NORTH Sea-focused oil and gas firm Neptune Energy has underlined the potential to produce low carbon hydrogen fuel in the area helped by the use of existing infrastructure.

Neptune has linked up with energy giant RWE to develop a “green” hydrogen facility. This is expected to feature an electrolyser which will produce hydrogen from sea water and will be powered by energy from offshore windfarms.

The firms expect to utilise an existing gas pipeline to take the hydrogen produced at the facility ashore. The hydrogen could be used to help decarbonise industries such as chemicals and steel production.

HeraldScotland: Picture: Neptune EnergyPicture: Neptune Energy

If successful the project could help vindicate claims by oil and gas industry leaders that the expertise and facilities developed by firms in the sector could be drawn on to help speed the transition to a less carbon intensive energy system.

Neptune’s Lex de Groot, said: “We see an important role for green hydrogen in future energy supply, and it can be produced here in the North Sea. The energy transition can be faster, cheaper and cleaner if we integrate existing gas infrastructure into new systems.

He added: “The faster we can scale up green hydrogen at sea, the faster industries such as chemicals and steel production can become more sustainable.”

The project will be completed in the Dutch North Sea and the output concerned transported to the Netherlands for use by firms in the country.

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However, Neptune could be expected to apply lessons learned off the Netherlands in the UK North Sea, in which it has significant production interests.

Neptune is working on plans to develop a ‘blue’ hydrogen production facility and related carbon capture and storage cluster which would be linked to Southern North Sea fields. Neptune operates the giant Cygnus field in the area.

Blue hydrogen is produced from natural gas.

Private equity-backed Neptune has been generating lots of cash from its oil and gas production operations. In December the firm declared an $800m dividend.

The company’s executive chairman Sam Laidlaw said then: “We remain on track to achieve significantly higher operating cash flow in 2021 as a result of higher commodity prices, robust production and good cost control.”