BP, Rio Tinto team up for hydrogen power

London, 17 May: Oil major BP and mining giant Rio Tinto have set up a joint venture to generate power from hydrogen. Hydrogen Energy will develop what the companies call "de-carbonised energy projects", which will convert fossil fuel feedstocks into hydrogen and carbon dioxide (CO2), using the hydrogen as a clean-burning fuel to generate power, and capturing and storing the CO2 underground.

Tony Hayward, BP group chief executive, said: "Projects such as these have the potential to help deliver the carbon emission reductions which companies and countries around the world are now seeking."

Rio Tinto is to invest $32 million in exchange for a 50% stake in the venture. This compensates BP for its investment to date in its hydrogen business, notably two hydrogen-fuelled projects already under development, which will become part of Hydrogen Energy.

BP, with Scottish and Southern Energy, announced plans in June 2005 for a project in Peterhead, Scotland that would use natural gas as a feedstock, generating some 475MW electricity and capturing and storing some 1.8 million tonnes (Mt) of CO2 a year in the North Sea Miller oilfield. A decision is due on commencing that project in early 2008, which would then begin operating in 2011.

The second proposed project is a 500MW plant in Carson, California, which BP is developing with Edison Mission Group, using petroleum coke as a feedstock. The project would capture some 4 Mt of CO2 a year and store it in geological formations in southern California. That plant would be operational by the end of 2012, subject to the successful outcome of engineering studies and the appropriate policy framework being put in place, the companies say.

BP's partners remain involved in the two projects, but BP's stakes are being transferred to Hydrogen Energy.

The new company, which is to be based in the UK, will initially have 75 staff, seconded from the parent companies. Lewis Gillies, formerly head of BP's hydrogen power business, has been named as chief executive, while Peter Cunningham, former head of business evaluation for Rio Tinto, becomes chief financial officer.