A secretive company backed with funding from billionaire investor Bill Gates is mining for natural hydrogen in the US Midwest — and plans to apply for subsidies under the Inflation Reduction Act’s (IRA) production tax credit.

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Denver-based Koloma — which was founded two years ago but only emerged from stealth mode yesterday in an interview with Forbes magazine — has raised reported $91m in funds from five investors, including Breakthrough Energy, founded by the Microsoft billionaire in 2015.

Koloma believes that it can tap into a continuously regenerating supply of underground hydrogen, sometimes called white or gold hydrogen, brought about by a process called serpentinisation.

During this process, subterranean iron- and magnesium-based minerals break down in water to produce hydrogen-rich fluids and other minerals — a process which Kolomo believe amounts to around 23 million tonnes of natural hydrogen production per year, globally, equivalent to nearly a quarter of all of today’s hydrogen demand.

“It’s on every continent,” Tom Darrah, Koloma’s co-founder and chief technology officer, told the magazine. “The scale of how much there is, is profound.”

Darrah, who is also a professor of Earth sciences at Ohio State University (OSU), has 16 patents to his name related to hydrogen extraction.

One of these patents involves using satellites and AI-assisted laser imaging to analyse sites that could contain underground stores of natural hydrogen or helium.

“That’s captured a lot of people's imagination, that you could have two resources in the same place,” Darrah told the magazine.

Koloma is using Darrah’s lab at OSU to analyse rock and mineral samples from its Midwestern wells — although it won’t reveal the location of the wells or when it expects commercial operations to begin.

Australian hydrogen explorer Hyterra is drilling for H2 in Nebraska, while Denver-based Natural Hydrogen Energy is looking for it in Kansas. Both are seeking to find hydrogen within the Midcontinental Rift System, a 2,000km tectonic fault running through North America.

Koloma’s executive team is furnished with oil & gas industry stalwarts — hailing from veteran US drillers Anardarko and Apache — as well as Pete Johnson, the co-founder and former chief technology officer of turquoise hydrogen producer Monolith.

“We're focusing on the places where we not only think that there’s the right kind of gas, the right kind of rock, but places that can become commercial producers,” Johnson told the magazine.

The company has not revealed how much of the $91m in investment is has sourced from Breakthrough Energy. Gates is a hydrogen enthusiast, who has called H2 the “Swiss Army knife” of energy sources — a position criticised by others in the field who warn about using hydrogen where it is not the best solution.

Koloma also said it plans to apply for subsidies under the US Bipartisan Infrastructure Law, as well as the flagship hydrogen production tax credit (PTC), introduced in the Inflation Reduction Act.

Access to the PTC, under which there is a maximum $3/kg available, is determined on carbon intensity grounds and on a range of sustainability and labour criteria, rather than production method.

So in theory, producers of natural hydrogen should be in line for subsidies alongside the green H2 producers the PTC was intended for. However, Treasury guidance, which is due to be published in August, will further clarify the rules.

Koloma only plans to begin commercial operation when demand for H2 has started to ramp up — despite the fact that about 90 million tonnes of highly polluting grey hydrogen, made from unabated fossil fuels, is currently being produced and consumed each year.

“The only big users of hydrogen are refineries and ammonia plants,” Johnson said. “So if I know where there’s a lot of hydrogen, I need to wait for markets to develop. We’re building our capabilities and going to try to time commerciality around the time hydrogen demand is really peaking.”

No commercially exploitable reserves of natural hydrogen have yet been found, although white H2 from one well in the African nation of Mali is being burned to produce electricity for the nearby village.

Hydrogen Insight has approached Koloma for comment.