Natural hydrogen techno-economics and valuation

Natural hydrogen, often referred to as “white” and sometimes “gold”, has recently emerged as a potentially compelling low-carbon energy resource with significant global decarbonization potential. This study presents a techno-economic analysis using a hybrid approach: it models hydrogen production based on test-well data from the Bourakébougou field in Mali—an ideal reference case due to its high purity and shallow depth, allowing for an assessment of economic potential under favorable geological conditions, while applying a capital and operational cost structure bench-marked against the U.S. Gulf Coast. The estimated levelized cost of hydrogen (LCOH) in a scaled production scenario of 1.3 tons/day across ten vertical wells is $6.82/kg, and it could decrease to $2.46/kg as the scale of production increases to sixty wells without diminishing returns of production. The analysis further demonstrates that these costs are highly sensitive to long-term reservoir performance to complement the constant production rate assumption in the base case. A simplified production decline scenario illustrates an increase in the LCOH by nearly 70%. Besides scale optimization, policy incentives can significantly reduce the LCOH to competitive levels close to $1.00/kg compared to conventional hydrogen production. This study further highlights that uncertainties in resource viability from exploration risks and transportation costs greatly affect the commercial viability of natural hydrogen production.