Essar Oil UK to begin decarbonising its production facilities at Ellesmere Port as it signs hydrogen supply agreement with Vertex. Tony McDonough reports

Oil refinery business Essar Oil UK (EOUK) is set to begin the decarbonisation of its production facilities at Stanlow in Ellesmere Port after signing a hydrogen supply deal.

EOUK has signed a heads of terms agreement with Vertex Hydrogen for the supply of 280MW of hydrogen. This will help power a new £45m hydrogen-enabled furnace which was delivered in August.

Vertex, a joint venture between Essar and Progressive Energy, is developing the first large scale, low carbon hydrogen production hub in the UK, as part of the £47bn North West HyNet consortium.

HyNet will initially produce 1GW of hydrogen (the equivalent energy use of a large UK city such Liverpool) and capture around 1.8m tonnes of carbon a year. Once captured, the carbon will be stored in empty gas caverns under Liverpool Bay.

Carbon capture and storage is seen by some experts as a questionable method in terms of cutting emissions. It has not yet been fully successful on the scale being proposed by HyNet. In an interview with LBN, HyNet director David Parkin explained why he believed the project would be a success.

Furnaces are essential to an oil refinery. The process of refining crude oil means it has to be heated to around 470 degrees. Once installed it will be the first refinery-based hydrogen-powered furnace in the UK. It will initially run on gas but will switch to hydrogen by 2026.

Its largest single module is 26.5 metres long, by 18.5 metres tall, by 14.5 metres. EOUK claims that once its fuel source is 100% hydrogen, the furnace has the potential to reduce 242,000 tonnes of CO2 every year.

By 2030, Vertex expects to deliver nearly 4GW of low carbon hydrogen, equivalent to around 40% of the UK Government’s national target.

In August this year the UK Government shortlisted the construction of the hydrogen production plants and, a separate carbon capture project, at Stanlow, which produces 16% of the UK’s road fuels.

Both projects form part of Essar’s £1bn investment into a range of energy efficiency, low-carbon energy, and carbon capture and storage initiatives.  

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Deepak Maheshwari, chief executive at EOUK, said: “This is an important statement of intent by Essar. It highlights our continued commitment to becoming the UK’s first low carbon refinery.

“By signing this hydrogen offtake agreement with Vertex Hydrogen, we are helping to de-risk the project, while also securing supply for our production processes into the future and thereby reducing our carbon footprint.”

Joe Seifert, chief executive at Vertex, added: “Vertex will be one of the first to deliver large volumes of low carbon hydrogen, produced in the UK, to materially reduce emissions.

“Our business is driven by demand from an array of world class industries in this region and the provision of low carbon hydrogen to Essar is one of the most material so far in the energy transition sector.

“Partnering with initial anchor customers operating close to our hydrogen production plants is common sense as we deliver large scale production, quickly and at low cost.”