Catalyst with Shayle Kann - Hunting for geologic hydrogen

Episode Date: August 23, 2024

Hydrogen has two big problems: cost and supply. As a low-carbon feedstock, it could decarbonize planes, industry, and power plants. It could even replace the oil in plastics and chemicals. But the leading contenders for low-carbon hydrogen production — like using zero-carbon power for electrolysis and methane pyrolysis — just haven’t cut it yet. So far, the price points are too high and the scale of production is too low to spur a hydrogen revolution. But instead of synthesizing hydrogen, what if we pumped naturally-occurring hydrogen reservoirs out of the ground, just like we drill for oil and natural gas? In this episode, Shayle talks about geologic hydrogen with Pete Johnson, CEO of Koloma. Early estimates suggest vast quantities of the gas could be tapped for far cheaper than other production methods. That is, if some major challenges are solved, like finding economically viable reserves, managing leakage, and building infrastructure. In these early days, those are all big ifs.  A handful of startups are exploring geologic hydrogen, and Koloma, which has raised $300 million, is the most prominent in the space. (Shayle invests in Koloma and serves on its board. Prelude Ventures, which led Latitude Media’s fundraising round, also invests in Koloma.) Shayle and Pete cover topics like: The key factors that lead to reservoirs of geologic hydrogen, like water, iron-rich rock, traps, and seals Why geologic hydrogen could become the cheapest form of hydrogen, if found in large, economically viable reservoirs The greenhouse gas impact of hydrogen, which interferes with the breakdown of methane in the atmosphere Why Pete thinks that economically viable wells will attract new infrastructure, like clean ammonia plants, the way Houston attracted oil infrastructure Stimulating geologic hydrogen production by injecting water into rock What sort of watershed moment would prove the viability of geologic hydrogen Recommended resources Latitude Media: Should we be paying more attention to geologic hydrogen? US Geological Survey: The Potential for Geologic Hydrogen for Next Generation Energy Catalyst is brought to you by Anza Renewables, a data, technology, and services platform for solar and storage buyers. Anza’s real-time market intel equips buyers with the essential data they need to get the best deals. Download Anza’s free Q2 Module Pricing Insights Report at go.anzarenewables.com/latitude  Catalyst is brought to you by Kraken, the advanced operating system for energy. Kraken is helping utilities offer excellent customer service and develop innovative products and tariffs through the connection and optimization of smart home energy assets. Already licensed by major players across the globe, including Origin Energy, E.ON, and EDF, Kraken can help you create a smarter, greener grid. Visit kraken.tech. Catalyst is brought to you by Antenna Group, the global leader in integrated marketing, public relations, creative, and public affairs for energy and climate brands. If you're a startup, investor, or enterprise that's trying to make a name for yourself, Antenna Group's team of industry insiders is ready to help tell your story and accelerate your growth engine. Learn more at antennagroup.com.

Latitude Media, podcast at the frontier of climate technology. I'm Shail Khan, and this is Catalyst. If we can find large price-advantaged geologic hydrogen reserves, the infrastructure will come to the hydrogen. Drill baby drill, for hydrogen, obviously. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million, devices to manage 3.4 gigawatts of flexibility built for the moments when utilities can't

afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale. Predictive, verifiable, and designed to perform when it counts. Learn more at energy hub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to

Critical Capital on Spotify, Apple, or wherever you get your podcasts. Catalyst is supported by Fish Tank PR, an award-winning PR firm focused on climate and energy tech, renewables, and sustainability. Fish Tank is known for generating prominent and effective media coverage for the brands they work with. If you want a PR partner that's thoughtful, shoots straight, and gets results, you'll like Fish Tank PR. To learn more about Fish Tank's approach, visit fish tankpr.com. That's F-I-S-C-H-Fish-Tankpr.com. I'm Shail Khan. I invest in revolutionary climate technologies at energy impact partners, which is a relevant

tagline this week. So here's my story. In early 2021, we at EIP brought on a new CTO named Michael Weber. You've heard him before on this podcast. And it was Michael's first week on the job with us. And so I sat down with him and walked him through my focus, leading the frontier fund, as we call it, at EIP. I told them we're looking for revolutionary advances.

that can drive deep decarbonization. And I said, all right, what should I be looking at? And the first thing he said is, what do you know about geologic hydrogen? To which my response, at least as I recall, was something like, well, that sure would be nice if it existed. It's too bad it doesn't. So he introduced me to Pete Johnson, the CEO and co-founder of Coloma and our guest today. That conversation with Pete and then months and months and months of work after that led to this deepening obsession for me and ultimately an investment in Pete's company.

So full disclosure, we at EAPR investors in Coloma. I'm on Pete's board. Anyway, Coloma's been operating in sort of semi-stealth, but has also simultaneously sort of become the standard bearer for this idea of geologic hydrogen, such as it is, in part thanks to having raised a lot of money from folks like us and many others to explore for naturally occurring reserves of hydrogen in the subsurface.

