Natural hydrogen's potential to deliver sub-$1/kg production costs using familiar oil, gas and mining techniques is drawing investor interest, panellists told the Hyvolution conference in Paris this week.
Raphael Schoentgen, chief executive of advisory firm Hydrogen Advisors, said oil and gas firms could apply existing geological expertise, drilling skills and subsurface data, with the natural hydrogen sector giving lower upfront spending.
Developers such as 45-8 Energy are focusing on shallow wells only a few hundred metres deep and costing a few hundred thousand dollars, limiting early risk.
Concerns about a lack of hydrogen in historical drilling reflect where companies drilled, said 45-8 Energy managing director Benoit Hauville. Around 95pc of legacy wells targeted sedimentary basins rich in fossil organic matter, not the iron-rich formations that generate hydrogen, he said.
Mining regions are helping to close knowledge gaps. Several nickel and chromium mines have reported hydrogen seepage — sometimes causing safety issues — Hauville said. Historic data are useful, with gas-well records from France's Landes region in the 1960s reporting high hydrogen concentrations near 20pc, he said.
Advances in sensing, data collection and machine learning are accelerating exploration. Developers are combining ground and airborne detection, seismology, well surveys and rock sampling to map hydrogen-generating locations. French research institute Ifpen is building basin models that merge geology and algorithmic tools to identify new exploration areas.
France is Europe's main testing ground, supported by historic subsurface research. Renewables firm Francaise de l'Energie (FDE) secured a five-year exclusive exploration permit in Lorraine in January. Early exploration success rates often range from 5–20pc, though 45-8 Energy expects its French prospects to reach 20–40pc after new survey work — approaching oil and gas probabilities.
Global investment in natural hydrogen has reached about $1bn, said Christophe Hecker, chief executive of advisory NaturalHy. Nearly half is deployed in the US, where developer Koloma has raised around $400mn from investors including Breakthrough Energy and is expanding globally. Europe has a weaker investment culture, Hecker said, with 45-8 Energy raising around €40mn ($48mn).
Argus' data show 30 of 51 schemes announced globally are in the US, Australia and Canada, supported by favourable investment and permitting regimes. 45-8 Energy and UK developer H2Au have partnered to drill wells in Kansas and Iowa, with two wells planned this year.
Helium co-production is central to project economics. 45-8 Energy and others explore for both gases and are developing purification and recycling systems. Even 1pc helium can add significant value given tight supply, high prices and its use in aerospace, medical imaging and semiconductor manufacturing. The firm recycled and re-purified 6,000m³ of helium from the Paris Olympics' hot-air balloon installation. Low-value gases such as nitrogen can be used onsite in small turbine systems to generate power and improve economics.
Cost is the main draw. Studies cited by panellists suggest natural hydrogen could be produced for $0.5–1/kg at the wellhead, with purification adding about $0.5/kg — well below current renewable hydrogen costs and competitive with gas-based production.
Shallow exploration programmes typically cost only a few million euros and create value at each de-risking step, offering investors low early exposure and strong upside if reserves are confirmed, Hecker said.
But the sector is still "high risk, high reward", he said. Only one known site is producing — in Mali — and at minimal scale. Cost estimates remain theoretical, and uncertainty over reservoir volumes and global reserves is still high.
