons of hydrogen. We don't know yet,
Speaker 2: but if we assume just two percent a fraction of
Speaker 2: what can be extracted from those accessible sites, I think
Speaker 2: that's really promising, and at this stage it's safe to
Speaker 2: be optimistic, which I am at.
Speaker 1: This point in the industrial application to decarbonize these hard
Speaker 1: to abate sectors that certainly exist. So maybe this will
Speaker 1: be a part of that puzzle. Sammy Musfica, thank you
Speaker 1: so much for joining today.
Speaker 2: Thank you very much, Sana, thanks for having me.
Speaker 1: Today's episode of Switched On was produced by Cam Gray
Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a
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Speaker 3: M