Carbon Capture and Hydrogen Equipment Technology with Baker Hughes

In the third episode of the Energy Transition Podcast Series, Chris Barkey, Chief Technology Officer of the TPS division at Baker Hughes joins Marc Bianchi, Industrial Gas & Equipment and Oilfield Services & Equipment Analyst to discuss the company’s offerings and product development in compressors, turbines and other capabilities available to serve hydrogen and carbon capture.

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Transcript

Speaker 1:

Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Marc Bianchi:

Hey everyone. This is Marc Bianchi from the energy team at Cowen. In this episode of the Cowen Energy Transition Podcast we’re speaking with Chris Barkey, who’s the Chief Technology Officer of the TPS Division in Baker Hughes. TPS stands for turbo machinery and process solutions and makes up about a third of Baker’s revenue. The division has a lot to offer in hydrogen and carbon capture, and the company has a goal to double TPS revenue by 2030 through those growth markets. Chris joined Baker in 2020 after spending 30 years at Rolls Royce. So Chris, thanks a lot for joining us. Before we get into the discussion maybe you could give us a couple minutes on who you are and what you’ve been up to since you came over to Baker.

Chris Barkey:

Yep. Perfect. Thanks Marc. And it’s a pleasure to be here today. Yeah. As you said, a 30 year career at Rolls Royce, my final role there was the group director of engineering and technology. So, I ran all of engineering for the company. That’s about 17 and a half thousand in engineers, about one million of R&DT spend every year. I owned functional strategy, product safety, technology strategy, and really had lifecycle all the way from kind of sticky messes in test tubes all the way through to the in-service support of the fleet. And as a member of the executive, we covered civil aerospace, defense aerospace, nuclear, marine, and the power systems business was used reciprocating engines. And during my career there, I spent time again in the defense aerospace business, in the energy business, which is obviously very relevant to what we’re talking about today and the civil aerospace business. I left in 2017. I did a chief exec of the Henry Royce Institute that’s named after the same famous engineer, but has nothing to do with Rolls Royce. It’s the UK National Institute for Advanced Material Science. I did that for a while.

                And then I joined Baker, as you said at the end of 2020. So really excited to be here. I was encouraged to come A, because there’s some machinery that I recognize. But also with the excitement and the challenge of the energy transition, the technology that that brings, the organizational challenge that brings with new skills and new techniques and new functional requirements. And obviously there’s a big kind of culture change going on in the company as well. So TPS, we do turbo machinery and process solutions, and my role covers again, full life cycle from low technology readiness level technologies, all the way through product introduction into the market. And I have a team who obviously supports all of our products in service and an ultimately disposal. So, pretty broad ranging role, member of the executive, exciting time within the company and delighted to be here.

Marc Bianchi:

Great. Well, it is certainly an exciting time. I guess, for those of us that, and I guess myself included that don’t know all the intricacies of the turbo machinery and process solutions business. Can you just talk to us generally at a high level, what it involves, what’s the basic definition of the equipment and the applications that it’s used for. You have a leadership position in LNG and that’s going to play a role in transition but I’d like you to address that briefly but also what we’re really interested to hear is kind of the capability that you have for hydrogen and carbon capture. I mean, my simplistic understanding is that really, this equipment is all used for moving gases around, right? So you’re compressing, you’re expanding, you’re combusting gases, and that’s kind of what we do with methane right now. And it’s what we’re going to be doing with hydrogen and CO2 in the future. I don’t know if that’s a kind of layman’s understanding of it, but curious if you could-

Chris Barkey:

Yeah. I mean, absolutely right. You’re not bad so we’ll look out to employers and engineer, Marc. But as you say, simplistically turbo machinery are machines that transfer energy between a rotor and a gas or a fluid, and that can go in both directions. So for example, a gas turbine and again, my favorite description is a gas turbine is basically sucks, squeeze, bang, blow. So we suck the air into the front of the engine, we squeeze it, we compress it so the rotor applies energy into the gas. The bang is where we inject the combustible fuel and create combustion. And then the blow is the exhaust gases coming out the back of the turbine. And that gas then applies its own forces to the turbine, which then drives both the shaft through to the compressors but also drives whatever equipment is on the back of the gas turbine.