For many of you, I'm sure, the reason why this would be a really big deal if it were to work out on significant scale will be fairly obvious. But for the rest, don't worry, we'll get there. And I should be clear, there are still big questions ahead in this space. I've heard lots of excitement and lots of fairly warranted skepticism

about the prospect of drilling for hydrogen just as we've drilled for oil and gas for so long. And from what is publicly known, I think both the excitement and the skepticism are reasonable. So Pete and I tried to dive into a bit of both. Why is there reason for excitement here? Why is there reason to be cautious?

Anyway, here's Pete. Pete, welcome at long last. Nice to be here, Shail. All right. Deologic hydrogen. What is it and what makes it? So, look, I mean, everybody knows what hydrogen is, right? Hydrogen is this very, very common molecule, but it's highly reactive, and it's something that's actually hard to find by itself in nature.

The way geologic hydrogen is produced is essentially a pretty simple reaction where water interacts with the iron in rock. And that water, the H2O and the water interacts with the iron and the oxygen goes to the iron side. It oxidizes the iron up to a new oxide state. And that results in hydrogen being released. And this is a downhill reaction. It's an exothermic reaction. It means it produces energy. So this isn't something that needs a bunch of catalyst to happen.

It happens naturally. And this has been happening in just massive, massive amount since the beginning of time. So that's how geologic hydrogen forms. And there's not really been any, I think we're going to get it a little bit into sort of the debates about how much of it exists in the subsurface and could it be a valuable resource, but also what forms it. I mean, that basic thing that you just described, like no one questions that, right? Yeah, that's a process called serpentinization. And it took me a lot of practice to be able to say that word consistently. But nobody questions that that's happening.

And there are other forms of hydrogen formation on the ground. Hydrogen can form through radioactive decay or radiolysis or even biological activity. But most people believe serpentinization is the main way that hydrogen forms under the ground. And look, we have hydrogen seeps that have been found and detected all over the planet. We have hydrogen seeping out. out of the ground in the mid-Atlantic rift and the ocean, and that comes to the surface at Iceland, and there's a lot of hydrogen coming out of the ground in Iceland. So nobody questions that this reaction is happening over and over in different places of the world.

Right. So the debate has not been, is this reaction happening? The debate has been, is there a resource that we could tap that comes from this? And so I want to talk about what it would take for there to be a significant resource, and then a little bit about what it would mean if there is. Well, let's talk about what it would take. So talk me through, okay, obviously we know there's serpentization going on all over the places. You said there are hydrogen seeps. We know there's hydrogen being formed underground. What would it take for then that to be a resource that we should talk about on a global scale as a source of energy? Essentially, in any sort of subsurface resource exploration, when you're talking about oil or gas, you know, oil or natural gas

or helium, this is how you do it. And hydrogen, you know, it's really, no different. You need a source. You need a viable source rock. And in this case, the source rock is basically water-wet-wet iron-rich rock, so what's called mafic rock. So you need a source rock. And then you need sort of a migratory pathway for the formed gas from that to move upwards or sometimes sideways or laterally into what's called a reservoir rock. And a lot of people when they, you know, I would say a lot of people when you say an oil reservoir or a gas reservoir, people think about, like the reservoir they go boating on with their family or they see. And we're not talking about a lake of oil or a, you know, a lake of gas.

And even though, you know, that's what people talk about in the movies. What a reservoir is is a porous rock where the pores of the rock are full of a fluid other than water, right? So reservoir rock is porous rock. So you're looking for, you know, a source rock for hydrogen, a migratory pathway, and then porous rock where that hydrogen could then be trapped, under a tight seal rock and sort of held for ages for a long period of time. Let's talk about what makes that difficult specifically with hydrogen, right? Like relative to oil and gas, one of the reasons why I think there has been historically some skepticism

about the idea that there be significant reserves of hydrogen underground is like hydrogen, it should be harder all things equal for hydrogen to get trapped and sealed, right? Yeah, I think there's two reasons why, I would say there's three, There's really three reasons why this is challenging. One is with oil and gas, you know, oil and gas come from basically buried organic matter, right? A bunch of trees and plants and bushes and grass and algae die, and then a bunch of sediments get laid on top of them, and over a long period of time with pressure and heat, that organic material decomposes into oil and gas, right?

But it's a single ingredient system, right? Just something that gets trapped. With hydrogen, it's a two-ingredient system. There's two reactants. There's the rock and there's water. And so if water comes down or makes it into this rock to get it wet and form hydrogen, there's a chance that the same pathway that water followed into the rock is the pathway the hydrogen is going to follow out.

