The Biden administration and several companies are eyeing a new way to produce hydrogen: drilling for it underground.
“Gold” hydrogen got a boost in September from the Department of Energy’s Advanced Research Projects Agency-Energy, which announced a $20 million funding opportunity. The agency currently is selecting projects. The U.S. Geological Survey and the Colorado School of Mines launched a gold hydrogen research consortium that includes Chevron and BP the same month.
Multiple startups, meanwhile, are moving forward this year on projects. Australia-based HyTerra is planning to soon drill for hydrogen at a well in Kansas on its own. Koloma, which publicly discussed its activities last summer for the first time and is backed by Bill Gates’ Breakthrough Energy, is actively looking for places in the U.S. to drill for gold hydrogen.
While the technology is still in its early stages, experts say it could be important because it potentially offers an abundant amount of cheap and clean fuel to help reach President Joe Biden’s climate targets.
“The potential is huge,” said Geoffrey Ellis, a USGS research geologist.
Gold hydrogen envisions extracting the fuel through a well, similar to how natural gas and oil are pulled from the earth. There are multiple ways hydrogen gas forms underground such as when iron-rich rocks interact with water. Hydrogen gas can then flow into subsurface reservoirs, where it can be extracted.
According to Ellis, the “most probable” amount of gold hydrogen in the world is 5 million megatons. If just 2 percent could be extracted, then drilling could produce the amount of hydrogen needed to reach net-zero emissions for 200 years, he said.
Even though most of the world’s gold hydrogen is too far offshore to drill or in too small quantities for commercial interest, there are pockets where it could be extracted, according to Ellis.
His “first-of-its-kind” geologic model aims to help find U.S. locations with exploitable hydrogen reserves.
The model pinpoints areas that have the ingredients for gold hydrogen like abundant iron-rich rocks and porous sandstone that could serve as reservoirs. So far, parts of the Great Plains and Upper Midwest known as the Midcontinental Rift have been identified as potential prime locations for gold hydrogen extraction.
The model, however, can’t tell companies where exactly to drill because it maps 50-kilometer areas.
“At [the 50-kilometer] resolution, that doesn’t really tell you where you should locate a drilling location,” he said.
Regardless, startups are moving forward with hydrogen drilling efforts.
HyTerra is also partnering with Denver-based Natural Hydrogen Energy on a Nebraska site, Project Geneva, that the companies say is the world’s first wildcat well dedicated to gold hydrogen. At the Kansas site, HyTerra announced in December it completed an assessment of the amount of hydrogen and helium resources underground. The company could begin drilling this year.
Another Denver-based company, Koloma, is exploring places in the U.S. where it can drill for hydrogen. The company backed by Breakthrough Energy announced in July that it raised $91 million.
“[Gold] hydrogen can be produced 100 percent domestically using American talent, know how, and equipment, making it a key pillar of domestic energy independence,” said Paul Harraka, Koloma’s chief business officer, in a statement to E&E News.
Koloma has yet to say where exactly it is drilling for gold hydrogen or elaborate on plans for commercialization.
To date, the village of Bourakébougou in Mali has the only well in the world that is extracting hydrogen from underground and using it as fuel.
The well is producing about 3 barrels of oil equivalent or about a tenth of the output of a small wind turbine, according to Arnout Everts, a geoscientist and freelance energy consultant for AEGeo. That’s enough energy to provide electricity to the small village but not enough to be commercialized.
Everts wrote in an email to E&E News that it is “not possible” to increase the amount of hydrogen that accumulates in the Mali well because of low pressure.
“The only way to scale up production to offtake levels similar to natural gas development, would be to drill hundreds or even thousands of wells,” he wrote.
Gold hydrogen’s cost
Despite existing challenges, many gold hydrogen companies say they could eventually drill cheaply for fuel.
Koloma, for example, says gold hydrogen could be a “low-cost, low-carbon” solution on its website. The startup estimates gold hydrogen production could emit 0.1 kilogram of CO2 equivalent per kilogram of hydrogen produced, less than today’s fossil fuel-reliant hydrogen production. The company did not respond to questions about the potential cost of gold hydrogen.
Other startups like the Texas-based Cemvita say gold hydrogen could cost under $1 per kilogram — less than the cost of hydrogen made from fossil fuels or electricity. A team of scientists concluded in a 2018 paper — in the International Journal of Hydrogen Energy on the Mali hydrogen well — that gold hydrogen could be “2 to 10 times” cheaper than traditional hydrogen production methods.
DOE estimates that “green” hydrogen produced with electricity from renewable energy costs about $5 per kilogram, while “blue” hydrogen made with fossil fuels and carbon capture costs about $1.60 to $1.64 in 2020 dollars.
