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Alberta takes early lead in blue hydrogen

Natural gas resources and geology hand Canadian province advantages over other regions, minister tells Hydrogen Economist

Proposed blue hydrogen-related projects continue to pile up in Alberta. In early August, Malaysian NOC Petronas’ Canadian subsidiary and Japanese conglomerate Itochu Corp. signed a memorandum of understanding to build a $1.3bn facility in the Industrial Heartland region near Edmonton to produce blue ammonia for export to Japan. If they decide to go ahead, construction would begin in 2023, with the goal of bringing the plant online by 2027.

This is the sixth hydrogen-related project proposed in Alberta in the past three months and the fourth to produce low-carbon hydrogen.

6 – Hydrogen-related projects proposed for Alberta in last three months

The other three are Shell’s Polaris carbon capture, utilisation and storage (CCUS) project to convert current grey hydrogen production at its Scotford refinery to blue; a C$1.3bn ($1bn) blue hydrogen project proposed by Pennsylvania-based Air Products; and a blue hydrogen project jointly announced by Canadian companies Suncor Energy and ATCO Ltd. The other two projects are CCUS trunklines: one proposed jointly by Canadian midstream firms Pembina Pipeline and TC Energy; and the other related to the Oil Sands Pathway to Net Zero initiative.

Hydrogen Economist interviewed Dale Nally, Alberta’s associate minister of natural gas and electricity to explore the reasons for the province’s early blue hydrogen success.

Alberta has gotten off to an extremely fast start on the blue hydrogen project front compared to other jurisdictions around the world. Why is that?

Nally: While it is still early in the development of hydrogen—both globally and in Alberta—there are very encouraging signs about the potential for major investments in our province. Alberta has several advantages working to our benefit, including huge natural gas resources as well as excellent geology for CCUS. We have supplemented those natural advantages by developing comprehensive natural gas infrastructure and making important early investments in CCUS, both of which mean Alberta is in a good position to start increasing natural gas-based hydrogen production sooner than some other jurisdictions. 

“We have supplemented those natural advantages by developing comprehensive natural gas infrastructure and making important early investments in CCUS”

What was the genesis of Petronas Canada and Itochu’s proposed e-ammonia plant?

Nally: I had the chance to tell the story of Alberta’s advantages during a trade mission to Japan in early 2019, which helped build long-term foundations for future investments like the potential C$2bn ammonia facility.

Why do you think Petronas Canada and Itochu are considering Alberta for their project?

Nally: Since taking office, I have been in relentless pursuit of the kinds of relationships that open the doors to investment by conveying the attractiveness of Alberta’s pro-growth, good-value investment policies. We are one of the best jurisdictions in North America to make petrochemical investments in, not only because of our plentiful feedstocks, expert workforce and world-leading innovation, but also because of Alberta’s competitive tax rates and commitment to responsible resource development. In addition, the Alberta Petrochemical Incentive Program outcompetes jurisdictions across North America by committing 12pc of the capital costs of eligible petrochemical projects to successful proponents.

What do you see as the key challenges to export Alberta’s blue hydrogen in the future?

Nally: The recent investment announcements by ATCO, Suncor, Air Products, Itochu and Petronas show the possibility in Alberta’s hydrogen sector, but it will be important to resolve challenges around transportation and establish a strong domestic market in the coming years.

The Alberta government provided a less-than-comprehensive hydrogen strategy last October. What should we expect from your government moving forward?

Nally: We are finalising a roadmap for the future of hydrogen in Alberta, which will lay out our path for ensuring Alberta remains in the best possible position to meet the world’s emerging hydrogen demands. This exciting energy source has enormous potential to support jobs, economic growth, and better environmental outcomes for Albertans, Canadians and customers around the world.

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