Right. So that's number one. It's a two reaction, two reactant system versus a one. The second one is that hydrogen is a small molecule, right? It's not as small of a molecule as helium, but it's a very small molecule. It has roughly 80% of viscosity of natural gas, but it's considerably smaller as far as the actual size of the molecule. And that means that it can find its way out of cracks and crevices

and things that natural gas or oil can't. So you're looking for tighter seals than you might need to look for for oil or gas, for example. But not necessarily tighter seals than you'd look for helium, right? And the fact that we can find helium in traps and we find helium underground tells you that there are sufficient traps and seals in nature that could hold a gas as small and light as hydrogen. But it's the combination of that rock water reactant plus looking for those really tight seals. That makes it a little more sort of challenging, I think, to find the appropriate systems. I think the third thing to think about with hydrogen is it is highly, highly attractive as a food for bugs.

right if you get microbes into a hydrogen-filled reservoir that hydrogen will be gone and so you have a preservation risk for hydrogen that you definitely wouldn't have for helium which is you know nobody can metabolize that at all but same with oil and gas you do have you know microbial and preservation risk for oil and gas but hydrogen is just much more readily metabolized by bugs and so that that's kind of the third challenge is the preservation challenge now of course you have one potential advantage relative to oil and gas, which is that, as you said, oil and gas are formed over extremely long period of time because organic matter was buried very long ago. This water rock interaction that you're describing with hydrogen can occur continuously, right? At least in principle.

Yeah, I think it's, I mean, it's a much faster reaction than what, you know, oil and gas, you know, oil and gas coming from decaying organic material. I think when you say faster, right, it's all relative, right? I mean, this is fast. This is fast. like a snail and not like a, you know, a tree. This is still, you know, our view is it's still, you're talking about thousands of years. Oil and gas, you're talking about millions of years, and this you might be talking about thousands or tens of thousands or hundreds of thousands of years. There are sort of systems in the world where the temperature and the pH are just right, that it may be happening considerably faster than that. But for the most part, our view is if you're

finding a reservoir full of hydrogen. It's not, it's not like recharging at a really fast rate, you know, with some exceptions. Obviously, one of the things that's particularly interesting about geologic hydrogen is the possibility of the application of a skill set and a set of experience, set of technology, potentially a workforce from the oil and gas industry, which has, of course, been building all those things up over the course of centuries now to this new domain. I guess the question is how much of it does apply? Like, how much direct, crossover is there between the skills and technology experience that has been built up in oil and gas exploration and production to what might get built up in geologic hydrogen?

It's a really good question. And I think, honestly, we can look backwards in time and figure out how many of the oil and gas tools and technologies applied to helium exploration, for example. Because, you know, really what we're looking for is a different gas in the subsurface. And the difference is that gas originates in different types of rock and might be found in different types of rocks for reservoirs and need different types of seals. But at the end of the day, you're exploring for a gas underground. So I think the technologies that come out of oil and gas and also mining,

don't forget about mining because it's the mining companies that actually know the most about this type of hard rock that serves as a source rock for hydrogen. But a lot of those technologies, you know, from aerial surveys, you know, methodologies looking at outcrops and figuring out what the geology underneath the ground is, all the way through 2D, 3D seismic, all that applies.

You're looking at different rocks and different signals and have to interpret them differently. So there's a lot of retrain, some skill sets that have to be developed as far as the knowledge base, but the actual tool set, it's not out of the box, but it definitely is sort of ready to help us move things as quickly as possible. All right.

So I want to talk more about what is known in what is not known publicly about the existence and magnitude and scale of hydrogen, natural hydrogen underground. Before we do, let's just talk about why we should care if there is, right? I mean, it's sort of intuitive, but I think it's worth drawing a finer point on it. So let's for a moment, we'll come back to this, but let's for a moment posit that there are significant economically tapable reserves of geologic hydrogen. Like, talk to me a little bit about why that would be a big deal. Yeah, well, can I share a little bit of personal story on this?

Feel free. So I've been sort of working in the hydrogen business for 12 years. You know, I didn't work for any of the major industrial gas companies, but I founded a company called Monolith Materials that was a methane pyrolysis business and a really attractive business, and it's been a pretty successful startup company and grown a lot. I took, you know, when I left that role, I took on a role in a private equity firm, helping an oil and gas firm build an energy transition strategy, And I was basically, you know, for a number of years, I was looking at essentially every hydrogen deal I could look at. And I was looking at geothermal and I was looking at, you know, nuclear and CCS and all the things that we need to think about for energy transition. And I learned about natural hydrogen. And, you know, my first reaction was just, I was very skeptical. I mean, it just sounded like a total silver bullet, right? But as I looked at it and kind of learned the things that, that, you know,

you and I just talked about that, you know, there are all these seeps and there are all these hydrogen vents and there's not really a lot of debate that's reactions happening. It's more around, can you find traps and seals? The same time, I started really thinking about what this could mean for energy transition. You know, the question you always ask as an entrepreneur is the what if. What if we're successful on the technical side? What does it mean? And, you know, if you can find hydrogen under the ground, the reality is you should be able to produce it from a volumetric standpoint at a similar cost.

