Kellas brings in first customer for blue hydrogen project in Teesside

Aberdeen-based energy infrastructure company Kellas Midstream has signed a heads of terms agreement with Statera Energy for the provision of low-carbon hydrogen from the H2NorthEast project in Teesside to Statera’s Saltholme power stations.

The agreement, described as a significant first for H2NorthEast, outlines how Kellas and Statera will work together toward the future supply of hydrogen from H2NorthEast, and the decarbonization of Statera’s Teesside operations.

Kellas is developing the H2NorthEast hydrogen facility next to its CATS (Central Area Transmission System) gas terminal in Teesside. Statera operates two flexible generation power stations at Saltholme which are in close proximity to CATS. The company 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 in order to support a fully decarbonized power system.

The first phase of the H2NorthEast involves the design and build of a 355 MW hydrogen production facility and hydrogen distribution system, with the potential to upscale to more than 1 GW in a second phase by 2030, contributing up to 10% of the UK’s target hydrogen capacity.

Following the funding secured through the Net Zero Hydrogen Fund in March this year, Kellas recently partnered with two service companies Worley and Johnson Matthey to kick off the FEED phase of the project.

The final investment decision (FID) for H2NorthEast is targeted for 2025, and commercial operation and first hydrogen production are targeted for 2028.

Nathan Morgan, CEO of Kellas Midstream, 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 (FEED), and securing government funding through the Net Zero Hydrogen Fund. The agreement is an important statement of intent by Statera and highlights our commitment to engage meaningfully with stakeholders to make Teesside one of the world’s first decarbonised industrial clusters.”

Tom Vernon, CEO of Statera Energy, commented: “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.”