January 8, 2025 • 29 mins
At first glance, gold hydrogen could be a game changer. This naturally occurring molecule, which is found in reservoirs below the Earth’s surface, has the potential to be less carbon intensive and less expensive than man-made hydrogen. But all that glitters is not necessarily gold, and a myriad of factors, from possible synergies with helium extraction to ongoing technical challenges, could still tip the scales either toward or away from gold hydrogen’s economic viability. On today’s show, Dana Perkins is joined by Sami Alisawi from BNEF’s Hydrogen team and Musfika Mishi from BNEF’s Technology and Innovation team to discuss findings from their recent report “Technology Radar: Geologic Hydrogen”.
Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal or on bnef.com
Links to research notes from this episode:
Technology Radar: Geologic Hydrogen - https://www.bnef.com/insights/35101
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
This is Dana Perkins and you're listening to Switched on
the BNF podcast. The hydrogen industry loves to assign colors
to different production sources. Some of the names are instinctual,
like green hydrogen, which is produced from renewable energy. Today
we're talking about gold hydrogen, and with a name like that,
we would assume that it's at the top of the stack.
(00:22):
So what makes geologic hydrogen gold? Well, firstly, it's naturally
occurring rather than man made, and it has the potential
to be less carbon intensive and importantly less expensive than
any other form of hydrogen. However, there are very limited
successful examples of extraction and utilization to date, and the
(00:43):
economics are nowhere near where they need to be. So
will technology improvements and synergies with the helium industry help
unlock its potential? To answer that question? Today, I am
joined by Sammy Alisowi from BNF's Hydrogen team, alongside Mushfka
Mishi from our Technology and Innovation team. They share some
(01:04):
of the research found in their recent report Technology Radar
Geologic Hydrogen. BNF clients will be able to find this
at BENF go on the Bloomberg Terminal or at benf
dot com. So let's discuss geologic hydrogen and whether it
should truly be considered gold. Mushwika, thanks for joining us,
(01:32):
Thanks for having me and Sammy great having you here too.
Speaker 2 (01:35):
Thank you for having me as well.
Speaker 1 (01:36):
Here we go. This episode is going to be gold.
We're talking about gold hydrogen. We did a show many
moons ago at this point, I want to say it
was well over a year ago where we went through
all of the colors associated with hydrogen and each of
them has invariably a different source that the hydrogen came from.
So today we're going to talk about gold hydrogen and
(01:57):
to give a bit of additional color and open in
tended so some context to that. It actually represents geologic hydrogen.
So let's start off with this definition. What is gold
or geologic hydrogen?
Speaker 3 (02:11):
Yeah, so geologic hydrogen, also known as clear why native orange,
or as you said, gold hydrogen, is naturally occurring hydrogen
that forms underground and often builds up in reservoirs within
the Earth's crust. But let's break that down a little further, right, So,
although the mechanisms of hydrogen production is uncertain, there's three
kind of big hypotheses that have been thrown around or proposed.
(02:32):
Researchers agree that at least some hydrogen is produced by
each pathway, but which pathway is dominating unclear. So you've
got the first one, which is radiolysis. It's basically a
radioactive decay of heavy metal securanium or thorium, and essentially
that radioactive decay can split water to become multiple particles
like hydrogen, hydroxide, all of that, and this occurs on
(02:53):
a geological time scale. The second one, which I think
is like the most widely accepted one, is serpentization, and
that when water reacts with iron rich automatic rocks like
olivene under really high temperatures and the iron is reduced
and in the process of reduction it releases hydrogen. There's
some research out there that suggests that some eighty percent
(03:13):
of the Earth's hydrogen could be a result of this process.
The third one, which is highly debated but worth mentioning,
is mental degassing, and that's when plate techton activity can
essentially trigger the degassing of hydrogen that's already present in
the Earth's core and mantle from way back, you know,
the Big Bang.
Speaker 1 (03:30):
So I know that we benef like to actually refer
to hydrogen by the fuel source, so we tend to
refer to things as geologic hydrogen. I'm going back to
these colors again, clear, white, orange, gold, What is the
most popular one used?
Speaker 3 (03:44):
I would say gold hydrogen is the one that mainstream
media has taken up, but we like to still refer
to it as geological age two.
Speaker 2 (03:51):
There's one more. Natural hydrogen is pretty popular. There's a
summit in Pairs that happened a couple weeks ago that
I attended, and the summit is basically called Natural Hydrogen
Summits or HNT. So natural hydrogen was also a very
popular term.
Speaker 1 (04:06):
So surely if natural hydrogen was easy to extract and plentiful,
there would not be need for companies to be making
hydrogen from other fuel sources like renewables or natural gas
or nuclear. So I could keep going. But hydrogen made
from so many different sources. So I want to know
how much of an opportunity is this and how much
hydrogen are we talking about? Can you put this into context?
(04:27):
You know, is this going to be Could it be
the dominant source of hydrogen at some point or will
it always be kind of on the fringe.
Speaker 2 (04:35):
So again, yeah, we're talking about a fraction that's accessible
and that amounts to again in theory, we don't know
how much, but it's in the millions per year. And
how much that is is that a lot, like is
a million a year a lot.
Speaker 1 (04:48):
For example years of what what's the unit of measure.
Speaker 2 (04:50):
Tons per year? And to put it into context, hydrogen
consumed nowadays, the unabated or the not clean hydrogen every
year is around nineteen million tons per year. So yeah,
just to put into context that when we still talk
about a fraction of what's out there or what's possibly
out there, it's two things. One, it's very theoretical, but
(05:12):
it has people optimistic because even a fraction is saw
a lot.
Speaker 1 (05:16):
Okay, so we have it out there and it can
in theory be extracted, but you have pointed out this
may be very difficult to get to. So what are
the technical barriers that are keeping us from being able
to get it out of the ground? Basically, why do
we not have this yet?
Speaker 3 (05:31):
So in theory, like oil and gas, geological hydrogen could
be extracted from the earth using drilled wells, and there's
kind of three main reservoirs or like stores of hydrogen
people are investigating. So there's traps. That's the one that's
kind of most akin to oil and gas. It's an
accumulation of hydrogen that becomes trapped below like an impermeable
(05:53):
layer of rock over time. And then there's the direct
kind of root, which some developers are aiming to drill
directly into iron ritual where cerpertalization is occurring and extract
the H two as it is being generated. Theoretically, that
could make geological hydrogen a renewable source of energy. The
third bit, which I haven't heard a lot of activity
being but it has been thrown around as a possibility,
(06:14):
is stimulated hydrogen. That's a type of development where you
could drill where it would potentially be produced, and then
stimulated artificially by injecting hot water and produce it artificially.
That's the one that's being referred to as orange hydrogen.
