Kellas Midstream has lined up its first customer to receive blue hydrogen from the H2NorthEast project, with Statera Energy eyeing supplies for use in nearby power stations.
Under a heads of terms agreement announced on Wednesday, flexible generation and storage operator Statera would use hydrogen from the H2NorthEast project in Teesside to power its plants at Saltholme.
Based at the Kellas-operated Central Area Transmission System (CATS) Terminal – which serves around 30 North Sea fields and handles around a quarter of the UK’s gas production – the project aims to produce hydrogen from gas, with carbon dioxide captured and stored offshore in the Northern Endurance reservoir.
It is set to deliver 355MW of hydrogen in Phase 1, growing to more than 1GW by 2030 and contributing as much as 10% of the UK’s target hydrogen capacity.
It forms a key linchpin in the East Coast Cluster decarbonisation project which secured government backing under the Track 1 CCS cluster process in 2021.
Described by the company as a “significant first” for the H2NorthEast, the new agreement sets out how Kellas and Statera will work together to shore up supplies of hydrogen and support decarbonisation of Statera’s Teesside operations.
Work on the scheme is already well underway, with Worley recently picked deliver a full-scope FEED package for Phase 1 over the next year.
Kellas CEO Nathan Morgan said: “The signature of these Heads of Terms further enhances our collaboration with Statera and represents a hugely positive step for the H2NorthEast project. It follows on from our announcements earlier this year regarding the project successfully entering front end engineering and design and securing government funding through the Net Zero Hydrogen Fund.”
Statera operates two gas-fired power stations at Saltholme North and South, which together represent 100MW of flexible generation that can be switched on during periods of high demand, often known as “peaker” plants.
Statera plans to use the hydrogen from H2NorthEast to fuel switch from natural gas and help transition its sites into the first low carbon flexible generation facilities in operation in the UK.
Statera boss Tom Vernon added: “Decarbonising thermal generation will be essential if the UK is to meet its objective of a net zero power system by 2035. Alongside power CCUS, Statera believes hydrogen fired generation will be critical in providing the long duration response required to support the intermittency of renewables.
“These heads of terms are an important first step in the decarbonisation of our flexible generation projects at Teesside. We look forward to working closely with Kellas as it progresses the exciting H2NorthEast project to an investment decision.”
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