that we produce natural gas out of the ground. And that doesn't mean that you're going to have the exact same cost per energy because natural gas holds about three times as much energy per unit volume as hydrogen. But what it does mean is you can produce hydrogen at a price point that suddenly makes it possible to produce low carbon, you know, carbon-free, base load, demand response power at a price that's just untouchable by most of the other options we're talking about. makes it so you can produce ammonia for cheaper than fossil-fired ammonia, fossil-fossil ammonia, and that allows us to do fertilizer in a carbon-free way. You could even take, you know,

natural hydrogen produced at optimized prices, combine that with biogenic CO2, and you could make kerosene for sustainable aviation fuel pretty darn close to cost parity to the kerosene that just comes out of oil refinery. So just from a cost standpoint, you know, that is, that's just world-changing. It's just completely world-changing for all of these really hard to decarbonize areas like steel and aviation and cargo shipping, if we can find this hydrogen out of the ground, it's just a total game-changer. And that got in my head and I was full of FOMO and decided I needed to take a chance and work with, you know, work with folks on this. I've found that geologic hydrogen is a very fomo-inducing sector. Yeah. Yeah, and I think the thing to understand,

which maybe some folks will have already figured out, but just to make it really clear, part of the reason why in principle production of geologic hydrogen should be so cheap, relative to other forms of hydrogen production, be they fossil-based or not, is that we generally consider hydrogen to be an energy carrier. It's a secondary form of energy. This would not be that. This would be primary energy. And that's such a fundamental distinction. It's, in fact, I think, think would be basically the first new significant source of primary energy that we found in the world in like a century, right? Yeah, since nuclear, right?

Since we started working on nuclear technology in the 30s and the 40s. So just some numbers here, right? A ton of hydrogen, a metric ton of hydrogen has about 33 megawatt hours of energy in it. Now, depending on what you do with it, some of that's lost inefficiencies, but just that's the number to think about is 33 megawatt hours. to electrolyze, to take renewable electricity and make a ton of hydrogen. Now, that's totally green. You can do that carbon-free.

It's great in many ways. But you're going to put 50 to 55 megawatt hours of electricity into that system and pull out 33 megawatt hours. And so best-case scenario, you're about 60% energy efficient. Now, if you step back and you say, okay, I'm going to make my hydrogen from natural gas. And people never talk about natural gas in terms of megawatt hours. but for the sake of comparison, I will, roughly around 40 megawatt hours of thermal energy from natural gas would go into making 33 megawatt hours of hydrogen.

So again, just confirming what you're talking about, you put more energy into that than you get out. And so hydrogen is really a form of energy storage. You take one form of energy, you convert it to another, and you might build a move it or this or that. Our best estimates for a natural hydrogen field is probably somewhere in the neighborhood of one to three, megawatt hours of energy in to pull a ton of hydrogen out.

So that's one to three megawatt hours of parasitic costs of running compressors and pumps and other things to pull it out and purify it to get 33 out. And that is on par with the kind of energy it takes to pull gas or coal or oil. I mean, nuclear is a pretty special case, which this is not the program to talk about that. But like this is a really impactful thing that it is a new. form of primary energy. Right. And then, of course, there are other benefits that you can imagine as well, relative to other

forms of hydrogen production of various stripes, whether it's water usage or land use or whatever it might be. I want to talk about two things that are concerns, though, about geologic hydrogen. One of which is leakage, the question of leakage and why that might matter and what we know about it, and the other which is location. So let's talk about leakage first. So explain why hydrogen leakage would be bad because it's not intuitive. It doesn't contain a carbon.

But it would still be bad. Yeah. And look, there's a lot still left to be figured out with this. People have really started studying this in kind of recent years, I think, as a lot of folks have started to look at hydrogen as a decarbonization solution. And so, again, I'm not an atmospheric scientist. and want to be careful and not get ahead of my skis. But essentially the idea here is if hydrogen leaks out of a system, right?

Hydrogen, let's say hydrogen is leaking out of a valve in a pipeline. That hydrogen will go up into the atmosphere, and that hydrogen will basically interfere with the breakdown of methane in the atmosphere. So it's not a direct greenhouse gas the way that CO2 is or that methane is, but hydrogen essentially will interfere with that reaction where methane slowly breaks down and because of that, hydrogen can be a greenhouse gas, an indirect greenhouse gas. Now, there's, you know, what people like to think about is, you know, what is the CO2 equivalents, you know, impact, right? And methane, depending on, you know, how you look and how many years you look out,

it might be, you know, 25 to 30 times more impactful on a greenhouse gas emissions per ton of methane. Now, the numbers for hydrogen are kind of a moving target. You know, there's some really low numbers out there. There's some higher numbers out there. There's a bunch of studies going on trying to really determine this. So we're pretty early, but I think it'd be hard to argue that it wouldn't have a negative effect on greenhouse gas, you know. And so you on climate change. So you do have to be thoughtful about monitoring and managing leakage and emissions for sure. There's a couple of things to think about, too, which is hydrogen is, you know, like hydrogen systems have been around for a long time.