Speaker 1 (06:28):
This doesn't sound totally dissimilar from fracking. Am I right
in drawing that parallel?
Speaker 3 (06:33):
You could do that parallel? Yeah, and I have also
asked that question to people in the industry, But we're
not there yet. We're not at the point where you
could even consider stimulating the production of hydrogen. We're still
at the point where just finding traps is becoming the
main topic.
Speaker 1 (06:49):
Okay, so we're trying to locate where in the world
these deposits are and then figure out how to get
them out. Do we have an idea of where they
are they evenly distributed? Everybody's got this or is it
really constant in some countries?
Speaker 3 (07:01):
So I do have to highlight that current hotspots of
geological hydrogen are a function of where it has historically
been measured, rather than where it could be found in
the future. So currently today scientists have recorded resources in
a number of geographies, including the US, Australia, Brazil, Canada, Mali, Oman,
the Philippines, Russia. Most of the recordings we have so
(07:22):
far of actual national hydrogen artificially does concentrate in Eastern
Europe and the general Northern Asia area, and that's because
researchers were sponsored by the Soviet Union Soviet government rather
to find another kind of abiogenic source of producing oil
way back in the Cold War times. So where can
(07:43):
we find it? Unsure? But it has been found kind
of all across the world, and most of the activity
today does concentrate within the general US North America area
in Australia.
Speaker 1 (07:52):
I mean when you rattled off that first list of countries,
those are the ones that are actively involved in other
forms of hydrogen. So it's not surprising that kind of
all eyes around hydrogen there, which then leads me to
what companies have their eyes on this. Are they the
same players that are exploring green hydrogen that made from
renewables or those that are coming from blue hydrogen, which
(08:14):
is natural gas and carbon capture and storage. Are they
the same companies that are investigating other sources of hydrogen
and actually energy made from energy or are they completely
different companies.
Speaker 3 (08:27):
Yeah, that's a very good question. Today we've counted around
fifty companies that are operating in this gold hydrogen industry,
headquartered mainly again in North America, Western Europe, Australia, and
I think the best way to segment the market would
be within three main categories. So obviously, you have your
pure play explorers that are prospecting for large reservoirs of hydrogen.
(08:47):
You also have your oil and gas and you're mining
like huge energy conglomerates that are funding the research and
development into the sector. But you also have this new
sector of people. We show these service providers that are
hoping to support exploration activities with gas separation equipment, geological surveying,
modeling tools, providing other geospatial data, or just like general
(09:08):
like EPCs, which is engineering and procurement construction of folks.
Speaker 1 (09:12):
Okay, so you've said in theory a few times on
this show, but there is a case of successful extraction
in Mali. Can you explain kind of how that came about,
how recently it was, and what they're doing there.
Speaker 3 (09:24):
Yeah, so it's actually a pretty interesting story. So essentially,
in nineteen eighty seven, hydrogen was accidentally discovered when a
cigarette of an engineer drilling water wells calls an explosion.
The well back then was kind of deemed useless and cemented,
But in twenty twelve, this company based out of Canada, Hydroma,
purchased the rights to explore in the region. So when
(09:45):
they unplugged the well, they discovered a nearly pure stream
of gas made up of ninety eight percent hydrogen by volume,
which they've soon routed to produce electricity for like nearby villages,
and it's still used today. So the reservoir today produces
about five to fifty tons of hydrogen per year. Most
electoralizers are probably doing about three to four times more
(10:06):
than that. So if five tons of hydrogen are produced
and used in a wind turbine or fuel cell with
fifty percent efficiency, you're looking at about one hundred megawatt
hours of electricity, which is what like ten houses being
powered in the US.
Speaker 2 (10:19):
So not a lot long story, short one thing about
this project and a point that Mushfika mentioned. So this
project is now being used as an example and a
benchmark to start like exploring other places around the world,
and it's definitely global. And speaking of companies, national oil
companies in the Middle East are getting involved. They're interested,
you know, they're experts in a lot of technical aspects
(10:40):
that apply to extracting gold hydrogen of course, because it's
similar to extracting oil and other molecules from the ground.
And so they are now being more vocal and they
reach out to those startups, those researchers that have experience
in analyzing a lot of data to find out exactly
what the potential is, and those national oil companies and
(11:01):
just oil and gas giants reach out to them or
vice versa to work together and collaborate so they fill
the full picture, some provide data, and again with this
project that is producing today right now, they've found potential
with similar gas composition because Mushwika mentioned also it's the
gas composition ninety eight percent hydrogen and the other two
(11:24):
percent is methane and nitrogen. But ninety percent of hydrogen
is a lot. It's very pure. But I'll get back
to that point about hydrogen purity and how it plays
into emissions costs and just overall projects.
Speaker 1 (11:37):
Well, so actually you've led right there. Let's talk about
emissions associated with this because I brought up racking. Is
this racking? We're going to see some weak and you'd
mentioned methane, and even though it is a small percentage,
overall it is a very potent greenhouse gas. So tell
me how clean is it really? And are we talking
(11:57):
about something that is really part of a transition to
a clean economy or is this another bridge fuel which
many people use to refer to natural gas as it's
something that's on the way to decarbonizing, but maybe not
the end game.
Speaker 2 (12:11):
So first off, you have now studies and companies who
are looking into this, doing something called life cycle analysis
where they look into a project from start to finish
and see what are the possible emissions that can result
from the process of extracting gold hydrogen. So you have
stuff like fugitive emissions and embodied emissions. Now, fugitive emissions.
Speaker 1 (12:32):
Does sound like the ones that escape when you're extracting
that's it.
Speaker 2 (12:35):
So fugitive emissions are the ones that are attributed to
like methane, gas, nitrogen or yeah, any gas that escapes
while you're in the process of like extracting the gold hydrogen.
Embodied emissions are technically those indirect emissions that come from
different processes and are attributed to different parts of extracting
the gold hydrogen. So it's not directly related.
Speaker 1 (12:57):
I mean, it's everything related to the process. Right, It's
kind of like the equivalent of a scope three.
Speaker 2 (13:01):
But for this exactly that's exactly it. So let's get
down to whether or not it's clean. So based on
life cycle analysis studies, they found that it is clean.
How clean, it's cleaner than most types of hydrogen being produced.
