Saudi Arabia to use $110 billion gas field for blue hydrogen

Saudi Arabia said it would use one of the world’s biggest natural-gas projects to make blue hydrogen, as the kingdom steps up efforts to export a fuel seen as crucial to the green-energy transition.

A large portion of gas from the $110-billion Jafurah development will be used for blue hydrogen, according to Energy Minister Abdulaziz bin Salman. It is made by converting natural gas and capturing the carbon dioxide emissions.

“We are the biggest adventurers when it comes to blue hydrogen,” Prince Abdulaziz said at a climate conference in Riyadh on Sunday. “We’re putting our money where our mouth is on hydrogen. We have a terrific gas base in Jafurah we will use it to generate blue hydrogen.”

The comments came a day after the Saudi government pledged to neutralize planet-warming emissions within its borders by 2060, saying it would use carbon sequestration and hydrogen to reach that goal.

The plans for Jafurah underscore how the kingdom is moving away from a previous strategy to become an exporter of liquefied natural gas, a fuel that’s cleaner than oil and coal but which some governments have said they want to phase out.

Huge Market

A market for hydrogen barely exists today, but could be worth $700 billion annually by 2050 if producers can bring down costs, according to BloombergNEF. Saudi state energy company Aramco says large-scale blue hydrogen exports will probably begin after 2030.

Aramco is considering opening up the Jafurah field in the east of the country to foreign investors, Bloomberg reported last month. Aramco is working with an adviser as it mulls raising equity or debt for to develop the vast site, according to people familiar with the matter.

Jafurah is estimated to hold 200 trillion cubic feet of gas, and Aramco expects to begin production in 2024.

The kingdom also plans to sell green hydrogen, which is produced using renewable energy — usually solar and wind power — in a process that creates no carbon emissions.

Saudi Arabia can make the world’s cheapest green hydrogen, Prince Abdulaziz said on Sunday. He announced late last year that the country wants to be the world’s biggest exporter of both types of hydrogen.

The government will boost gas supplies for the local market too. It aims to stop burning oil in its electricity plants by 2030 and for gas to power half the grid by then. Solar and wind will make up the rest of the energy mix.

© 2021 Bloomberg L.P.

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