Look: Saudi oil giant Aramco bets big on the ‘Blue’

Saudi Aramco employee Shady A. Amer refuels a hydrogen-powered vehicle at the recently inaugurated hydrogen fueling station at Air Products' new technology centre, at the Techno Valley Science Park, in Dhahran, Saudi Arabia. The pilot station fuels a fleet of fuel cell electric vehicles owned by Aramco and Air Products.

Saudi Aramco outlined plans to invest in blue hydrogen as the world shifts away from dirtier forms of energy but said it would take at least until the end of this decade before a global market for the fuel is developed. Above, Saudis watch a Hydrogen-powered bus as it refuels at the recently inaugurated hydrogen fueling station at Air Products' new technology centre, at the Techno Valley Science Park, in Dhahran, Saudi Arabia

We're going to have a large share" of the market for blue hydrogen, Aramco's chief technology officer, Ahmad Al-Khowaiter, said in an interview on Sunday in Dhahran, eastern Saudi Arabia, where the company's based. "The scale-up isn't going to happen before 2030. We're not going to see large volumes of blue ammonia before then." Above, Hydrogen-powered vehicles, operated by Saudi Aramco, on display at the Air Products New Technology Center in Dhahran.

A refueling pump station for hydrogen-powered vehicles at the fueling station in Dhahran, Saudi Arabia. Hydrogen is seen as crucial to slowing climate change since it emits no harmful greenhouse gases when burned. The blue form of the fuel is made from natural gas, with the carbon emissions generated in the conversion process being captured. The hydrogen is sometimes converted again into ammonia to allow it to be transported more easily between continents.

The state energy firm may end up spending roughly $1 billion on capturing carbon for every 1 million tons of blue ammonia produced, Khowaiter said. That would exclude the expense of producing the gas, he said.

Aramco, the world's biggest oil company, sent its first shipment of blue ammonia in September to Japan, a pilot project to show the fuel could be exported. Aramco will decide on further shipments depending on the level of demand, Khowaiter said.

Saudis watch a hydrogen powered car during a test drive organized by Aramco, marking the inauguration of a hydrogen fueling station at Air Products' new technology center, at the Techno Valley Science Park, in Dhahran.

The Kingdom said in 2019, it aimed to double gas output to 23 billion cubic feet a day this decade. At the time, it said it would use the extra supplies to wean local power plants off oil and export the rest by pipeline or as LNG..

While Aramco predicts demand for oil will remain high for years, if not decades, the company is positioning itself to develop newer types of fuels. Blue hydrogen is in its infancy and will take years to produce on a mass scale given the expense and complications involved with the technology.

Aramco needs to make deals with buyers before investments in blue hydrogen can begin properly, said Khowaiter.

"From the time you make clear off-take agreements, you're talking about a five- to six-year capital cycle to invest in the production and conversion requirements," Khowaiter said. "You're talking about a pretty long time scale." The company has not ruled out producing green hydrogen, which is made from renewable energy, typically wind or solar, and leads to no carbon emissions. Pennsylvania-based Air Products & Chemicals Inc. and Saudi firm ACWA Power International are leading the kingdom's efforts with green hydrogen, constructing a $5 billion plant in the north-eastern city of Neom. Aramco is looking into synergies between the two types of hydrogen, Khowaiter said. Still, he emphasized that costs for producing blue hydrogen are probably around one-fifth of those of green hydrogen, at least at today's solar and wind prices. Many analysts expect green hydrogen to become as cheap or cheaper within the next decade.