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Energy – Hydrogen

As the world continues to seek affordable, clean and reliable energy solutions, hydrogen has emerged as one of the potential replacements for traditional hydrocarbons to provide zero-to-low carbon energy. In addition to renewables and natural gas, hydrogen has an important role in the energy evolution landscape in the coming years. Hydrogen, as a versatile energy carrier and chemical feedstock, offers advantages that unite all of our nation’s energy resources – renewables, nuclear and fossil fuels – and enables innovations in energy production and end uses that can help decarbonize three of the most energy intensive sectors of our economy: transportation, electricity generation and manufacturing. Companies are beginning to make serious headway in growing a “hydrogen economy”, establishing hydrogen as an exciting and viable component of the future energy mix.

Hydrogen’s potential contribution to carbon neutrality is reliant on how it is produced. Used as a key industrial gas in the refining and chemical sectors, including ammonia production, most hydrogen today, commonly referred to as “gray” hydrogen, is produced from fossil fuels through coal gasification or steam methane reformation processes, which emit CO2 into the atmosphere.

Driven by an expansion of the range of applications for hydrogen in the energy sector (including power generation, heating, transport, energy storage and the decarbonization of industrial sectors such as steelmaking and iron smelting), the current wave of interest in the hydrogen industry is focused on “blue” and “green” hydrogen production. “Blue” hydrogen is produced in a similar manner to gray hydrogen, but carbon-capture technologies are incorporated in the process to prevent CO2 from being released. The cleanest variety, known as “green” hydrogen, is produced through the electrolysis of water powered by renewable energy sources, resulting in zero-carbon emissions and a clean and sustainable fuel source.

As hydrogen develops as a cleaner fuel and energy source, Vinson & Elkins continues to assist clients in delivering on the evolving energy mix. Our multidisciplinary team of lawyers has extensive experience advising clients on a full suite of legal matters related to hydrogen projects around the globe, including providing advice related to the development of carbon capture, utilization and storage (CCUS) operations. Many of the legal issues involved in the emerging hydrogen industry reflect those encountered in the wider energy sector, from increasing M&A activity, to project development matters and the potential for future project financings as hydrogen becomes more established. As market leaders in the energy industry across the world, these are areas where the team at Vinson & Elkins has comprehensive and wide-ranging existing experience ready to leverage. Our lawyers combine this experience with an appreciation of project and jurisdiction-specific issues to achieve creative and innovative solutions for our clients in all aspects of the hydrogen value chain.

Our lawyers advise on a full range of hydrogen related matters, including:

  • Full suite of project development matters
  • Project and other financing structures
  • Carbon Capture, Utilization and Storage (CCUS) infrastructure supporting large-scale hydrogen production
  • Investments in hydrogen companies and related joint ventures
  • Mergers and acquisitions
  • Regulatory advice and counseling
  • Technology licensing
  • Environmental permits, wildlife impact, and land use advice
  • Purchase and sale of environmental attributes, including renewable energy credits
  • Complex litigation
  • International alternative dispute resolution
  • Environmental, social and governance (ESG) advice and counseling
  • Representing issuers and underwriters in a variety of capital-raising transactions, including IPOs and combinations with SPACs

Experience Highlights

  • Gulf Coast Ammonia as project counsel and borrower’s counsel in all aspects of the development and financing of a world-scale, hydrogen-based ammonia project in Texas

  • Energy Growth Momentum, a UK-based private equity fund that invests in equipment and services companies improving the performance of energy assets, in its investment in H2scan Corporation, a provider of hydrogen leak detection sensors

  • The developer in relation to the development and financing of the Hydrogen Power Abu Dhabi project, which is the first of its kind globally, involving the splitting of a natural gas stream into hydrogen and carbon dioxide

  • Private developer in all aspects of a project for the development of a facility to be located in the Houston Ship Channel that converts 10,000 barrel per day of high sulfur oil into very low sulfur oil, including the negotiation of hydrogen supply agreements

  • Independent Pipeline Operator in its potential equity investment in a hydrogen fuel and hydrogen infrastructure supplier (ongoing)

  • Construction, development and financing of a multi-billion dollar gas-to-liquids project, including in relation to the sale of the hydrogen production unit and other industrial gases units of the facility and long-term supply of syngas and hydrogen

  • STAR Rafineri A.Ş., a subsidiary of the State Oil Company of the Azerbaijan Republic (SOCAR), and its sponsors on the development and financing of a $6 billion greenfield oil refinery in Turkey on the Aegean Sea, including all processing units, hydrogen production units and related facilities. This is the largest project financing in Turkey and involves the largest and most diverse group of ECAs for any multi-source financing in Turkey to date. The Project won 10 awards including Infrastructure Journal’s “European Oil and Gas Deal of the Year 2014”

  • Multiple entities in technology licensing for projects and transactions involving the use of hydrogen as a feedstock in a production process

  • Advising multiple clients on potential development of CCUS operations, including those associated with natural gas processing

  • Huntsman International in a breach of contract dispute with Praxair, its hydrogen raw materials supplier (ongoing)

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