                So it could be a generator, it could be a compressor. So again, when you kind of take that to a different product subset as compressors, again, either being driven by a gas turbine or being driven by an electric motor, for example, then the compressor as it turns and rotates is applying and transferring its energy into the gas that is then being compressed. So our product range, we have a whole range of gas turbines, we have heavy duty gas turbines, air derivatives that are derived from the engines that you see when you look out of your plane as you’re flying on all day around on business. And then light industrial gas turbines as well. And we have probably about 5,000 gas turbines as an installed base. And then obviously we have a range of compressors, both reciprocating compressors, centrifugal compressors, integrally geared compressors, and pumps that again kind of drive compression in a number of different industries.

                And as you said Marc, we are leading in Baker Hughes in the LNG space. So if we look at today, there’s about 490 million tons per annum of LNG produced. And I think Baker equipment’s on about 450 of that. So, long history, both [inaudible 00:06:49] Nuovo Pignone, acquired by GE. And really we’ve become extremely dominant in that space because of the quality of our equipment, the reliability of the equipment and the performance of our equipment. So hopefully-

Marc Bianchi:

So I get-

Chris Barkey:

… that’s the layman’s turbo machine.

Marc Bianchi:

That’s great. I want to talk a little bit more about the competitive landscape and the differentiation. LNG is an example of an application where you are able to enjoy a leadership position because of your differentiation. But what is it about that differentiation that gives you the advantage? Is it, I think it has something to do with reliability, but I don’t understand why you’re able to deliver on reliability. What is it about the equipment and the, maybe the combination of compressor and turbine that affords that? And then what are the other areas where you think you have a leadership position? And what are the other areas where you’re not going to really chase after that because somebody else is good at it, or it’s maybe a commoditized part of the business?

Chris Barkey:

Yeah. I mean, it’s a great question. I think at the heart of it as ever is fundamentally world class engineers producing highly competitive products. Whether they be compressors that have great range, great efficiency or gas turbines as you say, with great performance, great efficiency, great reliability and availability. So that’s kind of a baseline. Then there’s a, you have to wrap an incredible professional business organization around that. Both in terms of sales, in terms of how you project manage. So customers want things delivered on time and to quality and with zero punch lists. And obviously then transitioning into great support in the aftermarket, because the one thing about LNG is that reliability is really important, because if you trip a unit and the LNG process goes down, the LNG process itself will take a while to get back up to speed.

                So, making sure that those units run. So I think that’s one thing. We have great products. I think our ability to integrate a great gas turbine with a great compressor. And actually now as we’re expanding more and more into the, actually delivering entire LNG trains including the refrigeration units. We have a very sound position as a solutions integrator, working with our EPC partners to make sure that we can deliver what the customer wants. And the reality is that there are other competitors in the space and there’re all good engineers as well, and they have good products. And there’s always this kind of arms race about power and efficiency and reliability and performance and fuel flexibility. And that’s just the reality of living in our sort of product space. But I think the innovation that we have showed both in internal to single elements of the solution, like the gas turbine and the compressors.

                So we’ve done a lot of innovation recently around our compression sets, where we can combine some of our design styles, we can change some of the materials, we can do some aerodynamics that allow us to not only make better efficiency but do it in a much more energy dense package. And actually in some cases move the number of compressors that you need down from say three to two. So that gives great advantage on cost, it gives great advantage on footprint, it gives great advantage on reliability and maintainability. So all of these things allow us to keep innovating. And I think that’s key. Is, so great product, great service and continual innovation to make our customers A, produce more LNG and actually get from the start of a project to the point where they’re producing LNG faster and certainly we’re doing that today.

                And we’ve got a good track record introducing new machines, like the LM 9000 new compressor technology. And obviously that then starts feeding into the conversation we’re going to have in a minute around hydrogen and carbon capture and all of those things to help decarbonize, not just LNG but this different parts of the industry.

