New Mexico’s Delicate Dance to Become a Center of U.S. Hydrogen Production

New Mexico Gov. Michelle Lujan Grisham is on the hunt for federal dollars.

In a push to make the state a national center for hydrogen production, she’s pitching a legislative proposal that she says will flatten state government roadblocks and create a new industrial base to reenergize the economy in the San Juan Basin. She wants her Hydrogen Hub Act to be the star of the upcoming legislative session.

Lujan Grisham also brought up hydrogen in her first talk at the COP26 climate summit in Glasgow last week, calling it a “potential transition fuel source,” and again at her last engagement on Sunday when talking about “brand new opportunities to meet, beat and excel our efforts against the effects of climate change.”

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Depending on one’s views, Lujan Grisham has either promised or threatened this legislation ever more loudly for the past six months. At a Hydrogen Roundtable held this summer in Farmington, she brought along James Kenney, her cabinet secretary at the Environment Department (NMED). “The governor is serious when she says she wants this done yesterday,” he said.

The forum was held at San Juan College, in the middle of the San Juan Basin natural gas field. It was filled with participants from the local gas industry and tribes with oil and gas interests. She asked everyone to help her make the Hydrogen Hub Act a pathway for development, adding, “That pathway leads straight to San Juan County.”

That’s welcome news to many in the region as the northwest corner of the state faces a sallow economic future. Its two coal-fired power plants and their affiliated mines — big local employers and taxpayers — are slated for closure. And revenues from the surrounding natural gas fields have been declining for years. All of this has led to tensions between locals and government, environmentalists and fossil fuel producers, and different groups within the Navajo Nation. Furthermore, at the southern end of the region, Chaco Culture National Historical Park sits atop a contentious oil and gas field.
 

Governments across the globe see hydrogen as an important replacement for fossil fuels in energy-intensive applications like heavy transport and manufacturing.

 
So far, the governor’s pathway, though not yet explicit, faces sharp scrutiny from the environmentalists, ambivalence from the larger fossil fuel sector and unanswered questions about the economic and long-term viability of carbon sequestration — necessary to keep hydrogen’s green credentials — particularly in the San Juan Basin.

Questions sent to the governor’s office about the act were forwarded to NMED, where Public Relations Specialist Kaitlyn O’Brien wrote in an email, “Make no mistake, the hydrogen economy is expanding in New Mexico, other states and around the globe with or without the legislature passing the Hydrogen Hub Act.”

Camilla Feibelman, director of the Sierra Club Rio Grande Chapter, had a meeting with the governor’s staff after hearing about the Hydrogen Hub plans earlier this year. “The administration told us … there are likely to be large amounts of federal dollars coming for hydrogen hubs, and they want to be able to manage those funds on their terms,” she says. “But until I see a draft of that legislation, you know, I can’t really say what they’re doing.”

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At first blush, hydrogen is a miracle fuel. A kilogram of the stuff (about 2.2 pounds) has about the same energy content as a gallon of gasoline or diesel. But unlike those fuels, it produces only water when run through a fuel cell, and water and some nitrogen oxides (a potent air pollutant) when burned. Governments across the globe see it as an important replacement for fossil fuels in energy-intensive applications like heavy transport and manufacturing.

Earlier this year, the normally staid International Energy Agency released its clarion call and roadmap to massively decarbonize energy sources to reach net-zero carbon emissions globally by 2050. Hydrogen plays a key role in those plans.

The Biden administration shares the goal, launching its Hydrogen Shot in June. The federal government’s plan is to shrink the cost of a kilogram of hydrogen to a dollar within a decade (it’s currently $5-$6). But what really perked up ears from New York to Los Angeles was the federal government dangling $8 billion over four years in funding to create at least four regional clean hydrogen hub projects across the country, at least two of which are to be located in regions with “the greatest natural gas resources.”

That funding was approved last week in the Infrastructure Investment and Jobs Act.

Gov. Lujan Grisham has that money in her sights. “We’re not gonna let California and Oregon get anywhere close to this,” she said at the Hydrogen Roundtable.
 

The Infrastructure Investment and Jobs Act includes $8 billion in funding to create at least four regional clean hydrogen hub projects across the country.

 
Environmental problems arise, however, from how hydrogen is made, the source materials used and disposal of the waste products.

When processed with electrolysis, water is zapped to break hydrogen atoms away from oxygen. If the electricity is renewably sourced, the result is called green hydrogen. The only waste is oxygen, but the main drawback is its expense — it takes a lot of energy to break up H2O.

In the San Juan Basin, there isn’t a lot of water, but there is quite a bit of natural gas.

Through a complicated series of processes, natural gas can be heated and squeezed to break off hydrogen atoms. A resulting kilogram of hydrogen creates between 5½ and nine kilograms of CO2 (or its equivalent) depending on whom you ask. If the resulting carbon waste is vented to the air, it makes so-called gray hydrogen. About 95% of hydrogen in the U.S. is made this way. If the waste is captured and stored, it’s called blue hydrogen. The governor’s plans so far appear to be blue.

If hydrogen is to maintain the Democratic governor’s climate-friendly goals, that CO2 has to be captured and sequestered underground — permanently.

And that’s harder than it sounds.

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Scientists from the New Mexico Institute of Mining and Technology are studying the feasibility of carbon capture and storage deep beneath the San Juan Basin. That study originated from earlier plans to create one of the world’s biggest carbon capture and sequestration installations at the partly shuttered coal-fired San Juan Generating Station power plant near Farmington.

Repeated calls and emails to scientists involved in the carbon sequestration research were forwarded to an outside PR agency hired for the project and went unanswered. That firm is run by a past spokesperson for the New Mexico Oil and Gas Association, the state’s largest oil and gas lobbying group.

