Oil and gas majors globally account for an 8% share in the announced net low-carbon hydrogen production capacity, amounting to 102.6 million tonnes per annum (Mtpa), according to latest analysis from Wood Mackenzie. These companies are now focusing on bringing small-scale projects into operation before 2030, which will set the stage for industrial scaling in the next decade.
According to Wood Mackenzie’s base case, the production of global low-carbon hydrogen is set to increase from 1 Mtpa in 2023 to 200 Mtpa by 2050, a projection made in their Energy Transition Outlook published this September.
“The Majors currently have a modest share in the low-carbon hydrogen market, but the landscape could quickly change with the emergence of unannounced projects. The sector, with over 750 participants, is ripe for consolidation, and we anticipate an increase in the Majors’ market share as the industry approaches an investment inflection point,” said Bridget van Dorsten, Senior Research Analyst at Wood Mackenzie.
In the race for low-carbon hydrogen capacity, Equinor, BP, and Shell are leading among the majors. Equinor’s significant contribution comes primarily from its H21 project, while ExxonMobil tops in terms of advanced development capacity.
Van Dorsten added, “BP, Shell, and TotalEnergies are more involved in green hydrogen, reflecting their strong positions in renewable power. On the other hand, Equinor and ExxonMobil are at the forefront of blue hydrogen, benefiting from their leadership in CCS. Shell and BP are particularly noteworthy for their diversified project portfolios, reducing concentration risk.”
The majors have a stronger presence in blue hydrogen, owning a 23% market share, as they leverage their strengths in upstream gas and downstream infrastructure. Compared to the smaller electrolyser projects in green hydrogen, blue hydrogen initiatives offer earlier scalability and align with the majors’ expertise in methane reformation facilities.
“Blue hydrogen can compete cost-wise with some of the market’s carbon-intensive hydrogen. Its ability to provide low-carbon hydrogen at scale is a significant advantage over green hydrogen, making it a preferred choice for the Majors,” van Dorsten remarked.
However, the majors possess only a 5% share in the green hydrogen market, with European companies leading. They intend to integrate their renewable energy portfolios with green hydrogen facilities. In contrast, US majors show limited involvement in green hydrogen, reflecting their strategic choices.
Van Dorsten highlighted a pivotal concern for the industry, stating, “Focusing predominantly on blue hydrogen might lead to missed opportunities in the green hydrogen sector as it reaches an investment inflection point. However, the industry is still in its nascent stages, providing the majors with time to adjust their strategies. We foresee a phase of consolidation in the sector once commercial scale-up becomes clearer.”