So some of the things I've read is, you know, thinking about the concept that 20% of hydrogen might leak because it's a small molecule. But the reality is we've been moving hydrogen through pipelines in this country for decades. There's 1,600 miles of hydrogen pipelines. Hydrogen wells even are not a new thing. We store hydrogen underground today. So the well, the wellhead, the casing, the gasketing, the valving, all those things have been developed and monitored and optimized over the past, you know, four decades, right? So we're not, we're not really entering a new territory for figuring out what to do with hydrogen coming out of the ground. We've been storing it

under the ground for decades. And so there are numbers assigned to, you know, how much hydrogen actually leaks out of these systems today. And the numbers are pretty small. They're similar to, I'd say, some of the higher-performing natural gas producers as far as the emissions rates. And to be clear, the same amount of leakage from hydrogen would not equate to the same amount of leakage or proportion of leakage from natural gas. Like hydrogen would have a much from a warming impact perspective. It'd be like far less. Yeah, so just some numbers on this because it's, you know, lots of hand waving on this. But here's some numbers on this.

So the leading industrial gas companies who operate hydrogen wells and hydrogen pipelines, they monitor their leakage a lot because hydrogen is a lot more. more valuable than natural gas, right? So if you're, if you're drilling an oil well and you have some associated natural gas and you're really after the oil, those guys, a lot of them, I mean, a lot of people care, but like monitoring that natural gas is an expense, right? If you're in the hydrogen business and you have a hydrogen well and a hydrogen wellhead and hydrogen pipeline, you're delivering hydrogen, you monitor that product. That's your primary product. And so the best performers in industrial gas world, they lose about a quarter. order of a percent of their hydrogen from wellhead to customer delivery.

The sort of the bottom quartile are around 1%. So, you know, if you just kind of think, okay, in the neighborhood of 1% is what's lost from wellhead to customer, typically in industrial gas, you know, that's in a similar ballpark as the average natural gas production, you know, where Carve in California assumes about 2% methane loss from wellhead to delivery, if we just said, okay, let's just assume you lose 2% methane, you lose 2% hydrogen. That means if I took that methane and I burned that in a power plant or I took that hydrogen, I burned that in a power plant and I'm losing the same amount, I would have a 97% reduction in total greenhouse gas emissions by going from methane to hydrogen. So again, yes, emissions are something that we should always be mindful of and thoughtful of, but thinking about emissions as a reason not to do this would just be it would be cutting off our nose despite our face.

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we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Are you tired of overpaying for big-name PR firms, but not really knowing what they're delivering? Is your comms team wasting time reviewing lengthy messaging briefs and decks instead of engaging journalists or producing content? Are you wondering why your competitors are getting press and you aren't? Fish Tank PR is an award-winning climate and energy tech, renewables, and sustainability-focused PR firm dedicated to elevating the work of both early stage and established companies. Whether you need to position yourself as a thought leader in between project announcements, or translate,

ideas and technologies into tangible, compelling stories that resonate with the media, fish tank can help. Check out fish tankpr.com. That's f-i-s-c-h-fish-tankpr.com. All right, so let's talk about the other challenge then, which is, wow, amazing. We've got, you know, sizable reserves. We'll come back to what it could potentially be. But we've got sizable reserves.

We figured out how to tap it. It's cheap. It's clean. Low water, low land use, all that kind of stuff. But it is where it is, right? And we're not going to talk so much geographically here, I think probably for sort of obvious reasons. But let's assume that where it is is not like smack dab underneath the exact place where all the hydrogen demand exists today. Yeah.

Right? Like, you know, you have the petrochemical corridor in Texas or whatever. Let's assume that you can't just drill well beneath like an existing ammonia plant and all of a sudden you've got all your geologic hydrogen. So how do you think about, you know, this, this geography? challenge with natural hydrogen? Well, look, I'd say that the first thing that really matters, and people have got to be clear with, right, is like it's not like every natural gas reservoir that's ever been drilled produces gas at the same low cost.

You know, some reservoirs are drilled, and it's not a great reservoir, but it's just barely good enough to get it into the system. So some of the early geologic hydrogen finds that, you know, that come, if this is really, if this is going to work, aren't necessarily going to be the best ones. And so we'll slowly kind of weed our way through the best ones. And why this matters is if you can get your delivery costs down low enough, it becomes really attractive for people who want to produce, you know, the next wave of clean ammonia facilities, for example,

rather than them building in, you know, in a sort of pre-decided spot, they actually would be interested in coming and building close to the point of production for geologic hydrogen. Now, you know, think about Houston in the 1920s, 1930s as it developed, right? Houston isn't there because everybody wanted to go down and settle this region in East Texas by itself. I mean, Houston was always a small town. The refining complex in Houston came about because that's where the first big oil finds were. And so then the refining, the whole refining industry built up around there. And then pipelines started to be built to connect the other discoveries,

back to this refining center, right? And that's really the history of this is that, you know, when we're developing infrastructure, we tend to put infrastructure where the resource is first, and then when you find new resources, you have to connect those new resources to that infrastructure. Our view and what we've really seen in conversations we have with customers is if we can find large price advantage geologic hydrogen reserves,

the infrastructure will come to the hydrogen. And that doesn't mean it'll come to the hydrogen. if you're in the middle of Greenland, obviously. But I'd say most places inside the United States are attractive enough for investment that the infrastructure will likely come locate close to the point of production. Yeah, I think of it as being similar.