If cost projections for the gold variety are accurate, “we could be talking about some very economical hydrogen,” said Martin Tengler, head of hydrogen research for BloombergNEF. The clean energy research firm has not yet assessed the potential cost of gold hydrogen.
Low-cost gold hydrogen could also be relevant for the Biden administration, which is targeting a cost of clean hydrogen of $1 per kilogram by 2031.
DOE referred questions about the cost of gold hydrogen to the Advanced Research Projects Agency-Energy, which pointed E&E News to a funding opportunity announcement.
The announcement says ARPA-E’s support for gold hydrogen efforts “will lead to hydrogen production with the lowest cost” of less than $1 per kilogram of hydrogen.
Ellis of the U.S. Geological Survey said current gold hydrogen cost estimates are “pretty optimistic,” adding that it’s too early to determine how expensive it will be to buy.
Tax credit
The cost estimates do not consider the impact of a new federal tax credit in the Inflation Reduction Act, 45V, for low-emitting hydrogen production. If gold hydrogen turns out to produce low emissions as startups claim, it could theoretically qualify for the incentive.
In December, the Treasury Department released draft guidance for companies wanting to harness the credit. The 45V guidance is currently in a comment period and is expected to be finalized this year.
The rules outline two ways for gold hydrogen drillers to leverage the incentive.
Hydrogen drillers could wait for the possibility that DOE’s Argonne National Laboratory adds hydrogen drilling to the 45VH2-GREET model, which the federal government is using to calculate emissions from specific hydrogen projects. The model considers data such as the type of fuel used to make hydrogen as well as emissions from using grid power to make hydrogen.
The current version of the model considers eight hydrogen production methods, but hydrogen drilling is not one of them.
Ellis said DOE recently provided funding to Argonne to update the 45VH2-GREET model for hydrogen drilling. A spokesperson for the lab declined to comment on grants to update its model.
Alternatively, hydrogen drillers could petition the Treasury secretary for a special provisional emissions rate to receive the tax credit. Under current 45V tax guidance, a company making hydrogen using a method not included in the 45VH2-GREET model could receive the credit if it files such a petition and receives low emissions calculations for its project.
Climate concerns
Morgan Rote, director of U.S. climate at the Environmental Defense Fund, said there are some potential environmental concerns with hydrogen drilling, including the possibility that planet-warming methane is extracted along with hydrogen.
“It’s too early to be issuing provisional emissions rates for a [gold] hydrogen pathway,” Rote said.
Tengler of BloombergNEF said “there are questions around the purity” of gold hydrogen, considering that natural gas could also be pulled up during the extraction process in some cases.
“Is it 20 percent hydrogen and 80 percent natural gas or something else?” asked Tengler.
A peer-reviewed study by Stanford University energy science and engineering professor Adam Brandt in Joule that said it is a “first assessment” of gold hydrogen’s emissions found that drilling for the fuel could have an emissions level of 0.37 kilogram of CO2 equivalent per kilogram of hydrogen produced. That would be in a scenario where 85 percent of extracted gas is hydrogen and 1.5 percent is methane.
In a scenario where 75 percent of drilled gas is hydrogen and 22.5 percent is methane, gold hydrogen’s emissions would increase to 1.5 kilograms of CO2 equivalent per kilogram of hydrogen, according to the study.
DOE says that today’s most common way to produce hydrogen — using natural gas without capturing emissions — releases a significant amount of emissions, 10 kilograms of CO2 equivalent per kilogram of hydrogen.
While Brandt’s estimates for gold hydrogen would be significantly cleaner than hydrogen production without carbon capture, they would result in much different tax credits.
Under the Inflation Reduction Act, a gold hydrogen company could get the maximum $3-per-kilogram 45V tax subsidy if emissions are 0.37 kilogram of CO2 equivalent per kilogram of hydrogen produced. But a smaller 75-cents-per-kilogram incentive would be available if emissions increase to 1.5 kilograms.
The Joule study also says the sources of energy for gas processing and compression equipment are a key factor in hydrogen drilling’s emissions.
Rote said that hydrogen drilling in some locations could also raise air quality concerns and receive pushback from local communities.
Everts of AEGeo said some hydrogen drilling projects could involve hydraulic fracturing, a process that some say can cause air pollution and water contamination.
Other environmentalists note that any hydrogen gas that leaks during the drilling process could further warm the planet because hydrogen is an indirect greenhouse gas. Hydrogen gas increases the life span of methane in the atmosphere, for example.
Nevertheless, Koloma and other companies maintain that hydrogen drilling can be environmentally friendly.
“[Gold] hydrogen represents an extraordinary opportunity to produce clean hydrogen in a way that is not only low carbon, but also low land footprint, low water footprint and low energy consumption,” said Harraka, Koloma’s chief business officer.