Marc Bianchi:

That’s a great segue, right? Because one of the things that you are doing with air products you have this hydrogen combustion. So 100% percent hydrogen combustion on air products, Alberta project. I’m curious what the reference is for 100% combustion. How much uptime do you have doing that? What’s the demonstration of doing 100%? Because my understanding is there’ve been, when I look at what your peers have said there’s limited reference they’re blending some portion of hydrogen, but it’s not 100%. So it seems like a technically challenging thing to accomplish. How did you get there? And just talk to us about some of the technical challenges that you and the industry may encounter with that.

Chris Barkey:

Yeah. So I think first of all we’re not newcomers to the hydrogen space. I think, the first burning of hydrogen and the first was 20 odd years ago. The first treatment of hydrogen in a compression set was in 1962. So we’ve been compressing hydrogen for nearly 60 years. So, I think we have experience, I think depending on which kind of product line you are looking at. Whether you’re looking at frames, whether you’re looking at aero derivatives, whether you’re looking at the light industrials, there are different kind of max hydrogen experiences that we do have. But certainly at the smaller end we do have, in 2008 we built the first turbine in the world which was a 10 megawatt unit to run on 100% hydrogen at the, I think it was the Fusina hydrogen power project in Italy. So our smaller end certainly has that capability. And I’ll come back to the specific around air products in a minute. As you go up in pressure ratio, then some of these combustion elements get a little bit harder.

                So when you look at the air derivatives for example, we certainly don’t see that them having a hundred percent hydrogen capability today, and we’re going to grow those as we drive that. In particular on the air product piece, there is water injection as well which makes it a slightly easier, but not much easier technical challenge. And that helps to abate the NOx, which is one of the kind of the by-products of burning hydrogen. So I think we have a high level of confidence in our ability to deliver that air products, with good demonstration in the field as well as a lot of time spent kind of on the rigs. And we’ll develop those on the LT-16 engine which is about a 16 megawatt unit. But hydrogen is as you said, is not the easiest of fuels. It’s got its own set of challenges. But obviously the opportunity and the benefit of burning hydrogen in particular from the carbon perspective is very clear and undeniable. So if I talk about kind of the auxiliary systems, I mean, hydrogen is a flammable fuel, highly flammable.

                So making sure that you’ve got the auxiliary systems developed properly, to make sure all the safety standards are in place in terms of how you detect, how you design for leakage to make sure that all low energy ignition sources are away from many hydrogen potential areas. So that’s key and obviously hydrogen as well has some interesting properties in itself in terms of how it interacts with materials. So, making sure that you have the right material selections either in some of the fundamental turbine machinery, because there’s a phenomenon known as hydrogen embrittlement which makes some certain metals highly brittle. So making sure you pick the right materials, but also making sure you pick the right materials on things like seals for example, to make sure that they don’t deteriorate over time. I guess the other technical piece on hydrogen is when you burn it in the gas turbines, and there’s definitely some things that you need to think about. The auto ignition temperatures of hydrogen and natural gas are reasonably similar.

                But actually the flammability range of the kind of the percentage of hydrogen and air is much wider than other fuels so it goes between about 4%. So quite lean to about 75% where it is still extremely flammable. And the flame speed as well in hydrogen combustion is much harder than with methane. So that gives you some, there are phenomenon known as flashback where the flame kind of comes back into the pre- mixer. You’ve got combustion instability, which is where there’s pressure pulsations in the combustor which we need to be careful of. And actually the heat transfer co-efficients of the combustion products fueled by hydrogen are slightly higher than natural gas. So, making sure that the downstream equipment, the turbines have a good and useful life while still producing the power that we want them to produce. So it’s certainly not a straightforward fuel.

                As you say all of our competitors are developing. I think we have a very sound foundation from the experience that we have in the field, and we’ll continue to pursue that. And the air product project in Alberta is just one of those exciting projects where we’ll continue to develop our portfolio.