We have all this, like, aluminum production in Quebec, because we have Quebec hydro and it's cheap electricity. And, like, that's why we put aluminum production there. The thing that I've come to appreciate is that a lot of the things that you would make using hydrogen, hydrogen is the dominant cost in those things, right? If you're trying to make synthetic jet fuel or whatever, you're trying to make ammonia,

the cost of hydrogen is your fundamental driver. And so if you have a cost-advantaged source of hydrogen, it's definitely your incentive, all else equal, to get that cost-advanted source of hydrogen, and you might sacrifice, then you've got to move your product, for example. But that might be worth it to you because, again, the big lever on the cost

of these hydrogen derivatives is the hydrogen. That's right. I mean, if you look at the economics on almost all these, 75% of the cost of ammonia is hydrogen. A large percentage of the cost of the sustainable aviation fuel is hydrogen. And so, yeah, completely agree with you. I mean, to a certain degree, if you had a big plant operating and it had a bunch of extra capacity and you want hydrogen, then people will be weighing in, okay, what's the cost of connecting 200 miles of pipeline from that production source to this existing plant where I get better economic. by expanding it rather than building greenfield. So every case will be unique, but a lot of the infrastructure that we're trying to build as a country in the U.S., at least, to satisfy demand for clean energy, it's new. It's greenfield. So, you know, if you're going to build a greenfield clean ammonia facility, and you were going to build it in location A close to a, you know, renewable hub, and you have an

opportunity to build it in location B and run it baseload on much lower cost. hydrogen, that's where you'd put it, provided you're confident that that hydrogen's going to flow for 20 years. Right. That's an important thing. Which is a good segue to talking a little bit about what is actually known here and what is not. Because I think, look, hopefully we've driven the point home sufficiently that, like, if this

were a resource that you could talk about in numbers that are on a global scale, it would be pretty interesting, right? Like a pretty world-changing thing. But I think we should be clear not to oversell it at this point. So we're going to stick to what is publicly known here and not talk a whole lot about what Coloma is doing. But let's talk about what is publicly known about the existence of reserves of tapable geologic hydrogen. I think the answer is very little. I think a lot of people are really excited about this.

10% of the Earth's crust is mafic rock that could be producing hydrogen in one form or another. So, I mean, the potential scale of the resource is massive. The USGS put out an estimate that this could be on the order of trillions of tons, you know, hundreds of years of energy. Coloma, we have our own view on what that is. That's probably a bit aggressive in our view, but it's, but it's, it could be really, really big. As far as, you know, proven reserves of hydrogen, very, very little, right? There was a well drilled in 1987 in Mali, Africa that was a water well that struck hydrogen

and has been producing high purity hydrogen ever since for, you know, for decades. And other wells have been drilled around that. And there's enough hydrogen produced in this area in Mali to power a village, right? Like, it's not a, this is not something where they found the next, you know, the next permium basin of hydrogen. You know, company down in Australia, Australia has got a lot of. activity going on. Australia has very, very old rock, sort of mafic basement rocks and has some great sort of, you know, source reservoir trap seal combos. Company in Australia called Gold Hydrogen,

that's a publicly traded company on the ASX. They twinned a well that was drilled decades ago that showed hydrogen and they, you know, they flowed some hydrogen out of this recent well called the Ramsey well. They haven't proven necessarily a large reservoir so much as they've proven some flowable gas and that's a great thing. So I think there's, you know, we're in pretty early days as far as that goes. And so that's why, look, you know, Coloma's got a lot of data and we think this is a really interesting, interesting thing to spend our time working on. But it's early.

And, you know, anybody who's sort of waving their hand and saying, we figured it all out is a little bit ahead of their skis. My view right now is like, this is one of the most, this is one of the most interesting. experiments being run in all of energy transition, and it deserves well-thought-out, well-funded work and not kind of fly-by-night work, but it's early. You mentioned gold hydrogen, which is a company in Australia. Let's talk for a minute about who, from a publicly known standpoint anyway, who's going after this in what way and where, right?

