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Chevron Cautiously Wades Into Hydrogen

Copyright © 2021 Energy Intelligence Group

Chevron is still testing the waters on hydrogen as a commercial-scale investment, but recent months have seen an uptick in interest from the US major. Chevron has announced two memorandums of understanding (MOUs) since April with companies outside the oil industry to advance public policies that could help the nascent fuel take off, as well as explore technology, infrastructure and demand development. This week paired Chevron with engine and generator specialist Cummins, which has deployed more than 2,000 fuel cells and 600 electrolyzers globally. Cummins is also studying the feasibility of a hydrogen-fuel internal combustion engine. In addition to advocating supportive public policies in the US, the companies will look at ways to jointly build demand for hydrogen from commercial vehicles and industrial applications, as well as develop infrastructure. They will also explore the potential deployment of Cummins electrolyzers and fuel-cell technologies at Chevron's US refineries. "Hydrogen presents an opportunity to become a scalable, low-carbon solution that leverages Chevron’s existing assets, operations, and capabilities," Chevron spokesman Tyler Kruzich tells Energy Intelligence. "We are encouraged by the increased attention hydrogen is receiving from governments as they contemplate ways to lower carbon emissions from the transportation and industrial sectors." This week’s agreement follows an MOU in April between Chevron and automotive giant Toyota. That potential partnership would share research and development into hydrogen-powered transport and storage, and study supply and demand for light- and heavy-duty fuel-cell vehicles. Baby Steps The Western integrated majors have shown a growing interest in hydrogen as a low-carbon alternative fuel whose development could leverage existing downstream capabilities and infrastructure. In the case of "blue" hydrogen, the synergies also carry upstream, since this hydrogen is derived from natural gas, with carbon capture used to minimize emissions. The European majors have jumped more forcefully into this burgeoning sector, with feasibility work being done on multiple commercial-scale projects, particularly in Europe (IOD Mar.18'21). Chevron and Exxon Mobil, on the other hand, have tipped hydrogen more as a future-dated opportunity. Nevertheless, Chevron has become more active than its US counterpart in recent months in testing the market’s potential. Chevron tells Energy Intelligence that it is examining multiple opportunities for hydrogen demonstration projects, including a potential "green" hydrogen (i.e. hydrogen derived from renewable power) project at its Richmond, California, refinery. The company is also exploring the retail end. Its GS Caltex joint venture recently opened its first hydrogen fueling station in Seoul, South Korea. And Chevron has a license agreement to add hydrogen fueling capabilities at five owned-and-operated retail stations in California by end-2022. "We're very optimistic about [hydrogen’s] potential for decarbonizing hard-to-abate sectors in the economy, and that … it could eventually represent something incremental to our business," Chevron’s head of strategy and sustainability, Bruce Neimeyer, told investors at the company’s annual strategy update in March. Still, building out hydrogen as a price-competitive fuel source will require a significant reduction in costs, new infrastructure and the capacity for industry and vehicles to consume it. And that, Chevron notes, will require significant mobilization. "Robust public support for hydrogen is needed to complement the investments being made by the private sector to mature hydrogen technologies and build out the infrastructure needed to support its use," Kruzich says. The recent feelers into hydrogen opportunities come as Chevron faces heightened pressure from shareholders to develop a more comprehensive strategy to address the emissions of the products it sells (OD Jun.3'21). But with CEO Mike Wirth making clear that solar and wind power generation are off the table due to concerns of low returns, the onus is on management to define an alternate path that leans heavily on some combination of hydrogen, biofuels, carbon capture and offset credits. Casey Merriman, Phoenix

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