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SK E&S bets future on carbon-neutral LNG, blue hydrogen

Firm aims to be world’s No. 1 hydrogen player by 2025

SK E&S CEO Choo Hyung-wook announces the firm’s blue hydrogen and carbon-neutral LNG strategy during a press conference at Four Seasons Hotel Seoul on Wednesday. (SK E&S)
SK E&S CEO Choo Hyung-wook announces the firm’s blue hydrogen and carbon-neutral LNG strategy during a press conference at Four Seasons Hotel Seoul on Wednesday. (SK E&S)
SK E&S, a natural gas provider under SK Group, said Wednesday that renewables and batteries have limits in fighting climate change and suggested carbon-neutral liquefied natural gas and blue hydrogen as answers.

During a press conference held at the Four Seasons Hotel Seoul, CEO Choo Hyung-wook said the firm will ramp up production of carbon-neutral LNG to 1.3 million tons and blue hydrogen to 250,000 tons by 2025 to rise as the No. 1 hydrogen player in the world and achieve a market cap of 35 trillion won ($30.2 billion).

“To seek carbon neutrality, major countries are rolling out more renewables and electric vehicles, but they have critical weaknesses, which can be compensated with blue hydrogen,” Choo said.

According to Choo, renewables, which are affected by weather conditions, are highly intermittent and risk destabilization of electricity supplies. EVs, due to the heavy battery weight, aren’t suitable to replace commercial vehicles such as cargo trucks, which have to travel long distances and carry as many payloads as possible.

The CEO suggested hydrogen as a solution because the lightest gas in the world can produce electricity 24/7 regardless of weather changes. Of the different types of hydrogen, blue hydrogen is the most realistic option, the CEO added.

Although hydrogen itself has no color, it is given different colors based on how it is produced. Blue hydrogen is extracted from fossil fuels such as LNG with carbon capture and storage technology. Though blue hydrogen itself is clean, its feedstock fossil fuels aren’t, which is the crux of environmentalists’ criticism towards blue hydrogen.

Green hydrogen, which is produced by breaking water into hydrogen and oxygen using electricity generated 100 percent renewables, has emerged as an alternative, but lacks price competitiveness.

Aware of the situation, SK E&S aims to use carbon-neutral LNG when producing blue hydrogen. Starting 2025, SK E&S will produce 1.3 million tons of LNG at its Barossa-Caldita offshore gas field in Australia. During the process, more than 95 percent of carbon will be captured.

“SK E&S will send the captured carbon to empty oil or gas fields through pipes and store it there. Over time, the carbon will turn into rocks,” Choo said.

The 1.3 million tons of carbon-neutral LNG will then be shipped to a facility near an LNG terminal in Boryeong, South Chungcheong Province, South Korea. At the facility, SK E&S will produce 250,000 tons of blue hydrogen annually.

On top of 250,000 tons of blue hydrogen, SK E&S will collect byproduct hydrogen generated from SK Incheon Petrochem’s plant in Incheon and produce 30,000 tons of liquefied hydrogen there.

According to SK E&S, the environmental benefit of producing 280,000 tons of hydrogen is equivalent to planting 112 million trees.

By Kim Byung-wook (kbw@heraldcorp.com)
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