Hydrogen presents a transformative opportunity for the oil and gas industry to align with global decarbonisation goals.

The oil and gas industry stands at a critical juncture as the world intensifies efforts to reduce carbon emissions and transition toward cleaner energy sources. While fossil fuels have powered economies for over a century, their environmental impact has necessitated a shift toward more sustainable alternatives. Hydrogen, particularly low-carbon and green hydrogen, has emerged as a promising solution to help decarbonise the sector. By integrating hydrogen into operations, the oil and gas industry can significantly reduce its carbon footprint while maintaining energy security and economic viability.

The role of hydrogen in the oil & gas industry

Hydrogen has been a crucial component in the oil and gas industry for decades, primarily used in refining processes such as hydrocracking and desulfurisation. However, the traditional method of hydrogen production—steam methane reforming (SMR)—is carbon-intensive. The focus is now shifting to low-carbon hydrogen production methods, including blue and green hydrogen.

• Blue Hydrogen: Produced from natural gas using SMR but with carbon capture, utilisation, and storage (CCUS) to reduce emissions.
• Green Hydrogen: Generated via electrolysis using renewable energy, making it a zero-emission fuel.

By leveraging these low-carbon hydrogen sources, the oil and gas industry can make substantial progress in reducing greenhouse gas emissions.

Key applications of hydrogen in decarbonisation

1. Refining Process Decarbonisation

• Hydrogen is essential in refining crude oil into useful products. Replacing conventional hydrogen with blue or green hydrogen can significantly cut CO2 emissions from refineries.
• Some refineries are already adopting CCUS technologies to capture and store emissions from hydrogen production.

2. Fuel Switching in Industrial Operations

• Oil and gas facilities rely heavily on fossil fuels for heat and power generation. Hydrogen can serve as an alternative, reducing emissions from high-temperature processes.
• Blending hydrogen with natural gas in existing infrastructure can lower carbon intensity without requiring extensive modifications.

3. Hydrogen as a Feedstock for Chemicals and Synthetic Fuels

• Hydrogen can be combined with captured CO2 to produce synthetic fuels such as e-methanol and e-kerosene.
• These fuels can serve as low-carbon alternatives for sectors like aviation and shipping, which are challenging to electrify.

4. Hydrogen-Powered Upstream and Midstream Operations

• Hydrogen fuel cells can replace diesel generators used in remote oil and gas operations, reducing emissions and improving efficiency.
• Pipelines can be repurposed or adapted to transport hydrogen, facilitating its integration into the existing energy infrastructure.

Challenges in hydrogen adoption

Despite its potential, several challenges must be addressed to scale hydrogen adoption in the oil and gas industry:

High Production Costs: Green hydrogen is currently more expensive than conventional hydrogen. Scaling up electrolyzer technology and increasing renewable energy capacity can help drive down costs.

Infrastructure Development: Transporting and storing hydrogen requires new or upgraded infrastructure, including hydrogen pipelines and refueling stations.

Regulatory and Policy Support: Strong policies and incentives are needed to accelerate hydrogen deployment and encourage industry adoption.

Energy Efficiency Concerns: Hydrogen production via electrolysis requires significant electricity, necessitating an expansion of renewable energy sources to ensure sustainability.

Global Initiatives and Industry Adoption

Several oil and gas companies have already taken steps to integrate hydrogen into their operations:

Shell: Investing in green hydrogen production projects and integrating hydrogen into its refining processes.

BP: Exploring hydrogen as part of its transition to an integrated energy company.

TotalEnergies: Developing hydrogen infrastructure and investing in electrolyzer technology.

Saudi Aramco: Pursuing large-scale blue hydrogen projects with CCUS capabilities.

Governments worldwide are also introducing policies and funding initiatives to accelerate hydrogen adoption. The European Union’s Hydrogen Strategy aims to deploy 40 GW of electrolyzer capacity by 2030, while the US Department of Energy has launched the Hydrogen Earthshot initiative to reduce hydrogen production costs to $1 per kg by 2031.

Conclusion

Hydrogen presents a transformative opportunity for the oil and gas industry to align with global decarbonisation goals while maintaining energy security and economic growth. By adopting low-carbon hydrogen production methods, integrating hydrogen into refining and industrial processes, and developing necessary infrastructure, the industry can play a pivotal role in the transition to a sustainable energy future. Though challenges remain, continued investment, technological advancements, and policy support can drive the large-scale adoption of hydrogen, positioning it as a cornerstone of a low-carbon energy system.

What is India's National Hydrogen Mission?

India's National Hydrogen Mission (NHM) was launched in 2021 to promote the production, utilisation, and export of green hydrogen as part of the country’s strategy to transition to a clean energy future and achieve net-zero emissions by 2070. The mission focuses on reducing dependence on fossil fuels, cutting carbon emissions, and positioning India as a global hub for hydrogen production and export.

Key objectives of NHM

• Develop India as a Global Leader in Green Hydrogen – Boost domestic production and make India a hub for hydrogen export.
• Reduce Import Dependence – Cut reliance on fossil fuel imports, enhancing energy security.
• Support Decarbonisation of Key Sectors – Help industries like refining, steel, fertilizer, and heavy transport transition to cleaner energy sources.
• Create a Hydrogen Ecosystem – Encourage research, innovation, and infrastructure development for hydrogen production, storage, and distribution.
• Make Green Hydrogen Cost-Competitive – Lower the cost of green hydrogen production from $3–6 per kg (2021) to below $1 per kg by 2030.

Key components of NHM

• Green Hydrogen Production: Incentives for producing hydrogen via electrolysis using renewable energy.
• Infrastructure Development: Establishing pipelines, storage facilities, and refueling stations.
• Demand Creation: Encouraging the adoption of hydrogen in industries and transport.
• Policy and Regulatory Framework: Clear guidelines for production, safety, and usage.
• R&D and Innovation: Investments in advanced hydrogen technologies.

Green Hydrogen Policy (2022)

• Open access to renewable energy for hydrogen production.
• Waiver of inter-state transmission charges for 25 years.
• Incentives for manufacturing electrolyzers.
• Land allocation in renewable energy parks for hydrogen projects.
• Green Hydrogen Production Targets:
• 5 million metric tonnes (MMT) per year by 2030.
• Reduction of 50 million metric tonnes of CO₂ emissions annually.
• Significant cost reduction in green hydrogen production.

Major initiatives under NHM

• PLI (Production Linked Incentive) Scheme for electrolyzer and hydrogen production.
• Green Hydrogen Corridors – Strategic infrastructure development.
• Collaboration with Global Partners – Partnerships with countries like the EU, Japan, and Australia.

Challenges

• High production costs compared to grey hydrogen.
• Limited infrastructure for storage and transport.
• Need for large-scale renewable energy deployment.

Conclusion

India’s National Hydrogen Mission is a bold step toward energy security, industrial decarbonisation, and climate goals. If successful, India could become a leading global producer and exporter of green hydrogen, transforming its energy landscape.