So in terms of numbers, in a gas mix of
eighty five percent mole percentage of hydrogen and twelve percent
(13:24):
nitrogen with around two percent methane, the carbon intensity is
about zero point four kilograms of CO two per kilogram
of hydrogen gas. That is extremely low. When you think
about again other types of hydrogen working up from cleanness
to less clean and then to what we have today,
gold hydrogen sits at the lower end, meaning that it's
(13:45):
the cleanest form of hygroen, or has the potential to
be the cleanest, because again this is all in terms
of potential and in theory and based off analysis. When
we look at green hydrogen or hydrogen produced from machines
called electrolyzers that split the water into hydrogen atoms and
oxygen atoms. That's powered by green electricity or renewable electricity
(14:05):
solar wind, and that's what makes it green hydrogen. Those
emissions are anywhere between one kilogram of CO two emitted
perkologram of hydrogen upwards to five kilograms of CO two
perculogram of hydrogen. Now that's a lot of numbers, but
just to say that gold hydrogen, it's less than one
kilogram of CO two emitted percilogram of hydrogen. But that
(14:27):
depends on hydrogen purity. So when there's less hydrogen in
the gas composition, there's going to be more methane more nitrogen.
The more methane rather than hydrogen, that means it's definitely
going to be a lot more emissions. So it really
comes down to the gas mixture. But based on studies
of the most common gas mixture sites that they found
(14:47):
and they do want to extract from, we're talking about
zero point five to three kilograms of CO two per
kilogram of hydrogen extracted. It is also within the guidelines
of accessing tax credits and definitions in the IRA for example,
or the Inflation Reduction Act, where they have outlined what
is considered clean hydrogen. And again to put it into context,
(15:07):
when we're talking about these numbers, these low numbers for
gold hydrogen that falls within that definition.
Speaker 1 (15:13):
So let's talk about economic viability, which is the big
elephant in the room here. So it can be hard
to determine this with emerging technologies, and I feel like
this is almost an unfair question, but there is some
information that we should consider when it comes to extraction.
So how much is it going to cost and will
this cost comparison to other sources of production? Are we
(15:36):
going to get there? And is it going to some
days the hope that it is cheaper. I'm kind of
asking a leading question, but my real question is just
do we see a path to economic viability on gold
hydrogen that is maybe more compelling than the other sources
of hydrogen that are out there, given that there is
so much waste when you make energy from energy.
Speaker 3 (15:57):
Long story short, geological hydrogen developer are targeting the cost
of a dollar per kilogram of hydrogen as it is
exiting the processing facilities, but it is unclear whether this
value is the cost needed to kind of outcompete existing
methods as you can have alluded to, or if the
tech actually can achieve this cost. It's a little too
early to kind of make either claim, but we can
(16:19):
look at kind of what is driving the costs. There
is I would say three main things to look at.
The first thing, obviously, is capital expense. Geological hydrogen projects
are very capital intensive with huge, like long bill times,
so a project can easily cost five hundred million dollars
to a billion dollars, depending on how many wells you're building,
(16:41):
where in the world, it is, how deep each well is,
what kind of processing of the gas you need, what
the gas make sure actually is if you have more contaminants,
like Sam you mentioned the methae, the nitrogen is you're
going to have to spend a lot of energy and
effort to kind of separate out the gas to make
it like a pure stream of hydrogen. So capital costs
can easily equal to like twenty cents per kilogram of hydrogen.
(17:05):
And as I mentioned, you have a kind of a
pure stream scenario and a mixed gas stream scenario. Operational
expenses grow almost tenfold in a mixed gas scenario as
opposed to one with a pure gas stream, and this
is mainly driven by energy costs of gas processing, the
need to kind of maintain and replace the equipment, and
talking to these industry folks, the biggest expense is like
(17:27):
the membranes and the equipment you're using to separate the gas.
Additional costs can accrue upon like the depletion of the well,
which then needs to be plugged or decommissioned, which can
add like upwards of a one hundred thousand dollars per well.
But it's interesting because the revenue projections people have given
or disclosed to me do make this seem like it
is worthwhile. Yeah, you're spending almost a billion dollars building
(17:49):
a project, but the potential revenue that can come into
the next like fifteen twenty years as the gas is
being depleted is quite attractive.
Speaker 2 (17:57):
And to add to Mashrika's point, So in an actual
what it's going to cost is hundreds of millions of
dollars to extract gold hydrogen, and it really depends on
the different sites, different purity levels. But those are estimates.
You know, we're not gonna know for sure until we
see a project come to fruition. And actually this is
definitely speaking from experience and what we've seen with green
hydrogen again bringing it as an example and what comes
(18:21):
down to it. In the industry, when you think about costs,
people are interested in how much a kilogram of hydrogen costs.
So when we think about gold hydrogen, with certain assumptions,
not even factoring in transport costs, which is that separate issue,
geologic hydrogen can go from zero point five dollars to
around just above two dollars per kilogram of hydrogen in
(18:41):
terms of cost. Now, again that's an estimate with a
lot of assumptions attached to it. When we look at
green hydrogen, with some projects that we've seen actually get
awarded funding and actually get a sign like how much
it's going to cost and how with the subsidies it
costs upward of twelve dollars per which is extremely expensive.
(19:02):
When we think about gray hydrogen or the hydrogen being
produced today, it's at one dollar per kilogram of hydrogen
that's mostly in the US because of cheap natural gas prices,
and you can go up to three dollars per kilogram
of hydrogen. You want to make gold hydrogen competitive, so
that's why, like Mushfika said, we want to target one
dollar or less than one dollar percilogram of hydrogen. And
(19:24):
based on estimates right now, they think geologic hydrogen can
be cheaper, so it can be competitive. But what we've
seen so far from green hydrogen, it's more than six
times as much as hydrogen being produced today.
Speaker 1 (19:35):
So Sammy, I love that you brought up transport because
this relates to more than gold hydrogen. This molecule it's smaller, lighter,
more flammable than natural gas. And meanwhile, you hear the
industry talks so much about how we're going to use
a lot of the same infrastructure and we're going to
put them on the same ships and use the same pipes,
and I know that we have on this show talked
about how that's not immediately going to be possible. They'll
(19:58):
be quite a bit of retrofitting needed so in order
to make this form of hydrogen possible to be used
around the world, because think about the fact that now
we can no longer locate the production facilities near where
they need to be. The hydrogen is where it is
in nature. How's the transportation story coming along, and have
there been any breakthroughs there on the I guess technology side,
(20:19):
but essentially, can we contain that molecule to get it
where it needs to go?
Speaker 2 (20:23):
That's a great question. And again, the issue with transports
ties back to getting it where it needs to be.
So we're talking about demand at the same time, which
has been a topic for hydrogen for a long time.
Now issues with demand, and it's good to see now
at different forums and summits like the recent one that
happened in Paris, the Natural Hydrogen Summit, it was good
(20:45):
to see that they're thinking about demand at this point,
maybe not as much as they need to be, but
it is a topic of discussion because they can't control
where gold hydrogen is being extracted from those sites are static,
so you're really limited to those sites or specific sites.
