Big Oil is the Biggest User of Hydrogen

Hydrogen is a multi-billion dollar business. 50 million metric tons of hydrogen is sold annually. World hydrogen production is doubling every decade. The biggest growth driver is oil refineries’ need to make lower-sulfur fuels. Other growth drivers are the use of hydrogen in making fertilizer, food processing, semiconductor manufacturing, and by other growth industries. You use hydrogen in your vehicle. Gasoline is a hydrocarbon. Hydrogen is used to make gasoline achieve high-octane efficiency. Hydrogen is also used to make modern gasoline burn with far-less damaging emissions. The food you eat was probably grown with fertilizers that were processed with hydrogen. Many food oils are processed with hydrogen.

Most hydrogen is reformed from natural gas and oil. The United States creates as much as one-third of the world’s total hydrogen. Most of the current U.S. production is from steam reformation of natural gas, where hydrogen is extracted from CH4 and H20.

About half of the United States hydrogen is used in the oil refining process. Praxair, a world leader in supplying industrial hydrogen explains, “By using hydrogen, heat and a catalyst, refineries can improve gasoline yields by cracking heavy oil molecules into lighter, more valuable fuels.” Praxair includes these benefits of hydrogen in oil refining:

  • Higher gasoline yield
  • Environmentally clean – no flue gas
  • Improved gasoline octane quality and sensitivity
  • Enhance feedstock
  • Helps meet Clean Air Act regulations
  • Lowers sulfur content of fuels
  • Improves production flexibility

Critics of the Hydrogen Economy tend to ignore its multi-billion dollar success. Instead they focus on a worst case scenario – use coal generated electricity to reform natural gas, and then put the hydrogen in a truck that must drive one thousand miles, and then put the hydrogen in a million-dollar demonstration fuel cell vehicle. Call this dumb hydrogen.

With this type of scenario planning, IBM would never have made a computer. The initial market was seven computers in the planet. Computers were too expensive, slow, and unreliable. Today, of course, over one billion people hold more computing power in the palm of their hands than the first vacuum-tube monsters.

In transportation, smart hydrogen will drive growth, not dumb hydrogen. Smart hydrogen starts by making gasoline and diesel increasingly clean. Volumes increase. Production cost of hydrogen decreases. Smart hydrogen then expands by going into increasingly cost-effective hydrogen vehicles at reasonable costs. In Torrance, California, hydrogen is being pipelined to the fueling pump. $500 per month Honda FCX cars will use the hydrogen. $59,000 modified Toyota Priuses will use the hydrogen in conventional engines. Fuel costs will be competitive with gasoline. From where does this smart hydrogen come? It comes from the same hydrogen pipeline being used by the oil refiners. There are 1,500 km of hydrogen pipelines in the USA.

Armory Lovins, in his paper Twenty Hydrogen Myths states that “Producing hydrogen is already a large and mature global industry…. Globally, about 50 million metric tons of hydrogen is made for industrial use each year. The U.S. Department of Energy (DOE) reports that about 48% of global hydrogen production is reformed from natural gas, 30% from oil, and 18% from coal. Only 4% of the world’s hydrogen comes from electrolysis.”

Half of the California hydrogen fueling stations make hydrogen on-site, using electrolysis to split water into hydrogen and oxygen. Most use photovoltaics to power the electrolysis. In Palm Springs, wind is used for one station. Solar and wind hydrogen is green. It is also more expensive than the hydrogen in Torrance. It will take volume and improved technology to make green hydrogen cost-effective.

The United States has the potential to replace its dependency on foreign oil with fuel that is created at home. Short term, biofuels promise to be a big part of the equation. Long term, hydrogen could be a major fuel.

John Addison is the author of the book Revenue Rocket (Executive Summary at http://www.optimarkworks.com/) and the upcoming book Cleantech Marketing. Since 2002, John has been a Board member of the California Hydrogen Business Council (www.californiahydrogen.org). John Addison is president of OPTIMARK Inc. a firm that helps with marketing strategy and partner development. He is a popular speaker in the Americas, Europe and Asia.

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