A recent study by Wood Mackenzie found that the world's biggest oil and gas companies are responsible for 8% of the stated net low-carbon hydrogen production capacity, which adds up to 102.6 million tonnes per year (Mtpa).
These companies' focus is now shifting toward completing small-scale projects by 2030, creating the framework for industrial expansion in the following decade.
According to Wood Mackenzie's Energy Transition Outlook, published in September, worldwide low-carbon hydrogen production will increase from 1 Mtpa in 2023 to 200 Mtpa by 2050. With the development of undisclosed projects, the picture is ready to evolve, potentially leading to increasing market share for the majors, who presently have a tiny footprint in the low-carbon hydrogen sector.
Equinor, BP, and Shell are leading the race for low-carbon hydrogen capacity, with Equinor's H21 project making a significant contribution. ExxonMobil excels in advanced development capacity. While BP, Shell, and TotalEnergies focus on green hydrogen, Equinor and ExxonMobil lead in blue hydrogen, utilizing their respective strengths in renewable energy and carbon capture and storage (CCS).
Bridget van Dorsten, Senior Research Analyst at Wood Mackenzie, noted the majors' strong position in blue hydrogen, with a 23% market share, thanks to earlier scalability and alignment with their competence in methane reformation facilities. Blue hydrogen competes with carbon-intensive hydrogen on a cost-effective basis, making it a preferred choice for the majors.
Despite their dominance in blue hydrogen, the majors control only 5% of the green hydrogen industry, with European firms leading the way. The majors intend to integrate green hydrogen facilities into their renewable energy portfolios. Van Dorsten raised a potential risk, warning against an overemphasis on blue hydrogen, which could lead to missed possibilities in the green industry. However, because the business is still in its early phases, there is potential for strategy revision, and a period of consolidation is expected once commercial scale-up becomes evident.
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