And so now you think about, okay, we after we extract,
after we're done with all of that, how can we
(21:06):
get it where it needs to go? And how much
it's going to cost. When I go back to the
cost that I mentioned, that wasn't even accounting for transport costs,
which can reach up to seven dollars per kilogram, which
is a lot when you think about it. And when
we talk about transport, one of the most common ways
that they're thinking about right now, or that they were
mentioned in Europe specifically, we're pipelines existing gas pipelines that
(21:29):
maybe they can transport to now it would make economic
sense if they're in large enough quantities like the hydrogen
being transported.
Speaker 1 (21:36):
Are we seeing any of these projects happening yet, Are
we seeing pipelines being retrofitted effectively?
Speaker 2 (21:42):
And where in the world right so for other forms
of clean hydrogen, green and blue, how they're being transported.
We've seen pipelines work, yes, but still not well enough
for it to really make economic sense. And also there's
a lot of issues around it being a very flammable source.
It's very hard to deal with hydrogen, and it's complicated
(22:05):
because it takes up more volume than other types of gases.
Speaker 1 (22:08):
So this is a tough question. So then I guess
we're getting to a place where you might be actually
looking at the demand sources, potentially going to where the
source of the hydrogen actually is instead of the other
way around. So then let's talk a little bit about extraction.
Are there any synergies with any other industries, because if
you're out there looking for hydrogen, you may come up short.
(22:29):
You brought up a few times that this is something
where we're still looking for the deposits, we're still trying
to figure out how to extract it. Is there any
chance that a company that's out there searching for something
else and try and extract something else might actually stumble
upon it? And where did those synergies lie?
Speaker 3 (22:45):
So companies that are extracting hydrogen, they are also hoping
to extract helium, which often is co founded with hydrogen.
And the thing about helium is that helium is currently
in shortage across the world for a lot of things.
Obviously you see your fancy party balloons, but also helium
is used for a lot of other things like medical
(23:05):
imaging and labs. And the biggest thing to note here
is that when you co produce helium, you can almost
double the revenue that you're getting back using a gold
hydrogen project, and most of that it's because the helium
is so so expensive right now. Will the cost of
helium go down as a lot of these projects are
(23:25):
producing helium, then we have a different problem where we're
at an oversupply and low demand potentially, But talking to
people in the industry, it seems like they've already accounted
for a decreasing prices in their economic modeling for projects.
The helium could be a huge boon for the gold
hydrogen industry as a whole. One project that we have
profiled extensively in my note is a Mazlim project in
(23:48):
Spain being created by Helius Aragon, and that project model's
production of helium to be nearly two eight hundred tons
in twenty twenty nine, and that progressive few decreases to
thirty one tons in twenty fIF three. For contact, that
is two percent of the gas by volume that the
project is expecting to produce, So two percent of helium
(24:09):
is going to bring in almost fifty percent of the
revenue that the project as a whole is expected to
bring in.
Speaker 1 (24:16):
Because when you see this industry alignment, this is where
you see some really great breakthroughs. I mean, batteries is
a great example. When you see them in consumer goods,
you see them for storage, you see them for electric vehicles,
So lithium ion batteries, then everybody's got their eyes on them,
and then we see massive cost of clients. So there's
a lot of hype around hydrogen and we'll see what
comes to pass. This is definitely an area under development.
(24:38):
So for those who have actually been to a BNF summit,
you're going to notice that we have debates at the
summit and it's actually one of my favorite types of
presentations that our analysts do at these events. So, given
this is a space with a lot of hype around it,
I want one of you to take the side of
the hypeman for hydrogen. I want the other to take
the side of the skeptic and tell me why. And
I think, Sammy, you decided you were going to take
(24:58):
the hype man side, and Muspeka you're going to take
the skeptic. And you know what, because I want to
end on a positive note. Mispeka, I'm going to make
you go first with the skeptic argument, specifically for geologic hydrogen.
Speaker 3 (25:10):
Yeah, for sure. You know it's not news that I
am a skeptic of hydrogen and specifically for gold hydrogen.
The main thing for me, I think is only one
project has been like fully completed at commercial level. So
until we see more projects at least produce hydrogen and
actually sell it, I'm not buying this. Secondly, I think
the bigger thing is hydrogen demand as a whole is struggling.
(25:31):
You can see that supply exists, but only like I
think twelve percent of all the supplies that's expected to
come out actually has contracted optakes, and not even all
of them are binding optakes. So until you can show
me the demand for hydrogen and show me how people
are actually going to pay the amount of money that
they're paying for these premiums, I just don't see how
gold hydrogen as a whole is going to take off.
(25:53):
It has huge potential, I admit I agree with that
it has much potential, but until they transport kinks, the
issues with demand, the issues with actually drilling and finding
hydrogen can be done economically. I just don't see how
this becomes like a huge, multi billion dollar market.
Speaker 2 (26:10):
Okay, sammy counter right, that's tough to counter. But here's
my thing, innocent, I provement guilty. So so far, what
we have with gold hydrogen or geologic or natural hydrogen,
it's not a lot. I agree. There's a lot of
potential though, and based on estimates right now, and it
always starts with estimates and overviews and just sizing up
(26:30):
the potential, there is a lot. Here's why I think
geologic hydrogen could work in the industry right now. We
are already seeing sites and where they found a lot
of hydrogen potentially with a lot of high purity levels,
gold hydrogen has the potential to be the cheapest of
all the other types of hydrogen. A problem that was
mentioned is getting it where it needs to be. We're
(26:51):
already seeing projects though that are close to demand centers
in Europe which could solve that challenge. So there's always
a solution to a problem. And when we think about
emissions associated because at the end of the day, the
two main things we talk about are the economics and
the environmental impact. So we've seen based on the estimates
that it has the potential to be really cheap, and
(27:13):
we've seen based on estimates and life cycle analysis, it
could be really clean, cleaner than any other form of
hydrogen we've seen today being produced. I think that's promising.
When you see these numbers based on extensive and thorough analysis,
this bodes well to at least start looking into this
and start developing these projects. It could work or it couldn't,
but it's always good to see numbers like this. And finally,
(27:35):
when we talk about the potential how much is there,
because we do need a certain amount of hydrogen to
be produced to decarbonize or replace the unclean hydrogen weap today.
One of the numbers that we mentioned was an order
of magnitude. There's possible in the world to be up
to billions of tons of hydrogen. We don't know yet,
but if we assume just two percent a fraction of
(27:56):
what can be extracted from those accessible sites, I think
that's really promising, and at this stage it's safe to
be optimistic, which I am at.
Speaker 1 (28:04):
This point in the industrial application to decarbonize these hard
to abate sectors that certainly exist. So maybe this will
be a part of that puzzle. Sammy Musfica, thank you
so much for joining today.
Speaker 2 (28:14):
Thank you very much, Sana, thanks for having me.
