The "economical" role of hydrogen energy - hydrogen production from natural gas



Hydrogen energy, as a high-calorific value, zero-pollution energy source, will play an indispensable alternative role in promoting the decarbonization of the global economy, especially in industry and transportation. At present, the development of hydrogen energy industry has reached a period of acceleration. The United States, Europe, Japan, South Korea and other major industrialized countries and regions have incorporated hydrogen energy into the national energy strategic planning, and the commercialization of hydrogen energy industry continues to accelerate. The International Hydrogen Council predicts that by 2050, the hydrogen industry will create 30 million jobs, reduce 6 billion tons of carbon dioxide emissions, create a $2.5 trillion market size, and account for 18% of global energy consumption.

Although hydrogen energy is a clean, renewable energy source that releases no carbon emissions in the process, the current process of producing hydrogen energy is not 100 percent "zero carbon."

"Blue hydrogen" has high cost performance

Or become the current first choice for hydrogen production

On Earth, hydrogen exists mainly in the form of compounds in water and fossil fuels, and hydrogen energy, as a secondary energy source, needs to be "extracted" through hydrogen production technology. According to the source of hydrogen production and the emission in the production process, hydrogen energy is named gray hydrogen, blue hydrogen and green hydrogen respectively. From the current cost of hydrogen production, "gray hydrogen" is the lowest cost of hydrogen production from coal, while the "green hydrogen" production of wind power hydrogen is the highest cost, although it is expected that with the progress of production technology, the future cost of green hydrogen will gradually decline, but it is foreseeable that in the next 10 years, "gray hydrogen" still has a cost advantage. At present, as a clean energy, coal to hydrogen has a disadvantage, is dependent on fossil energy, can not avoid carbon emissions. In contrast, "blue hydrogen", which costs slightly more than "grey hydrogen", seems to be the best choice at the moment.

"Blue hydrogen" is also called natural gas hydrogen production, the process principle is to first pretreat natural gas, and then in the converter methane and water steam into carbon monoxide and hydrogen, waste heat recovery, carbon monoxide in the conversion tower into carbon dioxide and hydrogen, the basis of this process technology is achieved on the basis of natural gas steam conversion technology. In the conversion tower, under the condition of the presence of catalyst, the reaction temperature is controlled to react carbon monoxide and water in the conversion gas to produce hydrogen and carbon dioxide.

Although natural gas is also a fossil fuel and produces greenhouse gases in the production of blue hydrogen, the use of advanced technologies such as carbon capture, utilization and Storage (CCUS) has reduced the impact on the Earth's environment by capturing greenhouse gases and achieving low-emission production.

According to industry research institute data, natural gas hydrogen production process currently occupies the first place in the world hydrogen production market. The proportion of hydrogen production from natural gas in China ranks second, after that from coal. Hydrogen production from natural gas in China began in the 1970s, mainly providing hydrogen for ammonia synthesis. With the improvement of catalyst quality, process flow, control level, equipment form and structure optimization, the reliability and safety of natural gas hydrogen production process have been guaranteed.

In recent years, the output of China's natural gas hydrogen production industry has grown rapidly, from 2.775 million tons in 2015 to 4.589 million tons in 2020. The market size of hydrogen production from natural gas increased from 42.134 billion yuan in 2015 to 75.611 billion yuan in 2020.

A number of listed companies layout "blue hydrogen" industrial chain

The chemical performance of the satellite is remarkable

Among the A-share listed companies, there are A number of companies involved in the production of "blue hydrogen" related business, including satellite Chemical, Fumiao Technology, Furen Energy, Huibopu and so on.

The first company is Satellite Chemical, which is A leading enterprise in the field of A-share light hydrocarbon chemicals. At present, it has a production capacity of 900,000 tons of propylene, 450,000 tons of polypropylene, 1.41 million tons of acrylic and ester, 210,000 tons of polymer emulsion, 150,000 tons of SAP. 220,000 tons of hydrogen peroxide and 21,000 tons of pigment intermediates in the chemical industry chain. It is one of the few large-scale manufacturers of acrylic acid and ester, polymer emulsion and functional polymer materials with the whole industrial chain in China. The raw materials of light hydrocarbon chemical industry belong to hydrogen-rich raw materials, and a large amount of blue hydrogen is produced by side, which is an important resource. In the past, by-product hydrogen was burned as fuel gas, but with the development of hydrogen energy, hydrogen has been utilized with high added value.

Satellite Chemical has two sets of 1.25 million tons of ethane cracking plants in Lianyungang, of which the first phase project has been put into operation in mid-2021, and the second phase project is expected to be put into operation in 2022, with a total by-product of about 140,000 tons of high-purity hydrogen, plus the 140,000 tons of by-product hydrogen produced by Satellite Chemical's three sets of propane dehydrogenation plants in Pinghu, Jiaxing. Satellite Chemical's light hydrocarbon chemical by-product "blue hydrogen" totals about 280,000 tons, and is the largest hydrogen energy producer in East China.

