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Rising demand for hydrogen attracts interest of U.S. Gulf Coast petrochemical companies

Top executives of companies like Westlake Chemical and LyondellBasell are paying increasing attention to hydrogen, including the potential for turning ‘gray’ hydrogen into increasingly demanded environmentally friendly versions.

Hydrogen does not emit carbon when used as fuel. It can store energy, or provide power to vehicles and homes. It can be transported as gas or liquid.

When hydrogen releases energy it only leaves behind water vapor. But hydrogen production does release carbon dioxide. Gray hydrogen comes from hydrocarbons while green comes from renewables. Blue hydrogen comes from processes that include carbon re-capture.

Petrochemical companies mostly produce gray hydrogen, as it is based on fossil energy like ethane or propane. Production comes as a by-product.

There is increasing interest in hydrogen across the U.S., including "places like the Gulf Coast, where they already have a lot of hydrogen in the infrastructure and are wondering what is their future in the energy and how will they transition by taking advantage of infrastructure they already have,” Dave Edwards, Air Liquide's hydrogen director, said.

Westlake Chemical eyes hydrogen economy

Westlake produces a fair amount of gray hydrogen during the cracking process, as a by-product of ethylene and currently uses it as fuel.

Ethylene is the target molecule during ethane cracking, but the process also yields a fair amount of gray hydrogen. Westlake also produces smaller volumes of hydrogen when making chlorine.

Albert Chao, CEO of Westlake Chemical Corp, said during the second quarter earnings discussion on Aug. 7 that the company wants to “enter” the hydrogen economy, according to a call transcript by ThomsonReuters Street Events.

“We produce hydrogen from our colocalize cells. So we produce not a whole lot of amount because when you do electrolysis on salt brine to make chlorine caustic, there's water in the salt brine, and they turn into hydrogen as well,” Chao said,

“We do produce hydrogen from a chlor-alkali plant as well as ethylene plants. So we are all ears, and we want to enter into the hydrogen economy, and we have a way to supply with today's production without adding any more capacities,” he added.

“We could buy renewable power, then we become green from the chlor-alkali plants,” Chao added.

“We certainly do look at times of using hydrogen at a higher value and not just as fuel, but selling that back into the merchant market,” Westlake Chemical Corp.’s CFO Steve Bender said,

Regarding plans to produce hydrogen other than gray, that “is something that we're looking at and paying attention to, but it's something we'll just have to see if there's an underlying value stream long term if we want to look at doing anything on that front more broadly,” Bender added.

LyondellBasell to look into selling more hydrogen

An analyst posing a question during an earnings discussion on July 31 estimated that based on LyondellBasell’s ethylene capacity, the company likely produced “hundreds of thousands of tons of hydrogen a year.”

“Indeed, we do produce a lot of hydrogen off of our crackers, especially the ethane crackers,” LyondellBasell CEO Bhavesh Patel said, according to a call transcript by Motley Fool.

“We have some integration with the refinery, as you noted. We also sell some crude hydrogen to industrial gas companies who then refine the hydrogen,” Patel said.

“So there's a mix. Some of it is fuel, some of it is sold to industrial gas companies, and then and the balance goes back to our refinery,” he added.

“And we'll look at that over time as we see industrial gas companies finding new uses for hydrogen to see if we can sell more to them and recover,” Patel said.

Other hydrogen production

Another petrochemical process that produces hydrogen as a by-product is propane de-hydrogenation (PDH). PDH plants produces polymer grade propylene (PGP).

In 2018 Enterprise Products PDH produced hydrogen at Mont Belvieu, Texas helped Air Products add 40 million standard cubic feet per day to its Gulf Coast system.

Air Products’ Gulf Coast system, stretching from Houston to New Orleans, provides over 1.4 billion standard cubic feet of hydrogen per day to refinery and petrochemicals customers with 22 Air Products’ hydrogen facilities feeding a 600-mile pipeline.

Hydrogen is used in petroleum refining processes to remove sulfur, olefins and aromatics to meet specifications.

Hydrogen interest on the rise across U.S.

Hydrogen can replace or complement natural gas in powering homes. Using hydrogen for vehicles has the advantage of faster refueling compared with plug-in electricity vehicles.

Shane Stephens, chief development officer at First Element Fuel, California’s leading hydrogen retailer for vehicles, said scale is set to increase, likely to bring costs down.

“We hope in the next two to three years we will be competitive with gasoline in terms of the price at the pump,” Stephens said during the U.S. Biogas virtual conference by Reuters Events.

Dave Edwards, director and advocate for hydrogen energy at Air Liquide, added that interest in hydrogen in the U.S. is on the rise not just in California, which is the leading U.S. state when it comes to hydrogen adoption for automotive.

Air Liquide, based in France but with operations in over 80 countries, has investments in the U.S. that include a $150 million plant in North Las Vegas, Nevada to produce hydrogen from renewable natural gas.

The plan is to produce about 30 tons of liquid hydrogen per day to enable California to grow to an expected 200 stations providing hydrogen fuel to vehicles by 2025. Air Liquide’s has other U.S. projects, including some involving hydrogen production from landfill biogas.

“We’ve actually seen a number of regions wanting to really take a serious look at hydrogen,” Edwards said

“We’ve seen it in the Northwest, in the Northeast” as well as in the Gulf Coast, Edwards added.

By Renzo Pipoli

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