Speaker 1 (28:25):
Today's episode of Switched On was produced by Cam Gray
with production assistance from Kamala Shelling. Bloomberg NIF is a
service provided by Bloomberg Finance LP and its affiliates. This
recording does not constitute, nor should it be construed, as
investment advice, investment recommendations, or a recommendation as to an
investment or other strategy. Bloomberg ANIF should not be considered
(28:45):
as information sufficient upon which to base an investment decision.
Neither Bloomberg Finance LP nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in this recording, and any liability
as a result of this recording is expressly disclaimed.
Speaker 3 (29:09):
M
This is Dana Perkins and you're listening to Switched on
the BNF podcast. The hydrogen industry loves to assign colors
to different production sources. Some of the names are instinctual,
like green hydrogen, which is produced from renewable energy. Today
we're talking about gold hydrogen, and with a name like that,
we would assume that it's at the top of the stack.
(00:22):
So what makes geologic hydrogen gold? Well, firstly, it's naturally
occurring rather than man made, and it has the potential
to be less carbon intensive and importantly less expensive than
any other form of hydrogen. However, there are very limited
successful examples of extraction and utilization to date, and the
(00:43):
economics are nowhere near where they need to be. So
will technology improvements and synergies with the helium industry help
unlock its potential? To answer that question? Today, I am
joined by Sammy Alisowi from BNF's Hydrogen team, alongside Mushfka
Mishi from our Technology and Innovation team. They share some
(01:04):
of the research found in their recent report Technology Radar
Geologic Hydrogen. BNF clients will be able to find this
at BENF go on the Bloomberg Terminal or at benf
dot com. So let's discuss geologic hydrogen and whether it
should truly be considered gold. Mushwika, thanks for joining us,
(01:32):
Thanks for having me and Sammy great having you here too.
Speaker 2 (01:35):
Thank you for having me as well.
Speaker 1 (01:36):
Here we go. This episode is going to be gold.
We're talking about gold hydrogen. We did a show many
moons ago at this point, I want to say it
was well over a year ago where we went through
all of the colors associated with hydrogen and each of
them has invariably a different source that the hydrogen came from.
So today we're going to talk about gold hydrogen and
(01:57):
to give a bit of additional color and open in
tended so some context to that. It actually represents geologic hydrogen.
So let's start off with this definition. What is gold
or geologic hydrogen?
Speaker 3 (02:11):
Yeah, so geologic hydrogen, also known as clear why native orange,
or as you said, gold hydrogen, is naturally occurring hydrogen
that forms underground and often builds up in reservoirs within
the Earth's crust. But let's break that down a little further, right, So,
although the mechanisms of hydrogen production is uncertain, there's three
kind of big hypotheses that have been thrown around or proposed.
(02:32):
Researchers agree that at least some hydrogen is produced by
each pathway, but which pathway is dominating unclear. So you've
got the first one, which is radiolysis. It's basically a
radioactive decay of heavy metal securanium or thorium, and essentially
that radioactive decay can split water to become multiple particles
like hydrogen, hydroxide, all of that, and this occurs on
(02:53):
a geological time scale. The second one, which I think
is like the most widely accepted one, is serpentization, and
that when water reacts with iron rich automatic rocks like
olivene under really high temperatures and the iron is reduced
and in the process of reduction it releases hydrogen. There's
some research out there that suggests that some eighty percent
(03:13):
of the Earth's hydrogen could be a result of this process.
The third one, which is highly debated but worth mentioning,
is mental degassing, and that's when plate techton activity can
essentially trigger the degassing of hydrogen that's already present in
the Earth's core and mantle from way back, you know,
the Big Bang.
Speaker 1 (03:30):
So I know that we benef like to actually refer
to hydrogen by the fuel source, so we tend to
refer to things as geologic hydrogen. I'm going back to
these colors again, clear, white, orange, gold, What is the
most popular one used?
Speaker 3 (03:44):
I would say gold hydrogen is the one that mainstream
media has taken up, but we like to still refer
to it as geological age two.
Speaker 2 (03:51):
There's one more. Natural hydrogen is pretty popular. There's a
summit in Pairs that happened a couple weeks ago that
I attended, and the summit is basically called Natural Hydrogen
Summits or HNT. So natural hydrogen was also a very
popular term.
Speaker 1 (04:06):
So surely if natural hydrogen was easy to extract and plentiful,
there would not be need for companies to be making
hydrogen from other fuel sources like renewables or natural gas
or nuclear. So I could keep going. But hydrogen made
from so many different sources. So I want to know
how much of an opportunity is this and how much
hydrogen are we talking about? Can you put this into context?
(04:27):
You know, is this going to be Could it be
the dominant source of hydrogen at some point or will
it always be kind of on the fringe.
Speaker 2 (04:35):
So again, yeah, we're talking about a fraction that's accessible
and that amounts to again in theory, we don't know
how much, but it's in the millions per year. And
how much that is is that a lot, like is
a million a year a lot.
Speaker 1 (04:48):
For example years of what what's the unit of measure.
Speaker 2 (04:50):
Tons per year? And to put it into context, hydrogen
consumed nowadays, the unabated or the not clean hydrogen every
year is around nineteen million tons per year. So yeah,
just to put into context that when we still talk
about a fraction of what's out there or what's possibly
out there, it's two things. One, it's very theoretical, but
(05:12):
it has people optimistic because even a fraction is saw
a lot.
Speaker 1 (05:16):
Okay, so we have it out there and it can
in theory be extracted, but you have pointed out this
may be very difficult to get to. So what are
the technical barriers that are keeping us from being able
to get it out of the ground? Basically, why do
we not have this yet?
Speaker 3 (05:31):
So in theory, like oil and gas, geological hydrogen could
be extracted from the earth using drilled wells, and there's
kind of three main reservoirs or like stores of hydrogen
people are investigating. So there's traps. That's the one that's
kind of most akin to oil and gas. It's an
accumulation of hydrogen that becomes trapped below like an impermeable
(05:53):
layer of rock over time. And then there's the direct
kind of root, which some developers are aiming to drill
directly into iron ritual where cerpertalization is occurring and extract
the H two as it is being generated. Theoretically, that
could make geological hydrogen a renewable source of energy. The
third bit, which I haven't heard a lot of activity
being but it has been thrown around as a possibility,
(06:14):
is stimulated hydrogen. That's a type of development where you
could drill where it would potentially be produced, and then
stimulated artificially by injecting hot water and produce it artificially.
That's the one that's being referred to as orange hydrogen.
Speaker 1 (06:28):
This doesn't sound totally dissimilar from fracking. Am I right
in drawing that parallel?
Speaker 3 (06:33):
You could do that parallel? Yeah, and I have also
asked that question to people in the industry, But we're
not there yet. We're not at the point where you
could even consider stimulating the production of hydrogen. We're still
at the point where just finding traps is becoming the
main topic.
