The US state of West Virginia will site a $2bn blue hydrogen production facility and data centre, the governor’s office announced this week.

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The Mountaineer GigaSystem project aims to produce 500 tonnes a day of H2 from fossil gas, with CO2 emissions captured and stored, from 2028 to provide dispatchable power for a co-located data centre dubbed the Monarch Cloud Campus.

The complex’s developer, Houston-based Fidelis New Energy, indicates that three more phases, each costing $2bn and producing another 500 tonnes per day, could be built, although no timeline is attached.

“We are proud to have selected West Virginia as home to the Mountaineer GigaSystem where it can serve as a major anchor and support for the broader ARCH2 Hydrogen Hub,” said Pete Hollis, senior vice president and global head of CCUS at Fidelis said, referring to the proposed regional hub covering the state and its neighbours Ohio, Pennsylvania, and Kentucky.

ARCH2 has applied for funding through the Department of Energy’s Regional Clean Hydrogen Hubs programme, which will allocate $7bn across 6-10 hubs, with analysis by Rystad indicating that it is extremely likely to be selected.

At least one of these regional hubs is expected to demonstrate clean hydrogen production with fossil gas as a feedstock, although blue H2 is controversial due to the underperformance of CCS historically and the potential for significant upstream methane emissions.

“West Virginia has worked hard to build our reputation as an all-of-the-above energy state,” the president of West Virginia’s senate Craig Blair said.

“This investment by Fidelis will enable them to use our abundant natural gas resources to produce clean hydrogen energy, which then will be used to power manufacturing sites and more,” he added.

But despite this state government backing, key details of the so-called Mountaineer GigaSystem remain murky.

While the data centre is expected to have 1GW of power demand when fully built out, which is estimated to cost $5bn, it is unclear whether this will be completed in 2028 or if a first, smaller phase will be constructed first.

While Fidelis says that both renewable energy and fossil gas, with carbon capture and storage (CCS), will be used to produce hydrogen, its website clarifies that the H2 will be produced from the gas, implying that the green electricity will be used to power the plant’s processes.

The company says that its technology, for which it has filed patent applications, in combination with equipment from partnered firms Topsoe and Babcock & Wilcox can produce hydrogen from fossil gas at “a lifecycle carbon intensity of 0kgCO2e/kgH2”.

While this would be well within the threshold of the 45V clean hydrogen production tax credit’s carbon intensity criteria of 0.45kgCO2e/kgH2 or below for the full $3/kg, it is unclear to what extent Fidelis has accounted for upstream methane emissions from sourcing the gas feedstock.

It is also not clear how the company will be able to capture all emissions from the plant, since 95% CCS is generally considered at the top-end of performance for current technologies.

Fidelis targeting the 45V tax credit makes it unusual among blue hydrogen developers, since most analysts suggest that these projects are more likely to opt for the 45Q tax credit, which offers $85 per tonne of CO2 sequestered.

On paper, a facility with a 95% CCS rate could claim $1/kg of hydrogen produced through the 45V while only getting $0.75/kgH2 from the 45Q. But upstream methane emissions and grid electricity to run the plant are expected to ratchet up the lifecycle carbon intensity to the lower tiers of the hydrogen production tax credit where it can only claim $0.75 or $0.60 per kilogram — if at all.

Hydrogen Insight has reached out to Fidelis for more information about the project.