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Editor's note: The full version of this article originally appeared in the February issue of E&P Plus.
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Japan has been an early mover toward a hydrogen-based economy. Its roadmap includes developing a hydrogen supply chain, increasing the use of hydrogen across different sectors, promoting hydrogen technological innovation and public buy-in, and promoting an international hydrogen collaboration. The Paris Accord was a big driver, as was the Fukushima Daiichi disaster. The latter event resulted from natural causes (e.g., earthquake and tsunami) releasing radiation into the atmosphere and radioactive isotopes into the Pacific Ocean. Remember news of radioactive debris washing up on the shores of Washington?

The Japanese plan was thus born of the mother of all invention—necessity. While the U.S. hydrocarbon industry does not have that imminent necessity, it would be wise to pay attention and get on board before the train leaves the station.

And here is the point: it is the transition that requires America’s famous innovation.

The first issue is changing a deep-rooted hydrocarbon U.S. mindset, which author Bryan Burrough famously wrote about in The Big Rich, to the simple truth that a transition away from hydrocarbons is coming.

The second issue is focusing the right people on what the ultimate renewable energy solution will be.

The third issue—the most complicated yet most important—is beginning the transition from hydrocarbons to hydrogen, the ultimate renewable now. The U.S. is no Japan, so we learn from it but do not copy it.

Changing the mindset

Spindletop created something that seems to have ingrained the value of hydrocarbons in generations of not just Texans, but all of the U.S. over a certain age. Despite headlines, don’t think for a minute that California or the East Coast are not included. Companies and capital markets on the coasts have and still do make great fortunes off hydrocarbons. California has some of the largest fields in existence that have been pumping for more than 100 years. We still see can’t lose deals almost every day from Texas to California to South America to Indonesia. For example, Exxon’s Guyana Payara Field will begin production in 2024 and is expected to produce 220,000 bbl/d of oil from an estimated $9 billion in development costs.

Hydrocarbons are going nowhere fast without government intervention, which is happening in the most developed nations. Initiatives in the EU are likely as significant as in Japan. Even so, this will not effectuate change at the top fast enough. What will is social sentiment from the young. You see it on trading platforms such as Robinhood, in social media groups and even in the lower average age of politicians each year. The world is more connected, and that has brought with it more power to the youth and less to the aged establishment. So, change the mindset and get on the train before it leaves.

Hydrogen endgame

George H. Lugrin
“U.S. oil and gas companies need to reinvent themselves as true energy companies and use their world-leading innovative talent to face the inevitable changing energy world.”

What is the renewable energy endgame? Hydrogen—the most abundant element in the universe and the energy used by nature. Solar, wind and even geothermal all exist because of the sun, which, like every other star, is a massive fusion reactor. Without diverting to a discussion of Nebula Theory, the sun’s hydrogen undergoes a fusion reaction that unleashes light and heat (the same thing at different wavelengths), which radiates to the earth. This in turn allows plants and animals to grow, the wind to blow and even the earth to spin (as well as dissipate heat from its core).

It is a hydrogen endgame. The only question is how fast can the U.S. get there and do we let other economies (whether single or a bloc) beat us? Of course, this question does not need an answer. For those familiar with Moore’s law—predicting the number of components on an integrated circuit (chip) would double every two years—you may know we can thank this rapid pace of innovation for everything, from smartphones to cheap laptops and GPS.

America is the world’s innovator. That innovation needs to be focused on the hydrogen transition.

And there is the rub. How do we transition to a dominant hydrogen-based energy economy? The hydrocarbon infrastructure is vast and aging. Most automakers have already started down a battery EV path instead of fuel cell EVs, and most non-integrated oil and gas companies only want to drill for hydrocarbons.

Navigating supply and storage roadblocks

Most see storage and transportation of hydrogen as the major roadblock, but we already store and transport similarly volatile substances. Advancement in materials has already led to safe storage and transportation of hydrogen. Again, American innovation is the key, but we need the necessity.

Generation of hydrogen is another perceived roadblock. There are many ways to do this, some are green and others not so much. Green hydrogen is generated from renewable sources, so no greenhouse gases (GHGs) are generated in the process. Most people think of electrolysis, by which water is separated into hydrogen and oxygen using electricity. This process is green if the electricity comes from renewable sources like wind or solar. But the efficiencies are not there when compared to hydrocarbon electrical generation. This amounts to another innovation issue and frankly one that has a solution staring us in the face: biomass gasification.

Gray and blue hydrogen are also promising as existing infrastructure can be utilized. Gray hydrogen is generated from hydrocarbons but emits GHGs in the process. Blue hydrogen is also produced from hydrocarbons, but the GHGs are captured and injected back into the ground as opposed to being released to the atmosphere.

Another encouraging technology is direct recovery of hydrogen from existing oil sands (commercial or abandoned). The details are complex, but the process involves heating the remaining hydrocarbons and water in situ to break apart the molecules (thermolysis). The lightest element—hydrogen—can then be recovered from the wellbore leaving the other elements underground.

U.S. oil and gas companies need to reinvent themselves as true energy companies and use their world-leading innovative talent to face the inevitable changing energy world. Make no mistake, this transition will take decades and involve technologies yet to be invented. But green is coming.

About the author: George H. Lugrin IV is the shareholder, director and president of litigation law firm Hall Maines Lugrin, P.C. Lugrin’s expertise is grounded in a mechanical engineering degree, registration as a patent attorney and hands-on experience as a practicing engineer at NASA’s Johnson Space Center in Houston.