Marc Bianchi:

So it sounds like there’s some, at least on the size of the turbine maybe there’s some limitations today you’ll maybe sort those out over time with technological enhancement. And then there’s other limitations that you talked about from a safety perspective and how the flame works and all that. Do those items limit how broadly hydrogen combustion can be applied? Are there certain applications that we just, it won’t make sense or certain geographies or climates where it might not make sense? I’m thinking about perhaps in the desert where there’s a very different environment than what we see, where Alberta is. Maybe there’s temperatures, maybe there’s particulate that’s in the air. Is there anything like that might limit how broadly we could see combustion adopted?

Chris Barkey:

No, I don’t think so. I mean, there are the fundamental thermodynamics of gas turbines which absolutely change the behavior depending on what the temperature is in particular, the temperature and pressure of the air coming in the front. But actually the controls of the gas turbine will limit it to the pressures that we’re trying to achieve. And the temperatures that we limit the gas turbine to, to make sure that not only it produces the right power at the right efficiency but also maintains the life and the reliability of the product. So there is no doubt that actually whether you are burning hydrogen or methane or natural gas, that actually the cleanliness of the air is important, the cleanliness of the fuel is critical, particularly as you go into kind of dry, low emissions combustion. But that’s where we are today, there’s nothing special about hydrogen there.

                So we need to make sure that our inlet filtration is appropriate, we need to make sure that our gas filtration, our gas cleanliness is appropriate. But as long as we do those things kind of in line with what industry standards are, then I don’t think we’ll see any geographic or climate limitations to hydrogen.

Marc Bianchi:

Mm-hmm (affirmative). Okay, great. Maybe switching over to compression. So as you think about just, I mean, any use of gas, right? If it’s going to be put in a pipeline, probably as some degree of compression then we start talking about hydrogen for things like fuel cells and onboard tanks for fuel cells, you need even more compression. So maybe if you could talk to us a little bit generally about the different levels of pressure that are involved there, how Baker is involved in that compression and you mentioned the embrittlement issue as well. So what is that? How much does that affect kind of the challenges of doing compression?

Chris Barkey:

Yeah. So again, I think Baker Hughes is expanding our, trying to expand our leadership position in hydrogen compression as well. Again, as I said, I think our first hydrogen application was in 1962. I think we’ve got about, of the kind of number of units and I mentioned earlier, I think about 2000 of them have a level of hydrogen compression in them. And I think we have the largest compression portfolio tailored to the hydrogen value chain. It’s one of the reasons again, as we talked earlier. We have a range of products and capabilities that allow us to play at all aspects of the hydrogen value chain, either the one that exists today or the one that will exist in the future. Whether it be production, whether it be transportation, whether it be storage or whether it be utilization to produce power, for example.

                So I think we do have lots of experience, but the low volumetric energy density of hydrogen and the conditions means that the sorts of storage pressures when you compare it for example, in an automotive charging station to gasoline is significantly higher. So we are seeing needs up to potentially 900 bar, a thousand bar for our product, in particular in hydrogen storage. When you look for the transportation piece whether it’s pure hydrogen or ammonia. We don’t necessarily see a significant increase in the pressure compared to natural gas, so we still think those pressures are going to be in the kind of 60 bar to a hundred bar range. But we are, as I’ve said upgrading a number of our compressors, both our reciprocating compressor line in particular to get that large flow at 900 bar for kind of medium and large refueling station.

                And we continued to work on some of our pipeline compressors as well, but probably less pure development needed there. I think one of the areas that we are doing both the hydrogen and kind of, if I call it traditional compression if you like, is to develop this high pressure ratio compression technology, based on some of the new intuitive rotor architectures. So we’ve got a product called the HPRC, high pressure ratio compressor, which combines open and closed impellas which achieve both pressure ratio and efficiency levels. Which we believe are industry leading whilst allowing us to reduce the size, make smaller and lighter components. And as I said earlier, potentially start eliminating one train in a train. And we are making that further step to saying, how do we apply that to a specific hydrogen based version of the HPRC? Again, we’re improving impella aerodynamics, looking at getting higher strength materials that allows to go to much higher tip speeds. Because if you think of something rotating quite fast, the speed of the tip at the outer outer diameter can get quite high up to kind of 600 meters a second.

