Ask MMEX Resources Corp. CEO Jack Hanks what sets the Trans Permian H2Hub apart from others competing for a piece of the $7 billion being offered by the U.S. Department of Energy (DOE) for regional hydrogen hubs. For Hanks, the positives are plentiful.
Location and resources top his list.
“You’ve got good sun, good wind, abundant supplies of water. You’ve got a lot of land, obviously, that can be utilized,” Hanks told Hart Energy. “We’ve been able to acquire land and permitting on some of our other projects with relative ease… On top of that, about 22 billion cubic feet of natural gas is going to be coming out of the Permian, which can be supplanted by some degree in hydrogen.”
MMEX’s planned Trans Permian H2Hub was among the 33 projects recently “encouraged” by the DOE to submit a full application, the next step in the process of seeking federal funds.
In all, 79 concept papers were submitted to the DOE.
Concept papers allow the department to give feedback to applicants so they can submit their best applications. Full applications for the grants are due in April. Eventual recipients will be selected during the summer of 2023.
MMEX touts its access to major interstates, including one running coast to coast; railroads along with areas to capture and sequester CO2 are also on the list.
Publicly-held MMEX has been around for decades, focusing on the development of oil, gas, refining and electric power projects in Texas and Latin America. However, in 2021, the company modified its business plan to move into clean energy use and production.
Trans Permian H2Hub plans include hydrogen bus manufacturing; refueling stations; green and blue hydrogen production; ammonia and methanol production; metropolitan bus transport projects; and community development programs. Hanks noted how some of the vast amounts of oil drilling wastewater could be cleaned up and used as part of the water-intensive hydrogen production process.
Seen as a cleaner alternative to fossil fuel-based sources, hydrogen is expected to play a key role in reducing global emissions to slow global warming. Hydrogen use across multiple sectors, including hard-to-abate ones like steel and cement, could enable zero or near-zero emissions where it is used—be it in chemical or industrial processes, integrated clean energy systems or transportation, according to the DOE.
Grading hydrogen applicants
Concept papers from companies vying for regional hub grants, which must be matched, were independently reviewed based on evaluation criteria listed in the funding opportunity announcement. Factors included qualifications, experience and capabilities; expected contributions toward a national hydrogen network; plans to develop production, end-use and connective facilities; and the community benefits plan component, according to the DOE’s Office of Clean Energy Demonstrations. The scores were reviewed by a DOE panel, which decided which papers to “encourage” or “discourage.”
Papers receiving the panel’s encourage notification addressed each element deemed by the DOE as critical to an H2Hub: comprising production, end-uses and connective infrastructure; demonstrating capabilities to execute a project plan or to attract and hire such capabilities; planning to deploy proven technologies; and indicating commitments to clean hydrogen and meaningful community benefits.
“For these concept papers, the private sector response was overwhelming and covered all technological solutions and every region of the country. The request for federal funds was roughly eight times the size of DOE’s $7 billion solicitation,” a DOE spokesman said. “The most remarkable aspect of the responses was the willingness of the applicants to propose investments, in aggregate, of more than $150 billion of their own capital alongside the DOE. This, in our opinion, is an irrefutable indication that the private sector agrees with Congress and the DOE that hydrogen—the ‘Swiss Army Knife’ of energy, is ready to lift off to full commercial scale.”
Of the 79 papers submitted, 46 were discouraged. Most of the papers landed in this category,
according to the DOE, because their concepts focused on only one element of the hub. Others were too reliant on technologies not yet ready for commercial-scale demonstrations or proposed projects not expected to help generate a clean hydrogen network in the U.S.
The “discouraged” label, however, does not prohibit companies from applying for funding or partnering with another applicant.
Producing Permian power
MMEX is already lining up projects and working to find customers. Besides a major clean fuels refinery project underway, the company has announced a green hydrogen project utilizing Siemens Energy electrolyzer technology. It is also in talks with a major oil company to develop a blue hydrogen project using an auto thermal reformer, described by Hanks as off-the-shelf technology that breaks down methane into hydrogen and carbon.
The carbon will be captured, while the hydrogen will be put through a Siemens gas turbine to create electricity, he explained.
“We’ll be producing 365 megawatts of power in the Permian, which is needed,” Hanks said.
He added the company has also signed an exclusivity agreement with a European manufacturer of busses that utilize hydrogen, looking to market to big cities such as Dallas, Fort Worth, Houston and San Antonio and maybe the West Coast.
“It’s a good start on the mobility market, which needs to be developed,” he said.
The company is seeking $1 billion in grant money, so it would have to bring at least another $1 billion to table, according to Hanks, which he is confident the company can do with the projects underway.
“We’re moving forward with our projects, irrespective of whether we get the grant,” Hanks said. “If the grant comes, that’ll be wonderful. But we’ll continue the development and implementation of our projects, even if we’re not awarded a grant.”
Hydrogen market still in infancy
Challenges are expected though, considering the hydrogen market is still in its infancy, for all companies looking to build up the sector.
The biggest obstacle, Hanks said, is offtake and moving hydrogen to where it needs to go.
“Transportation mechanisms are not fully developed for hydrogen, so most of the hydrogen projects—including us—are looking toward converting the hydrogen, either into ammonia or methanol,” he said. “Ammonia can be utilized in the United States, and there’s a lot of demand for fertilizers. But there’s a big demand in Europe and in Asia. We’re not on the ocean but we’re interconnected from the Permian by railroad,” enabling transport to coastal areas or into Mexico.
Applicants that were encouraged to submit full applications are not guaranteed funding. The DOE will award funding for up to 10 projects. It will allow companies presenting different projects in the same region to combine projects for the final application.
For Hanks, combining the Trans Permian H2Hub with another Texas project, including the Gulf Coast, would make “great sense.”
“Our view of it is that Texas, because of all of our natural resources, is going to get one or two hubs, maybe three,” Hanks said. “We’re not opposed at all to joining and making one Texas hub… It would assure everybody of getting one hub or two hubs, and some funding, which would be great for everybody.”
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