Speaker 1 (06:49):
Okay, so we're trying to locate where in the world
these deposits are and then figure out how to get
them out. Do we have an idea of where they
are they evenly distributed? Everybody's got this or is it
really constant in some countries?
Speaker 3 (07:01):
So I do have to highlight that current hotspots of
geological hydrogen are a function of where it has historically
been measured, rather than where it could be found in
the future. So currently today scientists have recorded resources in
a number of geographies, including the US, Australia, Brazil, Canada, Mali, Oman,
the Philippines, Russia. Most of the recordings we have so
(07:22):
far of actual national hydrogen artificially does concentrate in Eastern
Europe and the general Northern Asia area, and that's because
researchers were sponsored by the Soviet Union Soviet government rather
to find another kind of abiogenic source of producing oil
way back in the Cold War times. So where can
(07:43):
we find it? Unsure? But it has been found kind
of all across the world, and most of the activity
today does concentrate within the general US North America area
in Australia.
Speaker 1 (07:52):
I mean when you rattled off that first list of countries,
those are the ones that are actively involved in other
forms of hydrogen. So it's not surprising that kind of
all eyes around hydrogen there, which then leads me to
what companies have their eyes on this. Are they the
same players that are exploring green hydrogen that made from
renewables or those that are coming from blue hydrogen, which
(08:14):
is natural gas and carbon capture and storage. Are they
the same companies that are investigating other sources of hydrogen
and actually energy made from energy or are they completely
different companies.
Speaker 3 (08:27):
Yeah, that's a very good question. Today we've counted around
fifty companies that are operating in this gold hydrogen industry,
headquartered mainly again in North America, Western Europe, Australia, and
I think the best way to segment the market would
be within three main categories. So obviously, you have your
pure play explorers that are prospecting for large reservoirs of hydrogen.
(08:47):
You also have your oil and gas and you're mining
like huge energy conglomerates that are funding the research and
development into the sector. But you also have this new
sector of people. We show these service providers that are
hoping to support exploration activities with gas separation equipment, geological surveying,
modeling tools, providing other geospatial data, or just like general
(09:08):
like EPCs, which is engineering and procurement construction of folks.
Speaker 1 (09:12):
Okay, so you've said in theory a few times on
this show, but there is a case of successful extraction
in Mali. Can you explain kind of how that came about,
how recently it was, and what they're doing there.
Speaker 3 (09:24):
Yeah, so it's actually a pretty interesting story. So essentially,
in nineteen eighty seven, hydrogen was accidentally discovered when a
cigarette of an engineer drilling water wells calls an explosion.
The well back then was kind of deemed useless and cemented,
But in twenty twelve, this company based out of Canada, Hydroma,
purchased the rights to explore in the region. So when
(09:45):
they unplugged the well, they discovered a nearly pure stream
of gas made up of ninety eight percent hydrogen by volume,
which they've soon routed to produce electricity for like nearby villages,
and it's still used today. So the reservoir today produces
about five to fifty tons of hydrogen per year. Most
electoralizers are probably doing about three to four times more
(10:06):
than that. So if five tons of hydrogen are produced
and used in a wind turbine or fuel cell with
fifty percent efficiency, you're looking at about one hundred megawatt
hours of electricity, which is what like ten houses being
powered in the US.
Speaker 2 (10:19):
So not a lot long story, short one thing about
this project and a point that Mushfika mentioned. So this
project is now being used as an example and a
benchmark to start like exploring other places around the world,
and it's definitely global. And speaking of companies, national oil
companies in the Middle East are getting involved. They're interested,
you know, they're experts in a lot of technical aspects
(10:40):
that apply to extracting gold hydrogen of course, because it's
similar to extracting oil and other molecules from the ground.
And so they are now being more vocal and they
reach out to those startups, those researchers that have experience
in analyzing a lot of data to find out exactly
what the potential is, and those national oil companies and
(11:01):
just oil and gas giants reach out to them or
vice versa to work together and collaborate so they fill
the full picture, some provide data, and again with this
project that is producing today right now, they've found potential
with similar gas composition because Mushwika mentioned also it's the
gas composition ninety eight percent hydrogen and the other two
(11:24):
percent is methane and nitrogen. But ninety percent of hydrogen
is a lot. It's very pure. But I'll get back
to that point about hydrogen purity and how it plays
into emissions costs and just overall projects.
Speaker 1 (11:37):
Well, so actually you've led right there. Let's talk about
emissions associated with this because I brought up racking. Is
this racking? We're going to see some weak and you'd
mentioned methane, and even though it is a small percentage,
overall it is a very potent greenhouse gas. So tell
me how clean is it really? And are we talking
(11:57):
about something that is really part of a transition to
a clean economy or is this another bridge fuel which
many people use to refer to natural gas as it's
something that's on the way to decarbonizing, but maybe not
the end game.
Speaker 2 (12:11):
So first off, you have now studies and companies who
are looking into this, doing something called life cycle analysis
where they look into a project from start to finish
and see what are the possible emissions that can result
from the process of extracting gold hydrogen. So you have
stuff like fugitive emissions and embodied emissions. Now, fugitive emissions.
Speaker 1 (12:32):
Does sound like the ones that escape when you're extracting
that's it.
Speaker 2 (12:35):
So fugitive emissions are the ones that are attributed to
like methane, gas, nitrogen or yeah, any gas that escapes
while you're in the process of like extracting the gold hydrogen.
Embodied emissions are technically those indirect emissions that come from
different processes and are attributed to different parts of extracting
the gold hydrogen. So it's not directly related.
Speaker 1 (12:57):
I mean, it's everything related to the process. Right, It's
kind of like the equivalent of a scope three.
Speaker 2 (13:01):
But for this exactly that's exactly it. So let's get
down to whether or not it's clean. So based on
life cycle analysis studies, they found that it is clean.
How clean, it's cleaner than most types of hydrogen being produced.
So in terms of numbers, in a gas mix of
eighty five percent mole percentage of hydrogen and twelve percent
(13:24):
nitrogen with around two percent methane, the carbon intensity is
about zero point four kilograms of CO two per kilogram
of hydrogen gas. That is extremely low. When you think
about again other types of hydrogen working up from cleanness
to less clean and then to what we have today,
gold hydrogen sits at the lower end, meaning that it's
(13:45):
the cleanest form of hygroen, or has the potential to
be the cleanest, because again this is all in terms
of potential and in theory and based off analysis. When
we look at green hydrogen or hydrogen produced from machines
called electrolyzers that split the water into hydrogen atoms and
oxygen atoms. That's powered by green electricity or renewable electricity
(14:05):
solar wind, and that's what makes it green hydrogen. Those
emissions are anywhere between one kilogram of CO two emitted
perkologram of hydrogen upwards to five kilograms of CO two
perculogram of hydrogen. Now that's a lot of numbers, but
just to say that gold hydrogen, it's less than one
kilogram of CO two emitted percilogram of hydrogen. But that
(14:27):
depends on hydrogen purity. So when there's less hydrogen in
the gas composition, there's going to be more methane more nitrogen.
