INTERVIEW: BP's hydrogen plans in Europe go far beyond own refinery use

BP's hydrogen plans in Northwest Europe go well beyond the company's own refinery demand, with plans to supply regional steel, chemicals and other industrial sectors, the company's vice president for hydrogen, James Patterson, told S&P Global Commodity Insights Nov. 14.

The energy major's recent entry into the European offshore wind sector, securing 4 GW of offshore licenses under Germany's tender in July, would feed into decarbonizing the company's operations and producing green hydrogen, though BP would also trade power in the market through its growing power trading desk, Patterson said on the sidelines of the Reuters Energy Transition Europe conference in London.

"We're just using the refineries to get started" with hydrogen, he said. "Decarbonizing refineries is important, but the scale that we're looking to go in places like Germany, it's well beyond the need of the refineries."

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BP aims to produce 500,000-700,000 mt/year of low-carbon hydrogen globally by 2030, across a portfolio of projects including in the EU, the UK, Australia and the US.

The company is building an electrolyzer for its Lingen refinery in Germany, and is developing a 250-MW plant in Rotterdam with Netherlands-based HyCC(opens in a new tab), while it is also planning green and blue hydrogen plants in the UK around the Teesside industrial decarbonization cluster.

BP's refineries will act as anchor offtakers for its hydrogen production projects, though the company plans to supply clean hydrogen to customers in the steel and chemical sectors, as well as mobility and other industrial users.

Indeed, subsidy schemes that the company is applying for in Europe require third-party access to the hydrogen, Patterson said.

"I've got to find a balance, because my refinery manager is definitely looking at decarbonizing, but I balance his or her needs against the needs of my third-party customers as well."

The company is awaiting the outcome of EU Important Project of Common European Interest awards for projects in Germany. IPCEI status opens the way for state capex support, which along with support schemes under the revised EU Renewable Energy Directive II and III, would just about make projects viable, he said.

"I wouldn't say the support easily gets you there -- it's still a struggle."

BP hopes to take final investment decisions on a number of projects in 2024, with Germany's IPCEI announcements expected "soon" to pave the way for the company.

Patterson said the Netherlands and Spain were likely to follow shortly afterwards, but noted that a number of details in the RED III package still needed clarifying.

"Like many things in Europe, the details are yet to be hammered out on RED III, so it's hard for me to tell you if that's going to result in an economic project," he said. "But capex subsidies alone won't do it. You do need that kind of demand-side support or mandated targets with the support in the background."

Platts, part of S&P Global Commodity Insights, assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur6.71/kg ($7.27/kg) Nov. 13 (Netherlands, including capex), based on month-ahead power prices. Proton exchange membrane electrolysis production was assessed at Eur7.85/kg, while blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur3.64/kg.

Power trade

Germany's 4 GW of offshore wind capacity(opens in a new tab) secured under a tender in July will also feed into refinery decarbonization and hydrogen production plans for the company, though Patterson also pointed to BP's fast-growing power trading operation.

"We do expect to provide significant parts of that to the market. But indeed, there's a big integration play there, and hydrogen is one of those pieces."

"We're looking to really grow our portfolio of green hydrogen projects in Germany to meet the similar timing to that 4 GW and integrate that."