Shell pulls plug on Norwegian blue hydrogen project citing lack of demand

Shell PLC (London) has put the Aukra low-carbon hydrogen project in Norway on hold due to what the company said was a lack of demand for blue hydrogen to support an associated pipeline to Germany, as per Chemweek.

The Aukra Hydrogen Hub, being developed with partners Aker Horizons and CapeOmega, was to have a capacity of 2.5 GW, producing 1,200 metric tons of hydrogen per day by 2030, avoiding 4 million metric tons per year (MMt/y) of CO2 emissions.

Shell said it did not see “enough market pull” for blue hydrogen “to sustain financial support to the Gassco-led study” for a hydrogen pipeline from Norway to Germany. “We have also chosen to put the Aukra-project on hold for the same reasons,” a spokesperson said.

According to media reports, Equinor has also cancelled plans to export blue hydrogen to Germany. In 2022, the Norwegian government tasked Gassco with preparing a joint feasibility study exploring a hydrogen transport value chain from Norway to Germany. Gassco submitted a report at the end of 2023, finding the hydrogen transport proposal was technically feasible, subject to certain conditions.

“We are aware that these conditions have been matured further among involved industry players, and we take note of the decision made last week,” a Gassco spokesperson told S&P Global Commodity Insights by email.

The Shell spokesperson said the Aukra project partnership was not renewed when it expired in June.

Aker Horizons will also exit the project. “When both Equinor and Shell shelve their plans for a new pipeline for blue hydrogen export from Norway, it means that Aker Horizons will also not continue the plan for blue hydrogen production at Aukra,” Knut Nyborg, managing director/asset development at Aker Horizons said in an email.

“Aker Horizons agrees with Equinor’s assessment that the framework conditions are not in place for large investments” in a blue hydrogen export pipeline, Nyborg said. “We also share Shell’s conclusions that major industrial players in Europe now seem to prefer green hydrogen over blue.” Equinor and CapeOmega did not respond to requests for comment.

In 2023, RWE and Equinor signed a memorandum of understanding to develop a hydrogen value chain between Norway and Germany, with a view to RWE using the hydrogen in its power generation fleet, although the pipeline project did not involve RWE.

“It remains to be seen which type of hydrogen (blue and green) from which countries will later be used to supply the hydrogen core network, which is also yet to be established throughout Germany,” an RWE spokesperson told Commodity Insights. “The hydrogen-ready gas-fired power plants that RWE wants to build in Germany still require a political framework from the German government.”

The plants could start operations in 2030 at the earliest, the spokesperson said, noting that RWE is preparing for possible participation in an auction for such plants.

The Aukra project on Norway’s west coast was to use natural gas from the Ormen Lange gas field, where it is transported to the gas plant at Nyhamna.

The partners planned to produce hydrogen via steam methane reforming or autothermal reforming, capturing over 95% of associated CO2 emissions for permanent storage.

Shell said one option for the Gassco-led pipeline study, in which Equinor was also involved, was for it to connect to Nyhamna.

Blue hydrogen, while cheaper to produce than green hydrogen via renewables-powered electrolysis, has not received as much policy support in the EU, with its primary focus on renewable hydrogen to decarbonize hard to abate sectors.

EU rules and regulations governing green hydrogen are well developed, while the industry is still waiting for the bloc to finalize definitions and rules for low-carbon hydrogen production with CCS.

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Kazakhstan has received a request from Germany to more than double oil supplies to 2.5 million tonnes, Kazakh Energy Minister Almasadam Satkaliyev said, as per Interfax.

"We plan to export 1.2 million tonnes to Germany by the end of the year. There is a request from them to increase to 2.5 million tonnes overall," Satkaliyev told reporters on Wednesday.

We remind, Kazakhstan Petrochemical Industries (KPI, Kazakhstan, JSC NC KazMunayGas) increased the share of its products in the local market of polypropylene homopolymer (PP-homo) from 15 to 54%, while the share of imported PP-homo brands decreased from 59 to 8% from January to August 2024.

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ECI Group has signed a licensing agreement with Shaanxi Yanchang China Coal Yulin Energy & Chemical Co., Ltd. (YECC) to deliver a 150,000-tpy copolymer plant project, using ECI Group’s proprietary hybrid reactor technology, as per Hydrocarbonprocessing.

YECC is part of the Part of the Shaanxi Yanchang Petroleum Group, China’s fourth largest oil producer with significant petrochemical production facilities based in Shaanxi, Northwestern China. The plant will be located in Yangqiaopan, Jingbian County, Yulin City, Shaanxi Province. ECI Group’s technology will enable the plant to produce 150,000 tpy of LDPE, EVA, EBA and other high-value copolymer products, with the ability for future expansion of both capacity and product capability.

