Part V
A couple of more subjects that are directly related to the natural hydrogen resources exploration and development:
- Natural Hydrogen Resources Evaluation / Appraisal. This topic involves a great deal of confusion among the community. Quite understandably, there is a huge temptation to cling to the existing and rather habitual practice of natural gas reserves evaluation. This is a seemingly easy way to address the rather complicated and un-studied matter, and lots of our colleagues eager to get the so much desired numbers fall for it.
There is a number of entities on the market, offering the petroleum resources evaluation services, with their further conversion into “reserves”. This step is customary if not compulsory for the explorers seeking the opportunity for approaching an IPO to raise sufficient capital so badly needed for conducting their operations. (Mind you, fundamental research is usually not included into this scope, being outsourced to the “mainstream” academia. The results are described in Part I, Part II, Part III and Part IV).
These evaluation entities a.k.a. independent advisory firms, or IAFs, have a long and quite successful history of oil and natural gas resources appraisal and audit. Their algorithms are not too complicated and pretty much written in stone. It would be rather difficult to imagine these IAFs stepping aside from these algorithms – but whatever for? Especially since the SPE official view announced in August 2022 basically equalized natural hydrogen with petroleum, having little doubts about completely different physical and chemical variances between these substances. (For the practical consequences of this particular decision, please go ahead and ask the Helios Aragon guys over in Spain, whose application for the well drilling permit is being refused for 6 years in row, specifically on the grounds that “hydrogen is no different from oil and gas”).
As a result, the entities who choose to getting armed with the “ordinary” natural hydrogen resource “evaluations” drafted by the IAFs in the ordinary way – that is, with “gas in place” measured in Bcf through the standard calculations utilizing the “trap” dome (imaginary) sizes, extraction factor etc., – end up with substantial risks, now formally stipulated in their prospectuses, at times approaching the staggering figures of 70% to 90%. Not a pretty target for a random investor coming by… or, rather, running away from such prospective.
HOWEVER
As explained in Part IV of this series, hydrogen does not form pressurized “reservoirs” to come after. (If my words don’t read trustworthy, please feel free to browse the LinkedIn and other social media platforms for both enthusiasts and sceptics of natural hydrogen, screaming that out of millions of wells, none tapped into a natural hydrogen “reservoir”).
“So, what are we gonna do now dear?” Well, the dawn of new era calls for new approaches… and such. Meaning, is there anything to fill this gap?
Yes. We at Avalio believe that the natural hydrogen resources evaluation approach needs to be changed from the stationary “gas in place” model to the dynamic, “flux” one.
Apparently, this will require the change of the model (which is do-able) and of the paradigm (which is much more difficult, provided how conformist our community is). Such dynamic model shall be based on a flow rate of gaseous mix (in cu m or cu ft) passing through the standard cross-section (in sq m or sq ft) per unit of time (hour or day). The value of H2 concentration in such gas mix shall be introduced as well, representing the equivalent of the extraction factor for the stationary models.
This need was pointed out by the prominent researchers experienced in the field natural hydrogen studies. In particular, Dr. Omar MAIGA O. Maiga et al. (2023) stipulated that “hydrogen system is a dynamic system that is recharged while producing”.
Mind you, there is nothing new about this approach. Natural gas wells production is measured in cu.m/well ID Ø/day for decades. (Well ID Ø is expressed with or without the limiter, being a choke of a certain size).
With time, even the IAFs – or at least some of them – started (reluctantly) recognizing such need for the paradigm change, see the title picture to this piece. (I would even take it easy on this “hotels” term – Moreover, we admit them existing, although calling them “temporary accumulations”, which is rather boring I know). It’s for the best because otherwise, they are risking – or “RISC-ing” – to find themselves out of the game before long.
Indeed, this change of the resources’ evaluation approach will require the new set of technical methods and tools, in order to provide the IAFs with means enabling them to keep offering their professional services to the nascent natural hydrogen industry. The sooner these bright minds accept this new reality, the better their positions will be in the race for the better, greener future.
(To be continued…)
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