                And obviously part of that is looking for materials with higher strength, but also looking for materials that have resistance to the hydrogen embrittlement challenge. Particularly with very high levels of hydrogen up to pure hydrogen. And that we’re working on today as well. We recently kind of selected the material of choice for that hydrogen compression system. So again, not without its technical challenges but an area where we can apply our experience and expertise and the innovation moving forward to be successful in that space.

Marc Bianchi:

Yeah. I guess that brings me to kind of the next topic I wanted to talk about. You have the collaboration with our products so this is separate from the award for Alberta, just so everybody’s aware. But there’s also a collaboration to lower the cost of hydrogen compression, if I have it right for green hydrogen or just all hydrogen I guess in general. But that’s a specific collaboration you have with APD on that. It sounds like that’s essentially what it is if I were to sort of rephrase it as just kind of improving efficiency, maybe lowering the energy needed to run the compressor and then also being able to reduce the footprint of the compressor. So instead of having multiple trains, you have fewer than multiple trains.

Chris Barkey:

Yeah, exactly. So as you said, I think it was the middle of last year we announced that collaboration with their Air Products, who are one of the global leaders in hydrogen to help develop that next generation of hydrogen compression that I just talked about. So all of those kind of features in the high pressure ratio compression and the hydrogen specific version of that are part of that agreement. So we will provide that advanced compression technology into the neon carbon free hydrogen project in Saudi Arabia. So that coupled with the delivery of the LT 16’s in the Alberta project in Canada, where those two products were really helping to drive with our customer, Air Products equipment for the largest blue and green hydrogen projects that there are.

Marc Bianchi:

And that neon project is pretty unique, right? It’s the largest green hydrogen project that’s out there. I mean, there’s some stuff in China we don’t know how real it is. But this one seems like it’s pretty real.

Chris Barkey:

This one is pretty significant. So we’re  really excited and looking forward to delivering those units.

Marc Bianchi:

Is there anything unique about delivering units for a big electrolysis project like that versus other applications of sort of the same idea? If I’m thinking this thing’s hooked up to renewable electricity, are there intermittency concerns or anything that might go along with this type of project versus, I don’t know. An electrolyzer that’s hooked up to the grid in some populated area or something like that.

Chris Barkey:

So I don’t know the exact detail of the whole system of the neon project. So I can’t talk to that one. But certainly where you have that intermittency of renewables in a green hydrogen project, actually one of the things that Baker are trying to position for is to make sure that we can help in that part of the value chain as well. So if you’ve got solar, if you’ve got wind, then how do we help adding maybe backup small gas turbines to provide a level of backup to intermittency, how do we provide with some of our collaborations around fuel cells, how do we provide for example, battery electrical storage services, and how do we help combine that into something where you can deal with the intermittency through some kind of energy management systems? So, yeah. That is always one of the challenges of the pure green hydrogen to make sure that you have that continuity of the electrolysis process. But yeah, lots of opportunities to do that.

                Some of which fits straight in the baking use space as well. Not only the compression and the gas turbine piece but some of the other things that we’re starting to bolt on with either internal technology development or through acquisition or investment.

Marc Bianchi:

So last one I had on hydrogen. The leadership in LNG, which is basically ticking gas, methane, and making it very cold. That’s kind of the same idea with hydrogen, right? We’re going to, there’s ideas about liquefying hydrogen. Is your role in hydrogen liquefaction would it be similar? And should we think that you have potentially a similar opportunity for market leadership there?

Chris Barkey:

Yeah, I think… The honest answer is yes. I mean, certainly hydrogen liquefaction for us is a really interesting potential market space and we think that back to our previous bit of the conversation that we both have the products and some of the experience in liquefaction in general, that would make us very viable in terms of compressors, expanders, the valves build the business that’s also sits within TPS. And we are confident that our technology will play a fundamental role in that scaling up of H2 liquefaction. Whether it be in US, in Europe or elsewhere in the world. I think the one thing that we’ll see is that at the moment, probably you want that liquid action to help in the transportation of hydrogen, particularly via ships. I think when we look across all of the liquefaction piece, that that technology probably isn’t as mature as we would want it to be either internally or externally. And is not at the required scale in particular scale.

