Great post Adam! You really have put the spot light on this...

Great post Adam! You really have put the spot light on this sleeping giant and potential hydrocarbon indicators.

Why is our massive natural gas resource important?

Mzarabani Prospect is the largest undrilled conventional oil and gas prospect onshore Africa.

Est. 8.2Tcf + 247 million barrels of conventional gas-condensate1 (~1.6 billion boe).

The market is aware Hydrogen is increasingly being viewed as an important tool for reducing carbon emissions. Why is Hydrogen important? because the use of hydrogen for energy generates no direct carbon dioxide emissions.

But did you know! It has been reported that low‐carbon hydrogen produced globally from natural gas with carbon sequestration will increase into the future.

Demand will come from industry, refineries, power plants, and the transportation sector. Hydrogen will be increasingly blended into natural gas for distribution to homes and industry.

It is possible to capture and store (CCS) or otherwise utilize the carbon dioxide when hydrogen is produced from fossil fuels. This hydrogen has a low carbon footprint and is classified as “blue hydrogen”.

Across the glob multiple projects set to be developed across major developed economies of the world include both green and blue hydrogen schemes were both natural gas and renewables work together to reduce emissions, while providing energy stability and efficiency.

1. Green hydrogen: This hydrogen is produced when water is split using renewable energy leaving behind only oxygen as a byproduct.

2. Blue hydrogen: This hydrogen on the other hand is extracted from fossil fuel gas and any greenhouse gas emissions are captured and stored underground.

I think that it is very important to note that the cost of producing green hydrogen, the renewable fuel put forward to decarbonise the global economy, may be currently far more expensive than initially hoped for some economies.

Blue hydrogen is derived from natural gas through the process of steam methane reforming. How does this work? Well very good question, the carbon dioxide emissions produced are then captured and stored underground using Carbon Capture, Utilization and a (CCUS) technology leaving nearly pure hydrogen.

Blue Hydrogen is being favoured by many major developed economies as provided in below examples, as the argument for green hydrogen projects to be feasible, a new water desalination industry would have to be created.

In my humble opinion producing the power required however for green hydrogen projects will require a huge amount of water.

Green hydrogen is made by using renewable energy to split the atoms of water molecules into hydrogen and oxygen. The amount of water required will need to come from somewhere and thus will most likely have to be sourced from the world’s oceans, which means a mass desalination project will have to take place to purify all that salty sea water.

Desalination is a power-hungry and expensive process. In many places of the world, there isn’t yet enough renewable energy to produce vast amounts of green hydrogen, and the process still remains costly, the infrastructure cost layout is high and geographic locations are often not viable for implementation.

Some countries are banking on hydrogen to help lift their ambitious carbon-neutral plans:

- Some governments have given priority to “green hydrogen,” such as that generated by wind turbines or solar panels.

- Many major developed rich countries, have made the case for a technology-neutral approach, or “blue” hydrogen, produced from fossil fuels such as natural gas. This requires a significant amount of natural gas. An example is Saudi Arabia were a newspaper reported it proposed would use one of the world's biggest $110 billion Jafurah natural-gas projects to make blue hydrogen, as the kingdom steps up efforts to export a fuel seen as crucial to the hydrogen transition.

In the search for low-carbon alternatives to natural gas, clean hydrogen is increasingly being seen as a key part of the solution.

Using clean hydrogen as a main fuel source in industry would go a long way towards reducing our large carbon footprint. Clean hydrogen has many desirable attributes: it has a very high energy to weight density and when consumed, emits only water.

For these reasons, it is one of the strategies many developed countries plan to invest heavily. There is a proposed project in Teesside which would be the largest in the UK, producing up to 1GW of ‘blue’ hydrogen – 20% of the UK’s hydrogen target – by 2030 and supporting development of region as UK’s first hydrogen transport hub.

Whereas with the alternative green hydrogen, one of the big roadblocks in scaling up electrolysis-generated hydrogen to meet current industrial energy demand is the intensive amount of resources required to make it. Thus, in my opinion Green hydrogen is still not cost competitive, costing much more than the hydrogen produced through methane and steam.

In the meantime, an alternative for producing the volumes of clean hydrogen necessary to meet industrial demand is by leveraging the benefits of carbon capture technology. In this hydrogen production process, natural gas is mixed with steam, which creates hydrogen and carbon monoxide as byproduct. The carbon monoxide is converted into carbon dioxide by adding water. The resulting hydrogen is then transformed into a clean energy source by the capture and secure storage or utilization of this carbon dioxide.

Only in my opinion it feels like IVZ has positioned itself at the right place and right time by exploring Natural Gas and playing a vital role in reducing carbon emissions.