Hydrogen Production in Teesside, UK Achieves a Significant Milestone

At a glance

The UK aims to achieve net zero emissions by 2050, with hydrogen identified as a key energy source. Kellas plans to develop a low carbon hydrogen production facility as part of the East Coast Cluster bid. This project will create jobs and help decarbonize industrial processes, contributing to the energy transition.

The UK must decarbonise industry to achieve its target of net zero emissions by 2050 and hydrogen is identified in the Government’s 10-point plan as an essential energy source to enable this to be achieved.

As part of the BEIS cluster application under the East Coast Cluster bid, Kellas submitted an application to develop a low carbon hydrogen production facility, H2NorthEast.

Following the Government’s recent announcement, the East Coast Cluster is now confirmed as a Track One cluster making it one of the first two carbon capture utilisation and storage (CCUS) developments in the UK.

What this means for the region

The East Coast Cluster – which groups initiatives on Teesside and the Humber – will result in the largest industrial decarbonisation project in the UK. Up to 27 million tonnes of CO2 could be removed through the industrial cluster, representing 50% of the UK’s industrial cluster carbon emissions. The ambition is that our H2NorthEast project will be operational by the end of 2027, and, if highly utilised, will capture around two million tonnes of CO2 per year. Our plant, will create hundreds of construction roles over a three-year development period as well as long term plant operation roles for at least 25 years. We estimate another 100 direct operational jobs and up to 300 jobs in the supply chain once operational, and during construction there is the potential for around 1,200 additional jobs.

Why Hydrogen?

The Government’s strategy on hydrogen suggests that 20-35% of the UK’s energy consumption by 2050 could be hydrogen-based. Their report states that in the UK, a lower carbon hydrogen economy could deliver emissions savings equivalent to the carbon captured by 700 million trees by 2032 and is a key pillar of capitalising on cleaner energy sources as the UK moves away from fossil fuels.

It’s clear that hydrogen has a key role to play in the new energy mix with the two main possibilities being green and blue. Although green hydrogen is the most sustainable of the two - when renewable sources of electricity are used in processing - the technology is currently not readily available at large scale and the costs are three times more expensive than blue hydrogen. This is where blue hydrogen can make a huge difference in reducing emissions now. The technology is scalable, affordable and available. Although we believe that blue hydrogen is the immediate solution, we also understand that green hydrogen is the ultimate solution, eventually, and as such Kellas has signed up to a Net Zero Technology Centre study looking at connecting Scotland to the European Hydrogen Backbone, which is intrinsically linked to the creation of green energy hubs across Scotland.

Why has Kellas chosen to invest in Hydrogen?

We want to develop our business to contribute towards achieving Net Zero and our CATS terminal in Teesside, which receives around 10 billion cubic metres of gas a year, representing 26% of UK domestic gas production, is ideally positioned for blue hydrogen production. It also has the land footprint required for the construction of a large-scale blue hydrogen facility.

Currently all our gas from the CATS terminal is exported to the national grid and another distinct advantage is that the NTS connection point is within the CATS boundary site. This, together with the availability of significant quantities of natural gas, means the location would also be optimal for a future blending facility for feeding hydrogen into the NTS.

H2NorthEast would be the first blue hydrogen production facility on Teesside, and have an asset life of around 25 years. The project, estimated to come on stream by the end of 2027, would deliver low-carbon hydrogen that will decarbonize industrial processes in the Teesside industrial cluster and/or blend with natural gas into the NTS or NGN local network

This is a new beginning for our industry – not the end

The oil and gas industry is responding and evolving into an energy industry that recognises and embraces the wide range of energy sources necessary. It’s clear that hydrogen is a new star in the range of solutions our world needs. We are ready and prepared for this evolution and excited for the future of our industry.

Projects like ours are a great example of what our industry is doing, together, to rise to the challenge.

Energy transition doesn’t spell the end of our industry because we are now a much bigger, wider and evolved industry and in fact are the ones best suited to delivering as we have the transferable skills and expertise to rise to the challenges.