                So it probably needs to move from, I think we’re thinking kind of a current, maximum size that we’ve seen around probably 30 tons per day to at least 200 tons per day to make it economical. So at the moment, it’s the economics of the liquefaction compared to other options, for example like transportation through ammonia. It needs to kind of get over that economic hump and then I think it’ll be a really interesting space.

Marc Bianchi:

Do you play it all or have anything that goes into, you mentioned ammonia. So when we think about just the process of ammonia and taking hydrogen and convert into ammonia, is there compression involved in that or other kit that you guys are supplying into that part of the process?

Chris Barkey:

I mean, certainly we see a great future in clean ammonia. If you think of the colors of hydrogen, they’re kind of the same colors of ammonia. And we see a lot of it around the decarbonization of existing ammonia production for fertilizers. We obviously see an opportunity there as a hydrogen carrier in pipelines, for example. Or as a fuel for hard to abate sectors like marine propulsion, for example. So I think we are starting to say obviously transportation, again, we go back to our compression systems and reconverting ammonia back to hydrogen is quite an expensive process, both in terms of money and in terms of energy. So I think it requires about 20% of the hydrogen energy that you get out if you see what I mean. So that’s not a good trade. But we are obviously looking in our roadmap to saying, without converting back to hydrogen can we burn ammonia either in furnaces or in our gas turbines to support power production or anything else? So, yeah. Certainly the ammonia pieces is very real and we are playing our part in developing technologies that can fit that particular market as well.

Marc Bianchi:

Great. Maybe shifting over to CO2 and carbon capture. I mean, I guess kind of back to how we started the whole conversation my sense is, your business is doing things with gases and just CO2 is just another gas. But maybe how does CO2 different from methane if we’re thinking about moving it around in pipelines and compressing it. You talked about hydrogen having the embrittlement. Are there things that make CO2 a little more challenging or different from a transport storage perspective?

Chris Barkey:

So I think, again, it depends… I don’t think you can necessarily separate the compression from the capture because not CO2, isn’t always readily available as a pure stream, like for example from an LNG facility. So, CO2 is as you say, we’ve got lots of experience in compressing CO2, we’ve been doing it for an awful long time both on centrifugal compressors in our pumps. And we range from very small flow and high pressure reciprocating compressors up to kind of medium pressure and much higher flows with our both barrel type and integrally geared compression. So we have lots of experience and we are very successful at it. There are some interesting kind of features around CO2 in terms of the phase state of it. And certainly recently we’ve actually tested a super critical CO2 compressor where you get the temperature pressure right. And it kind of, it turns into something a little bit like water, very quite dense.

                And is you have to keep it very well controlled so it stays in that super critical state. So that will again give us some more potential applications in super critical CO2 engines and again, in transportation. So I don’t think if anything-

Marc Bianchi:

Why do you care about super critical CO2? What is it? Why is that better than a gas use form?

Chris Barkey:

It just, in some ways it, again, it allows you to keep the density at the right point, which just allows a more efficient method of transportation. So again, that’s kind of on the, a bit lower technology maturity but we’re doing well and we’re getting close to it.

Marc Bianchi:

Got it. Got it. Okay. Well, I guess Baker more broadly has tried to build out the carbon capture portfolio, right? There’s you acquired compact carbon capture, you’ve got some MOUs. I think you’re kind of end to end capable right now. Correct me if I’m wrong of sort of doing a turnkey type of carbon capture project. Do you see a lot of those types of projects in the future? And another company in this space is offering carbon capture as a service. Is that something that you guys are contemplating, or how should we think about the potential there and interest from Baker?

Chris Barkey:

So I think there’s kind of a number of kind of levels to answer that question. So, one is that depending on application, depending on cli… This one where climate does play a part, Marc. Application, the concentration of CO2 in whatever kind of stream that you are trying to take the CO2 out of capture it. The footprint of a potential industrial commercial site, ambient temperature, and the overall flow all play a part in saying, what is the optimum carbon capture technology? So I think certainly the way we’ve approached it is, there is no single point solution that covers all of the potential variables if you like. So we have a number of different technologies available to us that we are at different levels of maturity from the chilled ammonia process, which is is a post combustion carbon capture that uses kind of a solvent formulation on basically based on ammonia, back to our ammonia question.