Of course, sequestering carbon isn’t a new technology. For decades, oil companies have jammed the gas underground near low performing wells to force out more oil — not exactly a carbon-neutral process and not necessarily designed for permanent carbon storage.
 

In Australia, Chevron spent about $40 billion of its own money developing the Gorgon natural gas and carbon sequestration project, the world’s largest. But it has met just over 50% of its sequestration goals.

 
David Schlissel, the director of resource planning analysis at the Institute for Energy Economics and Financial Analysis, has studied large-scale sequestration and says that huge, industrial-size sequestration projects simply don’t meet their CO2 capture targets. Plus, they’re really expensive.

“I’m not against new technologies,” he says. But in light of impending climate disaster, “You just have to put your money where it’s going to get the biggest bang and the fastest bang.”

For example, in Australia, Chevron spent about $40 billion of its own money — five times what the Biden administration is planning — developing the Gorgon natural gas and carbon sequestration project, the world’s largest. But it has met just over 50% of its sequestration goals.

In North America, the technology has a rocky history of missing goals, financial hassles and blown budgets.

“That technology’s not proven,” Schlissel says, “and we don’t have time to waste.”

Furthermore, a recent peer-reviewed study out of Stanford and Cornell universities found that life-cycle carbon emissions for energy produced from blue hydrogen were higher than from simply burning natural gas directly.

That’s because blue hydrogen uses natural gas both as a feedstock and as the fuel to heat the conversion process. The authors say that methane leaks from gas wells and pipelines — even if kept below the 2% allowed by recently implemented rules from New Mexico’s Oil Conservation Division (OCD) — are enough to offset any climate benefits of blue hydrogen.

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Unlike Gov. Lujan Grisham’s signature executive order on climate change — building a clean energy future and addressing climate change — environmental groups haven’t lined up to support a Hydrogen Hub.

Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center, thinks that the plan is “trying to thread the needle between fighting the oil and gas industry and placating environmental and climate advocates.” And, he says, “There’s a risk here that she’s going to make no one happy.”

Also, the governor may have little buy-in from the oil and gas sector, which stands to benefit from increased natural gas production that would likely happen under the plan.
 

Despite the environmental and economic potential of hydrogen fuel, a century of oil and gas drilling and a long history of environmental damage in the San Juan Basin has split Native communities.

 
When she met with the state’s largest oil and gas trade group at its annual conference in October, her speech, which included talk of the Hydrogen Hub, met with only scattered applause.

Despite the environmental and economic potential of hydrogen fuel, a century of oil and gas drilling and the long and continuing history of environmental damage in the San Juan Basin has split Native communities.

“Once we have a draft Hydrogen Hub Act bill, we will engage with tribal and pueblo leadership to ensure their voices are heard,” NMED’s O’Brien says.

But not all those voices agree on further gas production in the area, even if it’s for nominally greener blue hydrogen.

In the closing days of September, a pair of letters flew from the Navajo Nation to the office of Speaker of the House Nancy Pelosi.

In the first, Seth Damon, speaker of the 24th Navajo Nation Council, asked Pelosi to repeal an amendment to the $3.5 billion budget resolution proposal that would increase an oil and gas well drilling buffer around Chaco Culture National Historical Park. He said the amendment goes against the desires of Native land owners and their mineral interests. The park is a cultural touchstone for many surrounding tribes, but it also sits atop a productive oil and gas play.

A few days later, Daniel Tso, chairman of the health, education and human services committee for the Navajo Nation, sent a letter in favor of the wider buffer, saying it protected public health and culture from the impacts of large-scale well drilling.

In the days between the two letters, Kendra Pinto, a Navajo and field worker with Earthworks, was an hour north of Chaco with an infrared camera, looking for invisible gasses leaking from oil and gas wells.
 

Mario Atencio, a legislative district assistant with the Navajo Nation Council, sees hydrogen development as another path to pollute Navajo land and communities.

 
“Our priorities are usually like the newer fracking sites,” she says. “We’ve never taken a look at some of the sites from the ’90s or even beyond.” But that day, at an older well drilled in 1990 and now surrounded by newer well pads, she pointed her camera at the ground and saw vapors rising from the dirt.

“It was really concerning,” she says. “It wasn’t intermittent, or like a puff of emissions here or there. It was just like a constant flow.”

She reported what she saw to OCD, which traced the well to Epic Energy. A company crew found a hole in an underground pipe leaking natural gas into the surrounding soil and air. It’s not clear for how long the pipe had been leaking.

That’s exactly the kind of accident that worries Mario Atencio, a legislative district assistant with the Navajo Nation Council. He sees hydrogen development as another path to pollute Navajo land and communities.

“All that depends upon more development for more wells,” he says.

“We know that’s going to happen,” he says. “Gigantic, multimillion-dollar, multilateral oil pads that will snake out hundreds of miles underneath the ground.”

To him, hydrogen is another mineral resource, like oil or natural gas or coal or uranium, that is mined on tribal land, producing short-term money and long-term environmental damage. Now blue hydrogen is “greenwashing the fact that we’re still going to be a sacrifice zone,” where people live with the environmental and health threats for energy and minerals destined for people who live elsewhere.

And while Gov. Lujan Grisham pitches her hydrogen hopes at home and talks them up to world leaders at COP26, she did acknowledge the possibility of problems to at least one audience.

In September, during a guest appearance on “The Children’s Hour,” a syndicated public radio show, she talked of emissions targets and transition timelines and a complicated new fuel: hydrogen.

“Gotta study it more,” she said. “Gotta know all the pros and cons.”

 
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