White Geological Hydrogen Explained
Good morning MINING AIM.
While the market is quiet, I thought I'd quickly sketch out some of the key points to understand about hydrogen. If you thought that helium was poorly understood - well, geological hydrogen is even less well-known.
Here's why.
There are several, helpfully colour-coded types of hydrogen:
Gray - made from natural gas/methane through steam methane reforming, which releases carbon dioxide as a byproduct.
Blue - same as gray, but carbon emissions are captured and stored.
Green - produced using renewable energy, but expensive.
Brown - made by gasification of coal, even more harmful than gray.
Turquoise - produced via methane hydrolysis, methane is split into hydrogen and solid carbon instead of carbon dioxide gas.
Pink - generated from nuclear energy used to power electrolysis.
Yellow - produced via a mix of energy sources dependent on the grid.
White - naturally occuring geological hydrogen. Ultra-rare.
Now we have our Hydrogen Power Rangers (or modern Daleks), it's important to consider the positives and negatives.
The basic premise is that each method of hydrogen production is either carbon intensive (bad for the environment and often worse than fossil fuels) OR economically non-viable. The key issue is that you either cause significant environmental damage, OR you employ a method which takes more energy to produce the hydrogen than the hydrogen itself exudes when used.
While hydrogen is the most abundant gas in the universe (circa 75% of all matter), it's a nightmare to extract.
Except white hydrogen - we'll talk about that in a moment.
You can see this in some of the few hydrogen only focused shares on AIM:
Ceres Power - innovator in solid oxide fuel manufacturing, a novel, inexpensive, low energy method of manufacturing hydrogen. It’s partnered with a number of international brands to secure funding and distribution channels while it attempts to scale up.
Its fuel cells represent an area of immense potential, especially given its partnerships with Bosch, Doosan Fuel Cell, and Linde Engineering.
Ceres’ key advantage is that its fuel cells can be used with both traditional hydrocarbon energy sources as well as hydrogen. This means its clients can slowly transition to hydrogen, representing a smaller corporate investment risk.
Initial tests of its solid oxide electrolyser module give confidence that this technology can deliver green hydrogen at around 25% more efficiently than incumbent lower temperature technologies. Accordingly, it’s been awarded the coveted MacRobert award for the ‘spectacular’ engineering success.
For perspective, Bosch Power units based on Ceres’ technology have received European funding worth €160 million — while at Doosan’s 50MW factory in Korea, all machinery and commissioning is on schedule. Ceres also recently signed a global agreement with Delta Electronics worth a potential £43 million for cell and stack production.
ITM Power - is a producer of electrolysers — low-carbon hydrogen gas generation based on proton exchange membrane technology. As arguably the largest dedicated green hydrogen operator in the UK, ITM’s future prospects could be bright.
It’s possible that hydrogen power — and in particular, green hydrogen — will become a significant source of energy as the green revolution accelerates, particularly given the political prominence of energy security. And as there is a dearth of UK-based hydrogen stocks on the market, ITM Power could be an excellent, though risky, early investment especially at the current price point.
The company is mid-turnaround.
AFC Energy - is a leading provider of alkaline fuel cell systems, used in everything from electric vehicles to space shuttles. The company recently announced that its ammonia cracker technology successfully achieved 99.99% hydrogen from single reactor testing, with the results being independently tested by the National Physical Laboratory.
For context, this tech could deliver ‘fuel cell grade hydrogen on a modular, scalable basis,’ which could be key to the hydrogen world at large.
AFC intends to displace diesel in key markets through its S Series H-Power Generator — which is already earning revenue — and by developing the S+ H-Power Generator and Fuel conversion technology platforms to the revenue stage over the medium term.
The Speedy Hydrogen Solution Joint Venture — the partnership with Speedy Hire signed in November — is starting to prove the business model of selling H-Power Generators wholesale to plant hire companies, for onward rental to the construction sector and temporary power markets.
All three stocks are substantially down over the last 12 months - but fundamentally, all are trying to solve the energy problem - generating more hydrogen with less energy to meet the economic viability threshold.
But a real technological breakthrough is some time away, and the market considers current efforts to be high risk - hence the sell-off and relatively low market capitalisations compared to the potential prize.
For perspective, plenty of visionary investors consider that hydrogen cars will replace EVs in time.
But while we're all waiting for some financially starved Oxbridge spin-out to find a solution, there is one form of hydrogen that is both economically viable and NOT particularly environmentally damaging.
White (geologic, gold or natural) hydrogen.
It's white, because it's pure.
As a side note, this is what Helix Exploration has recently discovered - and if in economically large enough quantities - it could be a gamechanger.
Instead of using some kind of high-energy electrolysis, white hydrogen is found naturally occurring under the Earth. Rystad Energy notes that 40 companies are now actively searching for the stuff, quadruple in three years.
This is relatively new exploration; the first white hydrogen deposit was discovered in Mali in 1987 when Hydroma struck an odourless gas that was highly flammable but not considered valuable. This well was abruptly plugged - but in the early 2000s, exploration rediscovered this pure hydrogen gas which now powers the nearby village.
In 2023, explorers then found another vast white hydrogen deposit in Lorraine, France. Excitement is building. In the UK, hydrogen has government backing, as it is expected to fulfil a role in Net Zero 2050. The government’s Ten Point Plan for a Green Industrial Revolution report has predicted that hydrogen power could deliver more than £4 billion in private investment over the next decade.
Across the pond, the U.S. Department of Energy recently granted $20 million to support 16 projects nationwide to advance white hydrogen projects as the energy could potentially produce zero carbon emissions.
The United States Geological Survey (government agency) is throwing around some pretty crazy numbers, but you have to be careful with hyperbole. No hydrogen projects have actually started extracting (except in Mali) as far as I can surmise, and the Hydrogen Science Coalition remains sceptical about the prospects given the massive amount of white hydrogen that would be needed to power large-scale decarbonisation and the relatively few early-stage discoveries.
But.
And there's always a but.
The first large-scale hydrogen deposit that brings theory to practice could spearhead an industry revolution in terms of exploration and exploitation. Grant funding is there for the taking, partners are itching to provide capital, and the first to deliver a commercial find will see global interest.
It's effectively pure profit. And while exploration is early-stage, it could change the world.
Hydrogen deposits may be renewable. When water and ions interact under the crust, they create the gas - many scientists posit that as you extract white hydrogen, it is replaced as fast as you remove it.
Which sounds profitable.
- Charles Archer, 6/9/2024