                And that’s a pretty mature piece of technology. We’ve demonstrated TRL7, which is the kind of technology readiness level scale. We’ve got the mixed salt process which is a slightly less mature, which again is a solvent blend mainly around potassium carbonate and ammonia. And then as you say, we’ve got compact carbon capture which is a rotating bed kind of absorber and dissolver. So that’s kind of much more turbo machinery if you like that we talked about earlier. But we think that will generate efficiency in the absorbing and dissolver. And in some ways will be solvent agnostic. And it’ll allow us to make these things shorter, smaller footprint, and hopefully extremely economic. And they all will apply to slightly different applications. So we certainly think the compact carbon capture would be offshore because of its smaller footprint.

                Some of the cement factories, waste to energy plants for example, and even shipping where this may be viewed as an alternative to batteries or hydrogen power. So I think we are continuing to pursue maturing all of these technologies. And then we’ve got some really kind of interesting, kind of very low TRL level technologies that are actually taking pace. Something like electric chair for example, where we’ve taken a 15% stake and that’s a biomethanation process. So there’s single organisms, that act as a biocatalyst to synthesize methane to produce natural gas from streams of CO2 and hydrogen. So there are three pilot projects up to about one megawatt. So they are maturing technology and we are hoping to help them mature that. And that will be another technique that will be appropriate in some places and not appropriate in others.

                So, we are really attacking it across multiple fronts and maturing a number of multiple technologies that will be applicable in the right place. Your question on kind of carbon capture as a service. I think as ever with a lot of our commercial models, there are a number of them in a number of different spaces. And I wouldn’t say that we are striving specifically for capture as a service, is it one of the available options and we wouldn’t rule it out? That’s true. We certainly wouldn’t rule it out and we’re hoping to get some of these technologies, 3C for example we are working on the Tier R67, which is kind of the key thing that we’ve demonstrate at scale and then we go to commercialization. So we’re looking to do that kind of trying to get that by the end of the year. So as we start to really go and commercialize, then we start to refine and develop those commercial models of which captures a service maybe one, but maybe one of a number.

Marc Bianchi:

I was hopeful that you could help us with kind of the cost to capture, just at a high level. Because I think there’s a huge range that I’ve seen. And I think it has a lot to do with the purity of the CO2 coming out of wherever you’re capturing it. So, at the low end things like fermentation or gasification have a really pure stream of CO2. So it’s highly concentrated and maybe a lower cost to capture. And then I think of power generation coal or gas fire generation being somewhere in the middle. And then at the high end, we’ve got this direct air capture which we’re trying to take CO2 out of the atmosphere where it’s really, really diluted. My general sense is the range for those are like, I don’t know, anywhere from 30 to 50 bucks a ton, to $500 or more a ton if we’re up on the direct air capture stuff. But maybe from your experience where do you guys see those costs and what’s the roadmap getting lower? Where are the largest cost reduction opportunities in the whole process?

Chris Barkey:

Yeah. So I think as you said, Marc, the dollars per ton of capture is incredibly complicated and it relies on a whole range of different assumptions as you said. It [inaudible 00:41:17] out the concentration of CO2 in the flu or whatever you’re trying to capture it from. But also depreciation period, tax raise regime, equity to debt ratio, IRR and then some of the scale effects of are you talking big plants or small plants. So we continue to look at the cost. I think we see small and mid-scale carbon capture projects probably around the $130 a ton at the moment. I think we certainly see that that 50 to 90 tons is probably some of the incentives, is that you need to start building a robust market over the next 10 to 15 years. I think we certainly, well I look at 3C for example, we certainly believe we can drive the costs down below a hundred.

                And certainly we got a target to kind of that $130 a ton that we talked about earlier. Try and cut that in half. So, that’s the sort of range that we’re looking at but certainly sub hundred is achievable with some of the technologies that we’re developing like 3C.

