Shell and Equinor Drop Out of Norway's Blue Hydrogen Pipeline Plan

Equinor and Shell have dropped out of a key decarbonization project that would have supplied blue hydrogen to the German power generation market. Their previously-announced plans to use a future North Sea hydrogen pipeline would have "ensured jobs, industry and value creation," according to Norwegian state oil company Equinor, but due to lack of demand for the product in Europe, it will no longer be pursued.

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Norwegian state-owned oil company Equinor has decided not to pursue a joint blue hydrogen production and transport project with German utility RWE, it announced this week. In addition, Shell's Aukra project - which would have manufactured the gas at its Nyhamna terminal and used the same subsea pipeline for export - has also been canceled.

Aker Horizons' Knut Nyborg: “Aker Horizons agrees with Equinor's assessment that the framework conditions are not in place for large investments. We also share Shell's conclusions that major industrial players in Europe now seem to prefer green hydrogen over blue.”

Natural gas-based hydrogen coupled with carbon capture would be less expensive to develop and manufacture than renewable-power based green hydrogen. It was supposed to be "one of the answers to how we can bridge the gap between developments on the Norwegian continental shelf and the goals from the Paris Agreement," said Equinor's Ulrik Olbjorn at the time of the project's announcement.

Equinor and Shell will continue to export natural gas from Norway to Europe without carbon capture. Norway is the EU's largest natural gas supplier, delivering 109 billion cubic meters of pipeline gas in 2023 (down about seven percent year-on-year).