The more methane rather than hydrogen, that means it's definitely
going to be a lot more emissions. So it really
comes down to the gas mixture. But based on studies
of the most common gas mixture sites that they found
(14:47):
and they do want to extract from, we're talking about
zero point five to three kilograms of CO two per
kilogram of hydrogen extracted. It is also within the guidelines
of accessing tax credits and definitions in the IRA for example,
or the Inflation Reduction Act, where they have outlined what
is considered clean hydrogen. And again to put it into context,
(15:07):
when we're talking about these numbers, these low numbers for
gold hydrogen that falls within that definition.
Speaker 1 (15:13):
So let's talk about economic viability, which is the big
elephant in the room here. So it can be hard
to determine this with emerging technologies, and I feel like
this is almost an unfair question, but there is some
information that we should consider when it comes to extraction.
So how much is it going to cost and will
this cost comparison to other sources of production? Are we
(15:36):
going to get there? And is it going to some
days the hope that it is cheaper. I'm kind of
asking a leading question, but my real question is just
do we see a path to economic viability on gold
hydrogen that is maybe more compelling than the other sources
of hydrogen that are out there, given that there is
so much waste when you make energy from energy.
Speaker 3 (15:57):
Long story short, geological hydrogen developer are targeting the cost
of a dollar per kilogram of hydrogen as it is
exiting the processing facilities, but it is unclear whether this
value is the cost needed to kind of outcompete existing
methods as you can have alluded to, or if the
tech actually can achieve this cost. It's a little too
early to kind of make either claim, but we can
(16:19):
look at kind of what is driving the costs. There
is I would say three main things to look at.
The first thing, obviously, is capital expense. Geological hydrogen projects
are very capital intensive with huge, like long bill times,
so a project can easily cost five hundred million dollars
to a billion dollars, depending on how many wells you're building,
(16:41):
where in the world, it is, how deep each well is,
what kind of processing of the gas you need, what
the gas make sure actually is if you have more contaminants,
like Sam you mentioned the methae, the nitrogen is you're
going to have to spend a lot of energy and
effort to kind of separate out the gas to make
it like a pure stream of hydrogen. So capital costs
can easily equal to like twenty cents per kilogram of hydrogen.
(17:05):
And as I mentioned, you have a kind of a
pure stream scenario and a mixed gas stream scenario. Operational
expenses grow almost tenfold in a mixed gas scenario as
opposed to one with a pure gas stream, and this
is mainly driven by energy costs of gas processing, the
need to kind of maintain and replace the equipment, and
talking to these industry folks, the biggest expense is like
(17:27):
the membranes and the equipment you're using to separate the gas.
Additional costs can accrue upon like the depletion of the well,
which then needs to be plugged or decommissioned, which can
add like upwards of a one hundred thousand dollars per well.
But it's interesting because the revenue projections people have given
or disclosed to me do make this seem like it
is worthwhile. Yeah, you're spending almost a billion dollars building
(17:49):
a project, but the potential revenue that can come into
the next like fifteen twenty years as the gas is
being depleted is quite attractive.
Speaker 2 (17:57):
And to add to Mashrika's point, So in an actual
what it's going to cost is hundreds of millions of
dollars to extract gold hydrogen, and it really depends on
the different sites, different purity levels. But those are estimates.
You know, we're not gonna know for sure until we
see a project come to fruition. And actually this is
definitely speaking from experience and what we've seen with green
hydrogen again bringing it as an example and what comes
(18:21):
down to it. In the industry, when you think about costs,
people are interested in how much a kilogram of hydrogen costs.
So when we think about gold hydrogen, with certain assumptions,
not even factoring in transport costs, which is that separate issue,
geologic hydrogen can go from zero point five dollars to
around just above two dollars per kilogram of hydrogen in
(18:41):
terms of cost. Now, again that's an estimate with a
lot of assumptions attached to it. When we look at
green hydrogen, with some projects that we've seen actually get
awarded funding and actually get a sign like how much
it's going to cost and how with the subsidies it
costs upward of twelve dollars per which is extremely expensive.
(19:02):
When we think about gray hydrogen or the hydrogen being
produced today, it's at one dollar per kilogram of hydrogen
that's mostly in the US because of cheap natural gas prices,
and you can go up to three dollars per kilogram
of hydrogen. You want to make gold hydrogen competitive, so
that's why, like Mushfika said, we want to target one
dollar or less than one dollar percilogram of hydrogen. And
(19:24):
based on estimates right now, they think geologic hydrogen can
be cheaper, so it can be competitive. But what we've
seen so far from green hydrogen, it's more than six
times as much as hydrogen being produced today.
Speaker 1 (19:35):
So Sammy, I love that you brought up transport because
this relates to more than gold hydrogen. This molecule it's smaller, lighter,
more flammable than natural gas. And meanwhile, you hear the
industry talks so much about how we're going to use
a lot of the same infrastructure and we're going to
put them on the same ships and use the same pipes,
and I know that we have on this show talked
about how that's not immediately going to be possible. They'll
(19:58):
be quite a bit of retrofitting needed so in order
to make this form of hydrogen possible to be used
around the world, because think about the fact that now
we can no longer locate the production facilities near where
they need to be. The hydrogen is where it is
in nature. How's the transportation story coming along, and have
there been any breakthroughs there on the I guess technology side,
(20:19):
but essentially, can we contain that molecule to get it
where it needs to go?
Speaker 2 (20:23):
That's a great question. And again, the issue with transports
ties back to getting it where it needs to be.
So we're talking about demand at the same time, which
has been a topic for hydrogen for a long time.
Now issues with demand, and it's good to see now
at different forums and summits like the recent one that
happened in Paris, the Natural Hydrogen Summit, it was good
(20:45):
to see that they're thinking about demand at this point,
maybe not as much as they need to be, but
it is a topic of discussion because they can't control
where gold hydrogen is being extracted from those sites are static,
so you're really limited to those sites or specific sites.
And so now you think about, okay, we after we extract,
after we're done with all of that, how can we
(21:06):
get it where it needs to go? And how much
it's going to cost. When I go back to the
cost that I mentioned, that wasn't even accounting for transport costs,
which can reach up to seven dollars per kilogram, which
is a lot when you think about it. And when
we talk about transport, one of the most common ways
that they're thinking about right now, or that they were
mentioned in Europe specifically, we're pipelines existing gas pipelines that
(21:29):
maybe they can transport to now it would make economic
sense if they're in large enough quantities like the hydrogen
being transported.
Speaker 1 (21:36):
Are we seeing any of these projects happening yet, Are
we seeing pipelines being retrofitted effectively?