ECI Group will provide the technology license, process design package, expanded process design package, and detailed design for the high-pressure system as well as technical procurement services for the project and on-site technical support during installation, start-up, and performance assessment. ECI Group will be supported by Repsol, who will provide extensive technical, operational, and commercial expertise. Repsol has over 40 years of experience producing LDPE, EVA, and EBA polymer products in its industrial complexes in Spain and Portugal.

ECI Group’s hybrid reactor technology has been developed from the well-proven ICI autoclave technology and offers a wide range of high-pressure polyethylene products, providing unrivalled operational efficiency, reliability, and flexibility. ECI Group’s hybrid reactor technology offers significant improvements in the product range, reliability, and expandability to the original ICI technology, and has been optimized to make use of modern materials, design techniques, standards, and industry best practices for construction, operation, and maintenance. Since 2021, ECI Group has licensed plant capacities of 50,000 tpy, 100,000 tpy, 150,000 tpy and 200,000 tpy, all using ECI Group’s standardized design approach. This licensing agreement with YECC demonstrates the reputation and versatility of ECI Group’s hybrid reactor technology.

It was previously reported that polymer production in 2023 increased by 3.1%, to approximately 7.3 million tons. At the same time, demand increased by 9% and was covered mainly by the redirection of export volumes to the domestic market. The largest polymer application sectors in terms of volume are packaging and construction materials, and the largest consumers are housing and communal services and road construction.

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Ethylene prices journey southward in Asia, as per Polymerupdate.

Last week, ethylene prices dropped in the Asian region. An industry source in Asia requesting to remain unidentified informed a Polymerupdate team member, "Due to a combination of high supply and poor demand, buying and selling indicators, ethylene prices in the Asian markets. Bids for October cargoes are less than in October due to the ongoing weight of erased downstream margins.”

The source added, “owing to low demand and a lack of downstream assistance, several cargoes were still accessible. Given the weak demand and the usual winter slowdown, some derivative factories were thinking about reducing their operating rates in the fourth quarter. ”

On Friday, CFR North East Asia ethylene prices on Friday were assessed at the USD 835-845/mt levels, lower by USD (-20mt) from the previous week. CFR Southeast Asia ethylene prices were assessed at the USD 935-945/mt levels, a week on week decrease of USD (-25/mt).

Southeast Asia market sentiment also reported to be dull on the back of poor derivative margins, particularly in the polyethylene markets.

FOB Korea ethylene prices were assessed at the USD 790-800/mt levels while FOB Japan ethylene prices were assessed at the USD 785-795/mt levels, both week on week down by USD (-25/mt).

In plant news, Shandong Levima has taken off stream its Methanol-to-olefins (MTO) plant in mid-September 2024. Further details on the duration of the shutdown could not be ascertained.” Located in Shandong, China, the MTO plant has an ethylene and propylene capacity of 220,000 mt/year each .

In other plant news, LG Chem is likely to shut down its cracker in Quarter 4 2025 for a maintenance turnaround. The exact date and duration of the shutdown could not be ascertained.” Located in Daesan, South Korea, the cracker has an ethylene capacity of 1.270 million mt/year.

Petronas Chemicals Olefins has lowered run rates at its cracker. The reason behind the curtailed run rates could not be ascertained.” Located in Kerteh, Malaysia, the cracker has an ethylene production capacity of 600,000 mt/year and propylene production capacity of 95,000 mt/year.

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Technonicol Corporation has acquired an industrial complex from the EcoPartners group in Tver, the corporation's press service said, as per Interfax.

The amount of the deal has not been disclosed. The Tver enterprise includes three lines for processing PET bottles into flakes, two lines for recycling PET waste into re-granulate, and a line for the production of PET packaging tape.

Technonicol plans to allocate about 700 million rubles to modernize production in the near future. The plant should produce up to 30,000 tonnes of PET flex and up to 10,000 tonnes of HDPE granulate [a raw material made from low-density polyethylene] annually after reaching planned capacity.

Integration into the Technonicol structure will notably begin in September 2024 and end in 2025. The business processes of the organizations will be synchronized in all areas during this time. Increasing productivity will be the primary focus in developing the enterprise.

Part of the finished products from the plant in Tver will be used to provide raw materials for Technonicol's own production of PET fiber, and the rest will be used for packaging enterprises, including food.

The plant in Tver is already the fourth asset in the company's portfolio related to waste recycling. Previously, it bought the Nizhny Novgorod plant for processing secondary polymers "Fantastic Plastic". The new asset in the company will annually produce up to 12,000 tonnes of PET flex from plastic bottles and process about 3 thousand tons of HDPE into granulate.

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