$4B hydrogen production facility planned for idled Oklaunion site

Mark Potter | Southwest Ledger The former Oklaunion coal-fired power plant sits idle near Vernon, Texas, on October 15. The facility was retired in 2020 after 34 years of generating electricity. Two companies have announced plans to spend $4 billion to develop a ‘green’ hydrogen production facility on the North Texas site.

VERNON, Texas — Two corporations announced plans to invest approximately $4 billion to construct a “green” hydrogen production facility on the site of a decommissioned electric generating plant near here.

The “mega-scale renewable-power-to-hydrogen project” will include approximately 1.4 gigawatts of wind and solar power generation, plus electrolyzer capacity capable of producing more than 200 metric tons of hydrogen each day – more than 73,000 metric tons of hydrogen per year – “making it the largest ‘green’ hydrogen facility in the United States,” said Air Products and The AES Corporation.

The hydrogen plant will be powered by solar and wind energy produced at the site. The gas will be produced by electrolyzers, which split water into oxygen and hydrogen. Since no carbon emissions will be generated, the product is known as “green hydrogen.”

The facility is projected to begin commercial operations in 2027, the two companies reported in a joint press release.

The location is west of Wichita Falls and nine miles east of Vernon, approximately 30 minutes southwest of Frederick, in Wilbarger County, Texas. The site is where the 650-megawatt, coal-fired Oklaunion power plant generated electricity for 34 years, until 2020.

The Oklaunion plant was co-owned by four partners: Public Service Co. of Oklahoma (which operated the facility); sister company AEP Texas; the City of Brownsville, Texas; and the Oklahoma Municipal Power Authority.

The new facility “will be, by far, the largest green hydrogen facility in the U.S. to use wind and sun as energy sources,” said Seifi Ghasemi, chairman, president and CEO of Air Products.

The facility will serve “growing demand for zero-carbon intensity fuels for the mobility market as well as other industrial markets,” officials said. “It will yield a totally clean source of energy on a massive scale, and, if all the green hydrogen were used in the heavy-duty truck market, it would eliminate more than 1.6 million metric tons of carbon dioxide emissions annually when compared to diesel use in heavy-duty trucks.”

The joint venture will sell hydrogen to Air Products for distribution to the transportation market and for new industrial uses, which Air Products declined to identify.

Over the lifetime of the project, it is expected to circumvent more than 50 million metric tons of CO2, emissions that would otherwise be generated in conventional natural gas-based hydrogen production. That volume is the equivalent of avoiding emissions from nearly five billion gallons of diesel fuel.

Air Products and AES said they will jointly and equally own the renewable energy and electrolyzer assets, with Air Products serving as the exclusive off-taker and marketer of the green hydrogen under a 30-year contract.

The project will create more than 1,300 construction and 115 permanent operations jobs, and approximately 200 transportation and distribution jobs, the companies estimate. It also is expected to generate approximately $500 million in tax benefits to the state over the course of the project’s lifetime.

“This project will capitalize on AES’ position as one of the nation’s largest renewable energy developers and its global leadership in innovations such as energy storage systems and supplying around-the-clock clean energy to data centers,” said AES president and chief executive officer Andrés Gluski.

The Air Products/AES project is subject to receipt of local permits and local, state and federal incentives.

The Inflation Reduction Act signed into law in August by President Joe Biden gives producers with very low CO2 emissions a credit of $3 per kilogram of hydrogen produced. Ghasemi said the joint venture can receive up to $5 per kg if credits for producing green energy and building on the site of a former electric generating plant are included.

“The tax credits are doing what the U.S. government intended them to do, which is to accelerate implementation of these kinds of projects in the U.S.,” Ghasemi said.

Air Products provides industrial gases; AES operates power plants

AES Corp. owns and operates power plants and is headquartered in Arlington, Virginia. It operates in the U.S., Mexico, India, Central and South America, Europe, Vietnam and Jordan. Earlier this year AES signed power purchase agreements to deliver clean energy to Amazon data centers in California.

Air Products and Chemicals is based in Allentown, Pennsylvania, and was founded in 1940. The company provides essential industrial gases, related equipment, and applications expertise to customers around the world. It had $12.7 billion in sales in Fiscal Year 2022. It employed approximately 21,900 people in more than 50 countries in Europe, Asia, the Middle East, India, as well as the U.S. and Canada, on Sept. 30, according to the company’s annual report.

The North Texas project is another of Air Products’ major investments in green hydrogen. The company announced in 2020 a $5 billion arrangement with the Saudi energy firm ACWA Power to build a complex producing about 650 tons per day of hydrogen, and is considering a similar complex in Oman. Air Products also announced plans to spend $500 million on a hydroelectric-powered project to produce 35 tons of hydrogen daily in Massena, New York.

Hydrogen demand grows exponentially

Demand for green hydrogen for mobility and industrial applications is expected to grow exponentially across the U.S. over the next decade. The growth in demand is supported by green hydrogen’s role in net-zero ambitions announced by several states and major corporations.

Hydrogen is a versatile energy source for actual and potential uses. It can be produced using different energy inputs and different production technologies. Also, it can be converted to different forms and distributed via different routes: from compressed gas hydrogen in pipelines through liquid hydrogen on ships, trains or trucks.

Hydrogen can replace coke (a petroleum byproduct produced in the coal distilling process) and natural gas as a reducing agent in iron and steel manufacturing. Hydrogen also can enable decarbonization of products such as cement, fertilizer, and petrochemicals.

Primary uses of hydrogen today are as a chemical feedstock in ammonia, food, and drug production, as well as petrochemical and refinery processing. It also is used in crystal growth, glass manufacturing, chemical tracing, metal fabrication, polysilicon and semiconductor manufacturing, metal production, and thermal processing.

Hydrogen also is used to remove sulfur and to hydrotreat and hydrocrack heavier crude oil constituents into more valuable, lighter products.

Frontier Group spelled out plans for power plant site

The Frontier Group of Companies announced earlier this year that they plan to redevelop the site of the decommissioned Oklaunion power plant “to support heavy industry.”

The Frontier Group of Companies was founded in 2001 and is based in Buffalo, New York.

The companies include “industry-leading operations for industrial demolition, industrial dismantling, asset recovery, equipment repurposing, industrial clean-up, site remediation, brownfield redevelopment, facility acquisition, real estate development, energy exploration, energy production, and materials recycling,” Frontier Group’s website states.

Plans for the Oklaunion Industrial Park include “dismantling obsolete structures along with site clean-up, remediation and environmental monitoring as well as industrial repurposing and industrial materials recycling,” The Frontier Group announced. Southwest Ledger was unsuccessful in its efforts to contact someone at the corporate office.

Oklaunion Industrial Park redevelopment plans include “uses for manufacturing, commercial, warehousing, logistics operations and renewable energy,” The Frontier Group says in its advertising.

The site is “strategically located” near Vernon and is “30 minutes southwest of Frederick.” It has “1,000+ developable acres, 6+ miles of rail and a 2+ mile rail loop, electricity, public water, private water/sewer, fiber cable and three warehouses.”

Oklaunion Industrial Park “will tap renewable energy sources with the installation of the Oklaunion Green Energy solar farm,” Frontier Group of Companies claims. “This 119+ megawatt solar array is expected to generate 194 gigawatts of electricity annually while creating carbon offsets equal to 191,100 tons of CO2.”