The second company, Fumiao Technology, has built a natural gas hydrogen production device with an annual capacity of 36.61 million cubic meters, which is directly supplied to enterprises in the central area through pipelines, and the capacity utilization rate in the past three years is about 40%. The purity of the company's hydrogen is higher than that required for hydrogen energy vehicles and can be used in fuel cells for hydrogen energy vehicles. The company has joined the Suzhou Hydrogen energy Industry Innovation Alliance, and will become the upstream supplier of hydrogen energy vehicle industry chain in the future, and its annual sales of hydrogen is between 40 million and 50 million yuan.

The third Frean Energy, the company invested in the construction of Nanzhuang hydrogen and hydrogenation gas integration station started operation in July last year, which is also the first station in the station of natural gas hydrogen and hydrogenation integrated station, hydrogen and hydrogenation capacity of 1100 kg per day, can meet the hydrogenation needs of 100 buses or 150 logistics vehicles.

The fourth Huibo is different from the first three companies, it is an international oil and gas resource development and utilization of comprehensive solutions service provider, Huibo provides the "blue hydrogen" production is a key link - carbon capture and utilization and storage (CCUS). Thanks to the use of advanced technologies such as carbon capture, utilization and storage (CCUS), the production of "blue hydrogen" enables low-emission production, which gives "blue hydrogen" a higher environmental advantage over "gray hydrogen" when the cost difference is not too great.

Although the main business of these companies is not the same, but because they are involved in hydrogen business, are standing on the air of The Times, then, how is their performance?

Eastern Wealth data show that in the first three quarters of 2021, Satellite Chemical, Fumiao Technology, Fufuan Energy and Huibopu achieved revenue of 200.18 billion yuan, 1.037 billion yuan, 9.631 billion yuan and 1.025 billion yuan respectively, and achieved net profit of 4.256 billion yuan, 90 million yuan, 393 million yuan and 112 million yuan, respectively. From the company's overall performance point of view, satellite chemistry "one ride clean dust", the most bright. From the perspective of gross profit margin of sales, Huibopu is the highest, at 36.92%, and Fofuel Energy is the lowest, at 12.61%.

Although the hydrogen energy business of each company has different degrees of contribution to the performance, in the capital market, most of them have attracted the attention of funds because of their excellent performance and the concept of superimposed hydrogen energy. From January 1, 2021 to March 2, 2022, the share price of Satellite Chemical rose 132.85%, and as of the close of March 2, the total market value reached 74.4 billion yuan, becoming a no problem hydrogen energy leader. From the perspective of dynamic price/earnings ratio, satellite Chemical is the lowest, 13.12, and Huibo is the highest, 38.04; From the point of view of price-to-book ratio, the price-to-book ratio of these companies is relatively low, and the highest satellite chemical is only 4.2; From the perspective of return on equity, satellite chemistry is the highest, at 27.15%.

"Double carbon" background

Who is the future of the hydrogen industry?

With the increasing energy consumption, finding new energy sources has become an important task at present. As a kind of energy with the most development potential, hydrogen has a wide range of sources, almost no pollution in the process of use, high conversion efficiency, and wide application prospects. The use of natural gas to produce hydrogen (" blue hydrogen ") can alleviate the pressure in the process of energy substitution in China to a certain extent, and further promote the transformation of China's energy utilization structure.

At present, the production of "blue hydrogen" from natural gas is better than the "gray hydrogen" from coal in carbon emissions, and is better than the "green hydrogen" from wind power in production cost, which is a more reasonable choice in the current hydrogen production method, but there are also some problems in the production of "blue hydrogen".

The cost of hydrogen production from natural gas is mainly determined by the price of natural gas, and the cost of natural gas raw materials accounts for 70-90%. At the same time, in order to prevent the poisoning of the reforming catalyst, the production process of hydrogen production from natural gas needs to reduce the sulfur content of the raw gas to less than one part per million, so the impurity concentration of the produced hydrogen can be relatively low. In the production of "blue hydrogen" in China, the supply of domestic natural gas resources is limited and the regional distribution is mainly in the west, the sulfur content is high, and the pretreatment process is complex, resulting in the relatively high cost of domestic natural gas hydrogen production.

According to the estimates of the China Hydrogen Energy Alliance, by 2030, China's hydrogen demand will increase from the current more than 20 million tons to 35 million tons, and the proportion of the terminal energy system will increase from less than 3% to 5%. By 2050, hydrogen energy will account for at least 10% of China's terminal energy system, with demand for hydrogen approaching 60 million tons and an annual output value of about 12 trillion yuan.

At present, China's wind power hydrogen production "green hydrogen", the production technology is still in the initial stage, the production cost is high, but in the long run, with the expansion of hydrogen demand, large-scale "green" hydrogen production market demand will gradually grow. Distributed hydrogen production and hydrogenation integrated station combined with renewable energy, economical and efficient centralized hydrogen production, liquid hydrogen and other parallel storage and transportation routes will be the main development direction in the future. How will the much-anticipated "green hydrogen" lead the industry in the future? Welcome to continue to focus on the industry.