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  • Writer's pictureTariq Siddiqui,

Re-Imaging Energy: Underground H2 Storage - From Project to Regional Hub

Updated: Nov 15, 2022

By : Tariq Siddiqui

Your strategy to achieve Net-Zero by 2050 must included hydrogen energy and underground hydrogen storage solutions. The companies that have competitive advantage, can scale-up projects to regional storage hub are likely to be the leaders in the hydrogen economy in future.

Business Case for Hydrogen Energy

By 2035, additional 1.6 billion people will require energy, as global population hits 8.7 Billion. The finite fossil fuel resources with considerable Greenhouse Gas (GHG) impact would require a cleaner, sustainable and long-tern alternatives. Avoidance projects ( solar / wind) alone cannot solve the problem, Hydrogen energy offers one such alternative.

Hydrogen is an attractive green energy option for several reasons:

  1. Green hydrogen is produced by renewable technologies using electrolysis

  2. There is opportunity to convert grey hydrogen to blue, through removal projects (CCS)

  3. Its ease and ability to convert into electricity or heat supports its efficiency as an energy carrier due to its transport and energy storage capabilities .

  4. In addition to its convertibility, it is capable of replacing almost 60% of the natural gas used for non-industrial activities due to its substantial energy potential

Existing Hydrogen Market

The current hydrogen demand is almost entirely supplied by fossil fuels. The natural gas production from Steam-Methane-Reactions (SMR) is the primary source of hydrogen production. This Grey hydrogen is responsible for 830 mtpa of CO2 emissions (equal to the annual combined emissions of UK & Indonesia).

The key long-term transitioning strategy to meet Net-zero target is to transform this grey hydrogen into clean Blue hydrogen market, by decarbonizing and coupling it with existing Carbon Capture and Sequestration (CCS) infrastructure.

Developing New Hydrogen Market

Role of green hydrogen must be established in long-term Net-Zero strategy. There key challenges to overcome are:

  1. Need to match the development of new green hydrogen production & storage by stimulating commercial demand .

    1. Costs are challenging , supply chains need to be scaled-up to bring it down

    2. Policies are needed to control emissions and encourage early movers

  2. Address investment risk of first movers

  3. Eliminate cumbersome regulatory barriers

  4. The main opportunities for creating new markets and large scale hubs are:

    1. Leverage existing industrial ports and convert them into green hydrogen hubs

    2. Leverage existing natural gas & CCUS infrastructure to blue hydrogen

    3. Make fuel-cell vehicles more competitive by supporting hydrogen vehicles

    4. Establish hydrogen shipping routes for trading hydrogen

Why We Need Hydrogen Storage

  1. Hydrogen storage is a key enabling technology for the advancement of hydrogen and fuel cell technologies in applications including stationary power, portable power, and transportation.

  2. Hydrogen has the highest energy per mass of any fuel; however, its low ambient density results in a low energy per unit volume, requiring the development of advanced storage methods that have potential for higher energy density.

  3. Underground Hydrogen Storage (UHS) / Geological Hydrogen Storage (GHS) offers a large scale storage alternative to other options; like physical and material storage that are small scale, expensive and in the realm of research.

Type of Underground Hydrogen Storage (UHS)

  1. Salt Caverns (see figure)

  2. Depleted Oil & Gas (DOG) Reservoirs

  3. Saline Aquifers

UHS Project Lifecycle

The project life cycle is depicted in figure-1.

  1. PRODUCTION: H2 is produced by electrolysis using renewables (wind / solar)

  2. STORAGE: The excess hydrogen not needed is stored into salt caverns (depleted oil & gas fields and saline aquifer is also possible)

  3. EXTRACTION: When needed, hydrogen is extracted (by wells) from the salt caverns

  4. TRANSPORTATION: It is transported to industries/businesses using pipelines/truck

  5. UTILIZATION: The hydrogen can then be used by industries (utility) and business (filling stations).

The UHS project must demonstrate

  • Geological Confidence: Good data quality, exploration & appraisal, mapping, characterization, capacity, injectivity and containment, are needed for robust performance.

  • Technical Feasibility: Managing uncertainties and mitigating risks, monitoring, losses, identifying & assessing development options, concept selection, FEED and Execution.

  • Economic Viability: CAPEX/OPEX, reliable and sustainable markets, managing price volatility, managing regulatory framework, licensing and commercial risk

Examples of Existing /Planned UHS Projects / Hubs

  • US Texas : Clemens Dome, Moss Bluff, Spindletop - Existing

  • UK : Teeside - Existing

  • US Utah : ACES Delta - Development

  • US Texas : GHI - Planning

From Project To Regional Hub

A Regional Hydrogen Hub (RHH), plays a pivotal role in harnessing economies of scale. An industrial hub/port with, several refineries and chemical plant in proximity, along with network of natural gas, CO2 and Hydrogen pipelines, with several salt caverns and CCS sinks in proximity and existing infrastructure can all help bring down the cost. UK’s Teeside is a good example and Houston shipping channel meets the description for Houston Hydrogen Hub.

To Scale up from project to an Industrial hub requires development of capabilities in three areas to have competitive advantage:

  1. Storage Characterization - Data Driven

    1. Scaling up to the region scale (mapping screening and characterization)

  2. Venture Shaping - Business Driven

    1. Venture shaping can be single most issue that may impede upscaling of hydrogen project to a regional hub, as it involves many interfaces and integration challenges.

    2. All hub participants need to come together; producers, the storage operators, transporters and users, to share the value and risks.

  • Project / Asset Development - Project Management driven.

    1. Robust process need to be in place to mange New Energy projects.

    2. Value identification/creation must be managed through robust Decision Quality (DQ) in front-end space where uncertainty is highest.

    3. Value realization and preservation must be managed through value engineering in execution phase.


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