I mean, you've mentioned Africa, you've mentioned Australia. Where is the activity generally and who is known to be seeking it? Well, so, I mean, Coloma, the company that I run is sort of a higher profile business in the space, in part because we've got some high profile investors. And so, you know, we're obviously active. We're active in over 10 states right now. But that should be interpreted carefully because activity and exploration, I think the public just says, oh, that means, you know, that's a well being drilled. But the reality is to explore well, you've got to invest heavily in land and geo. physics and other things. And so to that sense, it's actually hard to know everybody who's working in because a lot of these things you can work pretty quietly in until you go have a rig put out on the land. You know, in the U.S., you know, Coloma's obviously working. There's a couple of Australian companies working in the U.S. as well. One company called Haightera, you know,

another company that's just getting started and they're working in the U.S. I've heard of Canadian companies, you know, some that are working in the western side of the U.S. There's a group working in Saskatchewan area in Canada. You know, there's just a lot of activity. Most these companies, I think, are just kind of getting started. There's a group in the four corners that's working. Some people will drill for helium and find a little hydrogen and try to make sense of that. Australia, there's, you know, gold hydrogen is a well-known name.

Buru, which is an oil and gas company, is pretty active in the space there. This is probably a boring thing for your listeners, but I mean, there's 50 or 60 companies working in the space, and, you know, I think most of them are pretty early in the game. What do you think of as being, like, okay, this is, there's a world in which geologic hydrogen is like as important as nuclear fusion. Again, I don't want to oversell it here, given how far we are for proving that. But the reason I bring up fusion, right, is because there's a nice moment you can point to that's Q equals one, right? That's like, ah, here's the watershed moment. Now, it doesn't mean then nuclear fusion has become a commercial resource for energy. I think that's something people often forget.

But there is at least this like watershed moment you can point to of, oh, we built a fusion reactor that got more energy out than we put into it. What do you think of as being the equivalent to that in geologic hydrogen world? Is there something that if it happens and is announced, everybody can point out. to and say, oh my God, this is a real, this is different now. I mean, look, the watershed moment that I think is going to happen is this. So, and let me step back and just talk about helium and natural gas. Normally, the way this works is you, you know, you shoot a bunch of seismic and geophysics and you study as much as you can.

You try to figure out, you know, are there traps, are there seals, is their source rock? And then eventually you drill an exploration well. and that well goes into that formation and ideally that well hits a dry gas cap in that formation and starts producing gas right and if you're producing that gas now you know whether that's high purity hydrogen medium purity there are things you can do with that gas on the surface to purify it and separate it so it becomes a valuable hydrogen product but you start producing that gas and you're going to run that production test for one month two months three months you're basically going to run that until you see a slight decline in production,

that helps you figure out how big is the pocket of gas that this well can draw on before I start to see pressure loss. That would be categorized as a discovery, right? But not all discoveries are created equal because you could have a small discovery that doesn't really matter in the grand scheme of things. So what I think is sort of a watershed moment is first off, that discovery, you know,

and you're flowing gas from multiples of months, and it's in a place where there's clearly more reservoir rock accessible. The next watershed moment is you go and you drill three to five additional wells around the perimeter of that well sort of expanding out. And in oil or gas, that would be called appraisal. Those would call appraisal wells. And you drill those appraisal wells, and you run those multi-month production tests with those wells.

And at the end of that, you have a data set that a third-party, auditor could come in and say, we agree you have this many proven reserves of this gas, right? Now, there's different levels of proven reserves, there's producing reserves, and there's proven undeveloped reserves. And this would be early. I think that is really the watershed moment where the proven undeveloped reserves, as viewed by a third party, is large enough that it's producing a flow of hydrogen that matters. And people can debate over what that is, But if you think about geologic hydrogen, how much do you need to be producing to justify building infrastructure out where you're producing? And if you want to produce liquid hydrogen, you've got to be producing 10,000 tons per year, give or take.

If you want to be producing ammonia, you know, you're probably in the neighborhood of like 50,000 tons per year is a good amount of hydrogen. So I would think if you could prove out reserves that would allow you to produce those kinds of those kinds of, volumes of hydrogen over a 15, 20, 30-year lifetime. That is like the watershed moment of a commercial, commercially relevant large reservoir discovery. Right. And that's in some ways why I think it's valuable to throw a little bit of cold water on the hype because from a public standpoint anyway, no one has announced a discovery, let alone having taken that discovery all the way through appraisal yet. So there's some ways to go still. Yeah, I mean, look, there's a long way to go people have flowed hydrogen gas to the surface, high purity hydrogen gas to the surface.

So we know it can be found underground. Like we know that. You know, gold hydrogen is published some data on that. There's others who've done it. And so that's really where we are. I mean, the reality is the so what of finding a reservoir that's commercially sized is such a big deal. that this just captures the imagination of a lot of people. We just have to be thoughtful about managing expectations

that good exploration programs run by the best oil and gas companies in the world take years and years and years to bear fruit. Yeah. All right. I want to talk about one other thing, which is we've been focusing on just exploration for existing reservoirs of natural hydrogen, which is where Coloma is predominantly focused.