Speaker 2 (21:42):
And where in the world right so for other forms
of clean hydrogen, green and blue, how they're being transported.
We've seen pipelines work, yes, but still not well enough
for it to really make economic sense. And also there's
a lot of issues around it being a very flammable source.
It's very hard to deal with hydrogen, and it's complicated
(22:05):
because it takes up more volume than other types of gases.
Speaker 1 (22:08):
So this is a tough question. So then I guess
we're getting to a place where you might be actually
looking at the demand sources, potentially going to where the
source of the hydrogen actually is instead of the other
way around. So then let's talk a little bit about extraction.
Are there any synergies with any other industries, because if
you're out there looking for hydrogen, you may come up short.
(22:29):
You brought up a few times that this is something
where we're still looking for the deposits, we're still trying
to figure out how to extract it. Is there any
chance that a company that's out there searching for something
else and try and extract something else might actually stumble
upon it? And where did those synergies lie?
Speaker 3 (22:45):
So companies that are extracting hydrogen, they are also hoping
to extract helium, which often is co founded with hydrogen.
And the thing about helium is that helium is currently
in shortage across the world for a lot of things.
Obviously you see your fancy party balloons, but also helium
is used for a lot of other things like medical
(23:05):
imaging and labs. And the biggest thing to note here
is that when you co produce helium, you can almost
double the revenue that you're getting back using a gold
hydrogen project, and most of that it's because the helium
is so so expensive right now. Will the cost of
helium go down as a lot of these projects are
(23:25):
producing helium, then we have a different problem where we're
at an oversupply and low demand potentially, But talking to
people in the industry, it seems like they've already accounted
for a decreasing prices in their economic modeling for projects.
The helium could be a huge boon for the gold
hydrogen industry as a whole. One project that we have
profiled extensively in my note is a Mazlim project in
(23:48):
Spain being created by Helius Aragon, and that project model's
production of helium to be nearly two eight hundred tons
in twenty twenty nine, and that progressive few decreases to
thirty one tons in twenty fIF three. For contact, that
is two percent of the gas by volume that the
project is expecting to produce, So two percent of helium
(24:09):
is going to bring in almost fifty percent of the
revenue that the project as a whole is expected to
bring in.
Speaker 1 (24:16):
Because when you see this industry alignment, this is where
you see some really great breakthroughs. I mean, batteries is
a great example. When you see them in consumer goods,
you see them for storage, you see them for electric vehicles,
So lithium ion batteries, then everybody's got their eyes on them,
and then we see massive cost of clients. So there's
a lot of hype around hydrogen and we'll see what
comes to pass. This is definitely an area under development.
(24:38):
So for those who have actually been to a BNF summit,
you're going to notice that we have debates at the
summit and it's actually one of my favorite types of
presentations that our analysts do at these events. So, given
this is a space with a lot of hype around it,
I want one of you to take the side of
the hypeman for hydrogen. I want the other to take
the side of the skeptic and tell me why. And
I think, Sammy, you decided you were going to take
(24:58):
the hype man side, and Muspeka you're going to take
the skeptic. And you know what, because I want to
end on a positive note. Mispeka, I'm going to make
you go first with the skeptic argument, specifically for geologic hydrogen.
Speaker 3 (25:10):
Yeah, for sure. You know it's not news that I
am a skeptic of hydrogen and specifically for gold hydrogen.
The main thing for me, I think is only one
project has been like fully completed at commercial level. So
until we see more projects at least produce hydrogen and
actually sell it, I'm not buying this. Secondly, I think
the bigger thing is hydrogen demand as a whole is struggling.
(25:31):
You can see that supply exists, but only like I
think twelve percent of all the supplies that's expected to
come out actually has contracted optakes, and not even all
of them are binding optakes. So until you can show
me the demand for hydrogen and show me how people
are actually going to pay the amount of money that
they're paying for these premiums, I just don't see how
gold hydrogen as a whole is going to take off.
(25:53):
It has huge potential, I admit I agree with that
it has much potential, but until they transport kinks, the
issues with demand, the issues with actually drilling and finding
hydrogen can be done economically. I just don't see how
this becomes like a huge, multi billion dollar market.
Speaker 2 (26:10):
Okay, sammy counter right, that's tough to counter. But here's
my thing, innocent, I provement guilty. So so far, what
we have with gold hydrogen or geologic or natural hydrogen,
it's not a lot. I agree. There's a lot of
potential though, and based on estimates right now, and it
always starts with estimates and overviews and just sizing up
(26:30):
the potential, there is a lot. Here's why I think
geologic hydrogen could work in the industry right now. We
are already seeing sites and where they found a lot
of hydrogen potentially with a lot of high purity levels,
gold hydrogen has the potential to be the cheapest of
all the other types of hydrogen. A problem that was
mentioned is getting it where it needs to be. We're
(26:51):
already seeing projects though that are close to demand centers
in Europe which could solve that challenge. So there's always
a solution to a problem. And when we think about
emissions associated because at the end of the day, the
two main things we talk about are the economics and
the environmental impact. So we've seen based on the estimates
that it has the potential to be really cheap, and
(27:13):
we've seen based on estimates and life cycle analysis, it
could be really clean, cleaner than any other form of
hydrogen we've seen today being produced. I think that's promising.
When you see these numbers based on extensive and thorough analysis,
this bodes well to at least start looking into this
and start developing these projects. It could work or it couldn't,
but it's always good to see numbers like this. And finally,
(27:35):
when we talk about the potential how much is there,
because we do need a certain amount of hydrogen to
be produced to decarbonize or replace the unclean hydrogen weap today.
One of the numbers that we mentioned was an order
of magnitude. There's possible in the world to be up
to billions of tons of hydrogen. We don't know yet,
but if we assume just two percent a fraction of
(27:56):
what can be extracted from those accessible sites, I think
that's really promising, and at this stage it's safe to
be optimistic, which I am at.
Speaker 1 (28:04):
This point in the industrial application to decarbonize these hard
to abate sectors that certainly exist. So maybe this will
be a part of that puzzle. Sammy Musfica, thank you
so much for joining today.
Speaker 2 (28:14):
Thank you very much, Sana, thanks for having me.
Speaker 1 (28:25):
Today's episode of Switched On was produced by Cam Gray
with production assistance from Kamala Shelling. Bloomberg NIF is a
service provided by Bloomberg Finance LP and its affiliates. This
recording does not constitute, nor should it be construed, as
investment advice, investment recommendations, or a recommendation as to an
investment or other strategy. Bloomberg ANIF should not be considered
(28:45):
as information sufficient upon which to base an investment decision.
Neither Bloomberg Finance LP nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in this recording, and any liability
as a result of this recording is expressly disclaimed.
Speaker 3 (29:09):
M
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