Q&A with Christophe Hecker, CEO, NaturalHy
Natural hydrogen is emerging as a low-cost, low-carbon energy source with global potential, and exploration is accelerating across North America, Australia, and Europe.
In this Mining Insiders, NaturalHy CEO Christophe Hecker outlines why the sector is gaining momentum, how juniors have already raised over US$1 billion ($1.4 billion), and why early-stage exploration offers the strongest value uplift for investors.
To listen to the interview, click here:
Let’s kick off with an introduction to you and your work.
I’m based in France and working as a financial advisor in the field of natural hydrogen, which we also call geological hydrogen or white hydrogen.
I work on fundraising for junior exploration companies in this field. Those juniors are exploring the subsurface in order to extract this natural hydrogen.
I also wear another hat, working as the spokesperson at Earth2, which is a European cluster program dedicated to natural hydrogen. We promote natural hydrogen as a low-carbon source of energy and pillar for the energy transition and energy sovereignty in Europe. This is a very hot topic at the moment.
So, what is natural hydrogen? How is it different from manufactured hydrogen?
First, it’s good to look at what hydrogen is in general. Essentially, it’s a gas that has been identified as a solution for the energy transition because it has potential to replace natural gas and coal, especially in what we call the hard-to-abate sectors such as steel, cement, glass, heavy mobility like shipping, and aviation.
The problem we have today with hydrogen is that it is too expensive to produce. Green hydrogen, obtained by splitting water molecules through electrolysis, uses electricity and is very expensive. In Europe, it’s more than €7–10 ($11.51–16.45) per kilogram. And if we want hydrogen to be competitive with fossil fuels like coal and natural gas, it must be cheaper than this.
This is where natural hydrogen can play a key role because the production cost estimates are heading toward €1 or less per kilogram.
What is natural hydrogen? Basically, it’s the same gas as any other form of hydrogen, but you don’t have to manufacture it. You just have to extract it from the subsurface.
What is new with this gas is that we’ve known for a long time that it does exist in the subsurface, but in the past, no one really cared about natural hydrogen because it was assumed that the resources were very low. What we now know is that those resources are probably much more important than expected, so we’re trying to explore the subsurface to extract it.
Is it geographically constrained or more broadly found?
This is very different from oil and gas, for example, where deposits are located in very specific regions of the world, such as the Middle East and the US with shale oil and shale gas, etc.
Hydrogen is likely much more widespread globally because its source rocks, the iron-rich formations, are located around the world. But having the right source rock is only the first part of the system. Just like in oil and gas, you also need a geological trap above the source so the hydrogen can accumulate instead of escaping to the surface.
Current research suggests the potential is very high in North America, Australia, and parts of Europe. At present, the most active exploration and discovery work is happening in North America and Australia.
Hydrogen’s role as a clean energy source is quite apparent as we’re seeing these heat waves all over North America and Europe at the moment. Tell us about the main industrial use case and why people should be paying attention.
As I mentioned earlier, cement, glass, all of those industries burn a lot of coal and gas, and in those industrial processes, you cannot replace coal or natural gas with electricity. In Europe, there is a huge move towards electrification across a lot of applications like mobility and in the industrial sectors. However, there are many processes that need very high temperatures that you simply cannot reach with electricity.
So, the first application for natural hydrogen would be those hard-to-abate sectors and then heavy mobility, like the shipping sector. There are a lot of constraints on the shipping sector in terms of decarbonisation because that industry burns a lot of fuel, so if you could replace fuel with hydrogen or ammonia or a derivative form of hydrogen, that could go a long way.
So, a big part of your role is fundraising with junior companies. Are you seeing a growth in the natural hydrogen junior sector right now?
Definitely. So far, we have identified around 70–80 exploration projects globally, again with most happening in North America and Australia, but also in Europe.
What we see in Australia, Canada, and the US is that all those junior exploration companies are getting listed very early, just like in the mining sector.
But what we also see is that the risk appetite for this new type of exploration is higher in the US and in Australia. To date, over the last three years, around US$1 billion has been raised in the field of natural hydrogen, with a terrific acceleration in the last 12 months.
Just in the last four months, more than US$100 million has been raised in the sector, so the momentum is definitely increasing. But there’s also a huge difference between the US and Europe. For example, in the US, one single company, Koloma, which is backed by Bill Gates through his investment fund Breakthrough Energy, raised half of that US$1 billion that I mentioned earlier.
What are investors looking for in a natural hydrogen project?
I would say it’s definitely the value that can be created during the exploration process.
In the mining sector, during the exploration phase, a company’s capex is quite low and there’s no production, but this is still a period of value creation. Once a company secures a licence or an asset, exploration is fundamentally about de-risking that asset, and every step of de-risking increases its value.
That’s why investors should focus on the early-stage exploration, when there is minimal capital outlay and maximum value uplift. What I’m trying to educate investors on is the importance of getting in as early as possible, right from the moment a company secures its licence and to stay on at least until the company reaches the point of drill testing.
What do you think the market needs to understand about the natural hydrogen sector and its momentum?
The main thing we have to understand is that it can definitely play a key role in the energy transition.
Having said that, I think we need to now shift from renewable energy, especially in Europe. There’s been significant momentum behind renewable energy over the last 20 years, which is good, but if we want to achieve the energy transition, we need clean, affordable, and reliable sources of energy, and natural hydrogen can play this key role by replacing coal and gas. This new source of energy has to be cheap enough to be competitive with natural gas.
Lastly, natural hydrogen can also play a key role in the geopolitical context. As we have recently seen with the Strait of Hormuz, we are all dependent on the Middle East for oil and gas, especially in Europe. So, the opportunity with natural hydrogen is also to make this geopolitical shift with it being sourced from many new locations around the world that could then produce their own energy.
Write to Amy Rotman at Mining.com.au
Images: Mining.com.au
