Oil giant signs hydrogen supply deal to decarbonise Cheshire refinery

Stanlow oil refinery

Essar Oil UK (Essar) has signed a ‘heads of terms’ offtake agreement with Vertex Hydrogen for 280MW+ of hydrogen.

This will be used to help decarbonise Essar’s existing production facilities at its Stanlow oil refinery in Cheshire, including the new hydrogen-powered furnace which was delivered last month.

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 HyNet Consortium.

This will produce, in its initial phases, 1GW of hydrogen – the equivalent energy use of a large UK city like Liverpool – and capture some 1.8 million tonnes of carbon per annum. By 2030, Vertex expects to deliver nearly 4GW of low carbon hydrogen, equivalent to around 40% of the Government’s national target.

Essar achieved a new milestone in its ongoing transition to low carbon operations following the Government’s decision in August this year to shortlist the construction of the hydrogen production plants and a separate carbon capture project at its site in Ellesmere Port.

The two projects form part of the Essar’s £1bn investment into a range of energy efficiency, low-carbon energy, and carbon capture and storage initiatives, designed to decarbonise its production processes and put Essar at the forefront of the UK’s shift to low carbon energy.

The company is delivering plans to significantly reduce its emissions before the end of the decade, to become the UK’s first low-carbon refinery.

Deepak Maheshwari, Essar Oil UK chief executive, said: “This is an important statement of intent by Essar and 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, Vertex Hydrogen chief executive, said: “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.”