19 Mar “We are the first in the world to use green hydrogen at sea, and that it happens in the North Sea is not without reason”
Neptune Energy is the largest gas production company in the Netherlands, and extracts 8.5 million cubic meters of natural gas from the North Sea every day. The gas producer’s mission is to supply energy with the smallest possible CO2 footprint, and therefore uses hydrogen and CO2 storage in addition to gas. “If the procedures are clear, we can store CO2 within a few years”, says Lex de Groot, managing director of Neptune Energy. Change Inc discussed with De Groot what it takes to speed up sustainability.
For many people, the Netherlands stops at the coastline, for Neptune Energy it only starts there. Although the Dutch company has been around for more than 50 years, it has only been operating under the name Neptune since 2018, when the London parent company took over the detection and extraction activities of the French multinational Engie. This is a total of 29 platforms on the Dutch continental shelf, providing about 10 percent of the daily Dutch gas supply.
In the next twenty years there is still plenty of gas to be extracted in the North Sea – which is beneficial given that the Groningen gas tap will be turned off in 2022 – but the really large gas reserves are already over their production peak. That is why Neptune is simultaneously investing in sustainable alternatives such as the production of green hydrogen and CO2 storage. The proceeds from gas serve as an investment space for these sustainable projects. Neptune wants to convert and use its platforms and pipelines in the North Sea as much as possible for the energy transition.
Hydrogen at sea
In 2019, Neptune’s Q13a platform was suddenly in the international spotlight because of the announcement of the PosHYdon project. This project is an initiative of TNO, Nexstep and the sector, including Neptune. It is the first offshore green hydrogen project in the world, linking three offshore energy systems. The aim is to conduct research into hydrogen production from wind energy and demineralised seawater on a working production platform in the North Sea. “We have been hinting at offshore hydrogen production for a few years now,” says Lex de Groot, managing director of Neptune Energy. “Stakeholders used to look at this with a compassion. But we hope to show with the PosHYdon project that it is possible, and we believe that green hydrogen at sea should also be able to compete in terms of price with hydrogen made on land.”
There are many advantages for making hydrogen at sea: the platforms and pipes get a new function, which saves money and time. Moreover, you are no longer dependent on expensive electricity connections to the coast for transport. TNO, together with Neptune and other consortium partners, is now conducting research into, among other things, safety, how the hydrogen should be transported via the existing gas pipelines, and how it can be controlled from a distance. In April it will be announced whether the subsidy for the green hydrogen project will be awarded and by 2022 the one megawatt electrolyser should be in use on the platform, which will make the green hydrogen.
“This is really a research and demonstration project,” De Groot said of PosHYdon. “It will not be a business case for us even with a subsidy. We also don’t do it with the idea of making money with it now, but it’s an investment in the future.” The lessons that PosHYdon provides will help the next steps towards large-scale offshore hydrogen production. De Groot says that the project has received a lot of attention worldwide. “We are the first in the world to be involved in green hydrogen production at sea. And the fact that it is happening here in the North Sea is not without reason: the sea, due to its relative shallowness, has both offshore wind and a very extensive and fine-meshed network in terms of gas infrastructure. And at Neptune, we know how to handle gas at sea. That is what we are good at; whether it’s gas molecules or hydrogen molecules.”
At the other end of the sustainable spectrum, Neptune is committed to CO2 storage in the empty gas fields, so that it can help achieve the climate goals. This can be realized relatively quickly and efficiently, because it literally concerns the reversal of the gas production process. Neptune therefore conducts a feasibility study on Carbon Capture Storage, ccs for short, around the L10-A field, where CO2 can be stored in empty gas fields. The gas producer would like to pick this up together with the emitters at this stage, but that is still difficult, according to De Groot. “In this market, new stakeholders need to come together: companies that have CO2 on offer, and companies that can store it. In this, and in fact in all sustainable developments, the government must take its role.”
It is still very unclear what the role of the government and its affiliated state participations in CO2 storage will be, and what role private parties can play, says De Groot. “Understandable, because it’s pioneering. The industry has parties eager to get started, but they do need clarity. Private public cooperation, as has been the custom in offshore gas extraction for 50 years, would make sense. It builds on what is already in place, so continuity that speeds up the process. And it has the advantages of cooperation between private financing and public control.”
De Groot also advocates openness and transparency in these types of projects. “Especially for operators like us, it is essential to also sit directly at the table, in order to arrive at the right, safe and most efficient solutions, for both the emitting industry and CCSoperators. This serves the economy and employment of the Netherlands. The more thresholds in between, the more expensive it becomes. That is why I am in favour of an open and transparent discussion in order to break open up the market. I think that is ultimately the best solution for the Netherlands, because we all want to meet the climate targets at the sharpest price for storage per tonne of CO2.”
If there is clarity, Neptune can switch quickly: “Our platform L10-A off the coast of IJmuiden is one of the largest offshore gas fields in the Netherlands, and for the most part it is empty. That platform would really be a spider in the web for CO2 storage: here lies a whole network of pipelines to England and the north.”
Certificates of origin
Another topic at play are the certificates of origin for hydrogen. After all, you can’t tell if hydrogen is produced sustainably or not. Discussions are already taking place at European level, which De Groot is keeping a close eye on. “The importance is great, because with the certificates you determine the value of your hydrogen.”
The green hydrogen economy has yet to get under way, but Neptune Energy’s aim for all eight countries where it operates is clear: by 2030, it wants to emit 60 percent less CO2 than if they did nothing. “Steps are already being taken in Europe to get the hydrogen economy and associated projects off the ground. At Neptune, we look at our significance in the hydrogen economy, and take our role seriously.”