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California’s 'first' blue hydrogen project edges forward with carbon capture agreement

Oklahoma firm signs CO2 sequestration deal with local oil producer, paving the way for final investment decision by 2023

Carbon dioxide from the Lone Cypress Hydrogen Project would be stored in California's depleted oil wells.
Carbon dioxide from the Lone Cypress Hydrogen Project would be stored in California's depleted oil wells.Photo: Tayfun Coskun/Anadolu Agency via Getty Images
Plans for California’ first blue hydrogen plant made with fossil gas and carbon capture and storage came a step closer to realisation yesterday (Wednesday), with the signing of a CO2 sequestration agreement between the project developer and a local oil producer.

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The deal, between Oklahoma-based project developer Lone Cypress and oil producer California Resources Corporation (CRC), will see the so-called Lone Cypress Hydrogen Project move closer to the planned final investment decision (FID) by 2023, said CRC.

Under the agreement, Lone Cypress will commission the construction of a blue H2 facility on acreage owned by CRC for its oil and gas production, known as Elk Hills, the Oklahoma company told Hydrogen Insight.

The facility will be built next door to CRC’s existing carbon capture plant, and Lone Cypress will then pay a fee to CRC to inject carbon dioxide from the facility into in to depleted Elk Hill oil and gas fields for permanent storage.

Lone Cypress intends to bring the blue hydrogen project on line by 2025, with the aim of producing 30 tons per day by the end of 2025, equivalent to around 11,000 tonnes per year. Further expansions could see it ramped-up to 60 tonnes per day.

The project, which will use steam methane reforming (SMR) technology to produce the hydrogen from fossil methane, could generate up to 200,000 tonne of carbon dioxide at full capacity, all of which would be buried in the oil field below.

While hydrogen produced with renewable energy sources and electrolysers is branded “green” hydrogen, “blue” hydrogen is considered a low emission product to the extent the carbon dioxide is captured and stored.

“Partnering with CTV JV [California Resource Corporation’s carbon sequestration company] represents an incredible opportunity to continue the growth of our hydrogen and carbon capture businesses,” said Greg Brooks, president of Lone Cypress Energy Services. “California is at the forefront of the global energy transition and through this partnership, we intend to be a leader in its low-carbon fuels market.”

In September, California introduced new subsidies for carbon capture and storage in the state, in an effort to reach the state’s goal to reduce greenhouse gas emission by 48% by 2030, adding to previous subsidies on hydrogen. California is using a variety of funding mechanisms to achieve the goals, including California’s Low Carbon Fuel Standard (LCFS), which recently plummeted, causing the pump price of hydrogen to soar.
In November, the California Air Resources Board (CARB), which regulates emissions in the state, included blue hydrogen with carbon capture and storage in its new ambitious H2 targets for the first time, in the state’s new Scoping Plan for Achieving Carbon Neutrality.
All earlier drafts of the plan had envisaged all of California’s hydrogen demand being met by green H2. But during the course of the plan’s development, CARB found that this would require new solar PV capacity of up to 40GW by 2045 — over two and a half times the state’s current installed solar capacity of 15GW.
The decision to include blue H2 comes as California simultaneously attempts to build out approximately 72GW of utility-scale solar by 2045 to meet its electricity demands and 37GW of battery storage —requiring an annual build-rate increase of 60% and 700% respectively.
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Blue hydrogenCCUSCaliforniaUSNorth America
Published 8 December 2022, 16:54Updated 8 December 2022, 18:05