There is also some discussion. There's been an Arpity, program around this, other folks thinking about, well, wait a second, do we have to just explore for these existing reservoirs, or what we're looking for is a reaction between water and iron-rich rock? Can't we just do it? We know there's 10% of the world's. The earth's crust is mafic rock. Can we stimulate hydrogen production in the subsurface? Talk to me a little bit about that side and what is and isn't known there. Yeah, so conceptually here, I mean, this is really fascinating. right is that this reaction of water and iron like you you can you can you can you can create this right

you can create this artificially you can push water into a iron rich rock and you can actually create this reaction there's you know certain elements that that will create make this reaction go faster you know there's there's certain certain sort of chemical and process conditions that'll make it go faster you know i'll give you an example which and this is one's not going to be a surprise to anybody who's a scientists listening is temperature, right? Reactions tend to be governed by temperature to an exponential rate. So there's a, you know, the hotter you go, the fastest reaction is going to go. But if you go too hot, there will be other reactions that then subsequently happen that will

actually reduce the hydrogen that's produced in this. So there's kind of a Goldilocks temperature zone that you want to be in to make that happen. I think the other challenge with that is is creating enough active surface area for the reaction to happen. And, you know, this is different from, you know, stimulating a natural gas well or an oil well because it's totally different kind of rock and you want to create this active surface area for the reaction to happen. I stated publicly in front of the Senate that Coloma is interested in this. We're spending time. We're working on this in the lab.

We've run field tests with partners in earlier times where we've shown like this can happen. So we're working on those optimal conditions. we're trying to figure that out. It's not our primary focus as a business. Our primary focus right now is finding natural deposits. But we know it works. We know that that reaction can be stimulated. We're trying to find the optimum conditions.

One of the big questions you have there is, can I recover enough hydrogen out of that well to pay for it? So if I'm going to drill a long horizontal well and I'm going to get into some fractured mafic rock and I'm going to push water into that and try to pull hydrogen back out or pull it out of another well. You know, I made me into that $5 to $10 million on that well. And, you know, you need to pull out, if it's a $10 million system, you've got to pull out five million dollars a year of hydrogen out of that system to be comfortable with a return.

And the question for me is not, does the reaction work? We know it does. The question is, can it work well enough and can there be an engineered system that's sufficient to actually be able to pull out $5 million a year of hydrogen? from a $10 million well. We're not there yet. All right. So to wrap it up, what do you think is the right?

It's an interesting, from a hype perspective, geologic hydrogen. I mean, virtually no one was even thinking about it outside of Coloma and a small group of academics and a few folks in oil and gas world until, I don't know, a couple years ago. And then I think some reporters kind of caught on to it, as you said, that the federal government started to pay more attention to USGS to this map. RPE picked it up. So it has started to gain more attention and then announcements from gold hydrogen and that kind of thing are getting more. As you said before, it's like easy to capture the imagination with it. And so I think of it as being particularly sensitive to getting overhyped

too early. What is the right way in your mind for folks to be thinking about this sector, such as it today. Look, as the CEO of a startup company and arguably, you know, one of the better known companies in the space, it's normally your job to sort of hype up the market and try to get in the press and get everybody excited about what you're doing. I think Geologic hydrogen is so interesting that it kind of does that itself without a lot of help from me, honestly. And I find that my job is more around trying to calm everybody down and manage expectations and help them realize the impact of this could be enormous, but it's going to take time. And we can't skip steps.

We can't fast forward this. We can't just throw money at it and suddenly take a five or seven-year process or 10-year process and shrink it into a two-year process. Then you're just kind of wondering what happened to all the money, right? Like that's the challenge here. So look, I think as far as an impact goes, I don't think there's anything in the world anybody's working on that could have a greater impact on decarbonization than geologic hydrogen.

So, I mean, the hype around the impact, I think, is real, and it's deserved. And I mean, when I kind of think about, well, what could have the biggest impacts on decarbonization, you know, the word that comes out of everybody's mouth is fusion, and I agree with that. I think geologic hydrogen should be mentioned in the same breath, you know, and then maybe some major, major breakthrough and energy storage that really changes the game there. I think those things are just the huge impact. So I don't think the impact can really be overhyped. I think it's that big.

I think managing expectations around timing and how hard this is going to be and how much work it's going to be is really important. And so making sure people don't think like, hey, in two years, the world's going to be a wash in geologic hydrogen, and thus we don't need to work on any of those other solutions because this is here. I think it's going to happen. I think the data is out there that makes this look. really interesting, but there's a lot of wooded

to chop still. All right, Pete, this was as fun as I expected. We'll have you back on when you've announced your first appraised asset, and we're shooting off to the moon. But in the meantime, thanks for walking us through the world of geologic hydrogen. Yeah, great to be here. Fun to talk about it. Pete Johnson is the CEO and co-founder of Coloma. This show is a production of Latitude Media.

Again head over Latitude Media.com for links to today's topics. Latitude is supported by Prelude Ventures. Prelude backs visionaries, accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more at Preludeventures.com. This episode was produced by Daniel Waldorf, mixing by Roy Campanella and Sean Marquan, theme song by Sean Marquan. Stephen Lacey is our executive editor.

I'm Shail Khan, and this is Catalyst.