Equinor pushes back target FID on UK blue hydrogen plans amid funding uncertainty

Norway's Equinor has pushed back a target final investment decision date for its 600-MW H2H Saltend blue hydrogen plant in the UK to around 2027 after failing to be selected under the government's Track 1 carbon capture, use and storage cluster sequencing program in 2023, a company official said June 12.

The Norwegian oil and gas firm's vice president for Low Carbon Solutions, Dan Sadler, said an investment decision hinged on getting the go-ahead for the CO2 pipeline system for Humberside, part of the East Coast Cluster.

None of the East Coast Cluster projects in Humberside received backing under Track One, leaving projects there up in the air, Sadler told S&P Global Commodity Insights at the FT Hydrogen Summit in London.

"The Humber's a little bit stranded until [the government] allows the Northern Endurance Partnership to take an FID on that Humber pipeline system," Sadler said. "I think H2H Saltend will struggle to take FID before 2026-27, [...] because we need to know the pipeline is going to happen."

An FID on H2H Saltend was previously expected in 2024, with operations from 2027.

NEP is the operator of the planned CO2 transport and storage system for the East Coast Cluster.

The Endurance CO2 facility could store 450 million mt of CO2, NEP said on its website.

The projects that received backing under Track 1 are all in Teesside: BP's 1.2-GW H2Teesside blue hydrogen production plant, Net Zero Teesside Power -- a joint venture between BP and Equinor -- and BOC's Teesside Hydrogen CO2 Capture.

"There's some uncertainty because government aren't being clear," Sadler said. Equinor would like to see a commitment from the government for NEP to take FID as soon as the Development Consent Order for the Humber Onshore pipeline is awarded, he said.

"Because government aren't being clear on the sequencing of the CO2 transport and storage to the Humber, and the extent of it, it's causing confusion for the emitters, and it's causing anxiety for investors."

"This lack of clarity comes from the fact that the government hasn't confirmed an additional affordability," meaning the civil service can't apportion funding, he said.

The Department for Energy Security and Net Zero did not immediately respond to a request for comment.

Political uncertainty

Sadler said that while Equinor could wait for "maybe a few years" to take FID on its hydrogen plant, a critical factor would be how the next government moved the planned hydrogen and CCUS projects forward after a general election on July 4.

The election could slightly delay expected FIDs for blue hydrogen and CCUS projects in the East Coast Cluster and HyNet in the UK's northeast from September to later in the autumn.

But any significant delay or cancellation could drive companies to relocate decarbonization investment elsewhere in the world, Sadler said.

Sadler said informal discussions with the opposition Labour Party -- which has a strong lead in the polls -- were encouraging.

"The most important thing that Labour needs to do is to take on FIDs in September," Sadler said. "If they don't take those FIDs, the international investment community will say 'we can't trust them'. If they take the FIDs, then game on."

"What we're not clear on yet is where their priorities lie," he said. For example, the Labour Party is targeting a net-zero power system by 2030, five years ahead of the ruling Conservative Party's ambitions.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing blue hydrogen by autothermal reforming at GBP2.12/kg ($2.72/kg) (including capex, CCS and carbon), based on month-ahead gas prices, up from GBP1.93/kg a month before.

Equinor received planning permission approval for its planned plant in February. It has selected Johnson Matthey's LCH blue hydrogen technology for the project.