Marc Bianchi:

And what would you say are the top, if you had to say the top two or three applications that you think you’ll be using the compact carbon capture and kind of the current kit for. Is it stuff like blue hydrogen where maybe there’s a really pure stream of CO2 coming off of it, or? What are the typical applications look like?

Chris Barkey:

I think a range. I think, as I mentioned before that certainly we see a good opportunity potentially offshore because of the footprint benefit, but actually across a wide range of industrial applications, cement factories, biomass power plants, reformers, steel mills, refineries. And as I said, shipping is an interesting one where again, if you can get them small enough on the footprint enough, then it can maybe be a sensible alternative to the full electrification, if you see what I mean. So I think there’s a full range. And particularly in that kind of small to medium industrial applications.

Marc Bianchi:

Great. I really just had kind of one more, and this is something that we’re kind of asking everybody to provide. And it’s, we’re asking for a prediction. But it’s a prediction that’s several years out. We’re not going to hold you accountable for it. The purpose really is to just kind of give you an opportunity to provide something that’s thought provoking. You’re looking at this whole world from kind of the other side of the table than we are as investors. So just any thoughts on what’s a prediction out in the next 3, 5, 7 years that people might not have on their radars.

Chris Barkey:

So rather than picking a specific technology, I’ll give you an insight into the way Chris Barkey’s mind thinks, through my [crosstalk 00:44:34]-

Marc Bianchi:

That’s what we’re looking for.

Chris Barkey:

… my career actually. So there are some kind of undeniable truths out there and some megatrends. So we have a global trend in population growth, we have a global trend in GDP growth. And when you add one plus one equals fundamentally a bigger middle class with disposable income. And that disposable income tends to be then spent on things that require energy. So population growth and GDP growth gives you energy demand. So I don’t think they’re going away. Obviously, you might have some economic or things like COVID that put blips in the energy demand, but it’s kind of on the rise. And the other one obviously is climate change is an imperative that is not going away. People have said, “Why have you been an engineer your whole career?” And it really is down to A, I enjoy the technology and I enjoy the engineering. But I’ve always enjoyed the fact that you can actually do something that has a true social impact. So yes, you need regulations, you need offsets, you need trading, but that won’t solve the challenge of kind of net zero.

                The only thing that’s going to solve it is engineering. And engineering has to solve it. And a bit like the conversation on carbon capture. There is no real big bang single solution, yep. Maybe in 50 years with nuclear fusion, maybe. But it’s going to be a combination and a portfolio of solutions, and the people who can bring a portfolio of products across the whole value chain are going to be successful. But actually no one’s going to be successful on their own. So we need investment in infrastructure, as well as kind of point solutions to some of the challenges we’ve got. And I think we’re already seeing it now that collaboration across the whole value chain is absolutely essential. And you see some of the things that are in the public domain that we are doing, it just proves that collaboration is probably going to have to be higher than ever before. And I genuinely believe there are a number of kind of energy technology companies out there.

                And I genuinely believe that Baker Hughes will be at the forefront of that. And that’s one of the reasons that I decided to come and join them, Marc, to be honest. I think the hydrogen economy will grow. There was a real focus probably 10 years ago on the electrification piece, across the whole economy. Whether it’s aerospace, automotive, rail, maritime and electrification will continue. But I think that the hydrogen economy is coming more into focus. So yes, questions on infrastructure, questions on do you do large scale production and transportation, or do you go near point production, near point of use production? I think those are still fascinating questions and are always a good place for debate, but you will see hydrogen appearing more and more.

                And electrification at the end of the day only works with electricity. So, something has to produce the electricity. So the other prediction is that I think natural gas will continue to play a significant role. And therefore some of the other technologies that we’re developing will have to be done to make sure that natural gas plays its role that plays its role in a clean matter. So, there’s my prediction.

Marc Bianchi:

Great. Well that’s a great place to leave it.

Chris Barkey:

If I could have lottery numbers, then I do that as well but I can’t.

Marc Bianchi:

We’ll do that next time. Chris, thanks so much. This has been great. Really appreciate it. And look forward to catching up sometime soon.

Chris Barkey:

Okay. It’s been a pleasure. Thanks Marc.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of Cowen Insights.


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